Transcripts For CNBC Squawk 20240703

Yields have picked up. Tenyear yield above 5 . That is a significant level. We touched briefly above that for a nanosecond last week. Since then, you have to go back to 2007 when you have seen yields at these levels. 5. 012 for the tenyear yield. By the way, check out energy prices. You will see wti which is off 33 cents. 87. 76. We have merger monday as joe mentioned. Look at what is happening here. Chevron buying hess in the deal of 53 billion. 171 a share. That is a low premium over the Closing Price for hess on friday. Hess shares are up 2. 25 . Chevron down 2. 9 . This deal comes just weeks after exxonmobil made its move to buy pioneer natural resources. Both stocks on the move. Hess ceo john hess will join chevrons board. I just got off the phone with mike wirth. Very low primemium on this. This goes back long before the rumors came out about exxonmobil and pioneer. That deal went through last week. A lot of people thought after the deal, that chevron would look for Something Else in the Permian Basin. You saw the stocks which have moved since. He said it would not make sense for them because he pointed out they have more acres in the Permian Basin than exxonmobil. They have 2. 2 million acres in the permian. After the exxon deal, they have 1. 6 million acres. It wont make sense. Ghana is a unique as well. John hess has come on many times. I asked why are you doing this with stock instead of cash. The deal last week was half cash. This is a situation where he said they dont like to do deals in cash because Oil Prices Move so much when you are dealing with a commodity which is 90 now. If it goes to 60, you look like you paid for it. This is overpriced. I asked this has to be a tax issue for hess. Between the trust at 8 , it is a more tax advantageous deal for stock for Something Like that. It is like one share. Share for share. 1. 025. It is no way a merger equal 53. The market is not saying whoa. It is merger activity. This is not helping sentiment. Here is a question. The price of oil is out of the hands of these companies in large part. Power, do regulators decide to look at this given the size of the companies . This goes back to the exxon deal which was a different situation because of the retail piece or lack of retail piece. This has both. I wonder with the gas station. Especially with the regulator like lina khan. Big is bad. They throw everything at the wall. Is that right or wrong . Wrong. There have been deals that have been wrong. Clearly, there is overlap in this context. Yeah. A couple of things for shareholders. They are holding a Conference Call at 7 30 a. M. Eastern time this morning. They are planning on taking all of the cash they are not using on the deal and giving back to shareholders. They will increase the Share Buybacks by 2. 5 billion to 20 billion a year. Come january, they will talking creasing Dividend Per Share by8 to 1. 63 a share. That is what they are doing with the increased cash. The Company Points out and mike wirth says the free cash will double by 2027 with this deal. They are looking at this positively. This has been going for more than six months. 8. 6 yield. Mike said they have increased their Dividend Per Share by 6 annually year over year. That is double competitors in the market. Thats what they are doing with the cash they are not using on this deal with theall stock deal. Was there discussion of a chevron truck for christmas . Instead of the hess truck. I didnt know. The hess trucks we had forever. Will they keep it . Hess airplanes and helicopters . It is a gift we had every year from john hess. Will they keep the brand at the gas stations . I would. You wont. Chevron . Chevron has a brand. The trucks. Why spend the money to market both brands . They are probably not calling it chevronhess. They will knockout every marketing expense. Why have two marketing departments and two advertising departments . You are asking. Ill find out. Well have more details. Well have more details throughout the morning. Big deal on monday morning. Huge. Mike wirths legacy deal for not that hes old. Mike wirth says we are still working on the plans for the trucks. They are important to john hess. What you say here comes out there. Good. Keep your phone on. House republicans will consider more candidates, good, for the speaker race. Nine republicans are now campaigning for the job after jim jordan failed to get enough votes to replace Kevin Mccarthy. The one that might have the lead is tom emmer of minnesota. The early frontrunner. Republicans are expected to reconvene at 6 30 p. M. Eastern time. We will have more on the speakers race and what it means for aid to israel and ukraine coming up in the next half hour. Israel ramping up attacks on the gaza strip over the weekend as the fighting enters the third week and aid deliveries are moving into the gaza strip. Nbcs jay gray is in tel aviv with more on the latest this morning. Good morning. Reporter lets start with the military action. We have seen a stepped up air pace faster and more strikes than we have seen since the start of the war. Idf telling us they hit 320 military targets in the last 24 hours, including tunnels and Operational Command centers which clears the way for the next step in the maneuvers. For the first time in the long time, they are using language of moving in on the ground. That is a change of what they are saying publicly. The troops and equipment on the border has been repositioned. We know strike teams have made their way across the border. Idf is searching for hosstages and clearing the area of gunmen. One idf soldier was killed during a raid and three others injured. When speaking about the pace of these air strikes, one commander says this and i want to make sure i get it right here. He says they want to leave hamas weakened and tired and dislocated in preparation for our next stage of military operations. Clearly, they are working toward something and it is quite likely the tanks rolling across the gaza border. On the other end of the strip, the aid you talked about. 17 trucks in yesterday. We had 20 more go across the border today. They are carrying water, food and medicine which is desperately needed with medical supplies. What you wont see is fuel. We have Israeli Forces investigating and searching the trucks before they cross the border. The u. N. Says there is two days of fuel left for the hospitals to carry out lifesaving missions. We know some of the doctors in the operating rooms are using cell phone lights to conduct surgeries. Jay, its an unbelievable situation that has been taking place, not just over the weekend, but the past two weeks. We hope you remain safe. We appreciate your reporting. We will talk to you throughout the next week and more. Thanks. Coming up, back here, we are watching the tenyear yield at the 5 level. What should investors expect next . Well have that right after the break. The futures right now thats better than they were. Were still down 200 points in the premarket on the dow. Squawk box is coming right back. Announcer this cnbc program is sponsored by truist securities. Experience. Expe expertise. Execution. Are needed most. Drawing on deep expertise across the worlds public and private markets in pursuit of longterm returns. Pgim. Our investments shape tomorrow today. That first time you take a step back. I made that. With your very own online store. I sold that. And you can manage it all in one place. I built this. And it was easy, with a partner that puts you first. Godaddy. Big week for the markets. The busiest week of earnings season with 30 of the s p 500 reporting. Four of the mega cap tech giants. Amazon and microsoft among them. Gm and ford on the list. Investors are looking for guidance related to the strike with the uaw. Jpmorgan chase estimates the strike costs for ford 145 million and 191 million for gm. Losses expected to balloon in the fourth quarter. On the economic front, growth in focus this week because on thursday, the markets get the first report on Third Quarter gdp. We have will see what the number is and maybe have a debate about it. With the tenyear treasury above 5 for the first time in 16 years, lets bring in Komal Srikumar from srikumar strategies. Sri, i know you watch and we have been talking about terms like untethered and unmoored. I think thats what you want to focus on. There could be some, i guess, somewhat discturbing outcomes i the fed has lost control of its ability to set long rates. We never believed they could set long rates, but for a while, it looked orderly. They have not raised rates in a wh while. We have 70point increases in the tenyear yield. That is troubling. Absolutely. I put out a report on saturday, joe, saying precisely that. For the first time, you have chairman powell doing what he did. With expectations of Interest Rates and finally to say in the Economic Club of new york talk in the q a session that he did not know what is causing the higher bond essentially, the fed chairman says i dont know what it is. When he said that, i said we are in completely unchartered territory. Things will get worse next week because of the fact the fed is out of control and they dont know what to do next. You are absolutely correct. I think unintended consequences will happen. I have been saying that on your show for some time. Whether it be a huge bank failure or whether it should be Pension Funds losing a lot of money or commercial real estate suddenly worsening or a clo, commercial loan market with difficulty and somewhere things will break and rather than expe expecting threetosix months, ill say within the next four or five weeks. Sri, individuals are sympathetic to chairman powells plight have actually said that this was totally chair powells doing and exactly what he wanted. When he said higher for longer in recent appearances, he said it better or said it he actually stimulated yields to go higher and was exactly what he wanted and he kept saying higher for longer. He orchestrated deliberately this move up to 5 . I dont know. Weve been saying higher for longer for seven or eight months. We are almost not inverted because of what has happened on the long end, sri. There are two points in response to the issues you raised, joe. They are very relevant. First of all, yes, he wanted the Interest Rate it to be higher and yield to be higher. I dont think he wanted it to go well over 5 . In that rapid fashion as he has done it. As he is looking for yields to stay that high and to go up that rapidly, that was his intention. He also must be intending to create a train wreck. Meaning he will cause something to crash. If you tell me that is part of his intentions, he is right doing what he wanted to do. Im sure thats not what the chairman wants. What he wants is a mild increase in unemployment rate. He wants a job opening rate to come down. He wants the inflation rate closer to the target, but otherwise, the economy is moving smoothly. That is not what he will get. There is nowhere between success and crashing if you follow a policy of this kind with the bond yields which are not controlled by the fed. That is true. Today, he has totally lost control of them and not able to influence them. That is a lot more serious. I dont know what breaks and we could do a David Letterman top ten list. I guess he was at one point a late night host the a show. I we are that. Now he hasnt shaved. It could be a Real Estate Firm or a bank. For whatever it is, theres no guarantee you will be right on this. You could be. You think that shifts the fed to easing quicker than anyone anticipating at this point . When do you expect that . Within six months we could be back on an easing path or rate cutting path, sri, within six months . Joe, just look at last march to give yourself an indication. We had three small regional banks which failed. Immediately qt ended and qe was put in place. We took the fed assets back in november of 2022. We set it back by five months. What im saying is if that incident could do that, anything like a bigger crash taking place in the next two to three months will reverse Monetary Policy in Interest Rates and quantitative tightening. Within the time period you mentioned, it is clearly when i think it will happen. 2024 will be a year of lower Interest Rates and clearly a much more easier fed than we have seen so far. I dont know whether that is good or bad. We have had, you know, the specter where if you look at the chart, we have higher rates in the cards from what we are seeing. At least in this case, it sounds like turbulence on the way. It could keep us from getting up to 7 or 8 or 9 . Exactly. That wont happen in the next five years . That is exactly what im saying. Yes, you may want higher yields to resdtrain the economy, but yu cannot do it that without breaking something within the system. People got too used to it. Theres people 30 or 40 years old who have no idea that rates can go above 5 . Sri, thanks. Thank you very much, joe. Youre welcome. Still to come this morning, potential warning sign for the economy and the health of the consumer. Its a merger monday. Chevron acquiring hess in the 53 billion all stock deal. Here is a look at both companys stocks reacting to the news. Chevron down 3. 25 and hess up 1. 25 . Well have more on this coming up. 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. Ai has the power to automate, but if its using untrusted data can you trust the results . Your business doesnt just need ai, it needs the right ai for your business. Introducing watsonx a platform designed to multiply output by tailoring ai to your needs. When you watsonx your business, you can train, tune and deploy ai, all with your trusted data. Lets create the right ai for your business with watsonx. Ibm. Lets create. Im hearing different ways for me to screen for colon cancer. Its time to use my voice, ive got a choice, more than one answer. I sat down with my doc. We had a talk. Knew just what to say. I asked for cologuard and did it my way. Cologuard is a oneofa kind way to screen for colon cancer thats effective and noninvasive. Its for people 45 plus at average risk, not high risk. False positive and negative results may occur. Ask your provider for cologuard. I did it my way hi, im michael, ive lost 62 pounds on golo and i have kept it off. Ask your provider for cologuard. Most of the weight that i gained was strictly in my belly which is a sign of insulin resistance. But since golo, that weight has completely gone away, as you can tell. Thanks to golo and release, ive got my life and my health back. Businesses need 5g solutions today. Thats why they choose tmobile for business. Mlb partners with tmobile to not only enhance the fan experience, but to advance how the game is played. Aaa relies on tmobiles network to stay connected nationwide, so they can help get their members back on the road. And were helping pano ai innovate, to stop the spread of wildfires. Nows the time to see what americas largest 5g network can do for your business. Time for todays executive edge. Higher borrowing costs is putting pressure on the consumer. The consumer 60 days late has risen to the highest since 1994. Joe. I keep seeing the one offs. The gdp number. Have you seen estimates . No. I have to make sure the number i have seen is possible. We would be the global leader, our economy, except for china. China has come down. Much better. Still a lot of people are not feeling it. This is another example of that. Coming up, an update on the race for the house speaker. More candidates to consider. Plus, how it is impacting aid to israel and ukraine. The hollywood strike saga goes on and on. Actors and studios heading back to the bargaining table. Some alisters are getting more involved. Well have an update in the next half hour. As we head to break, check out the biggest premarket l losers in the dow. Chevron stock down 3. 5 . Announcer executive edge is sponsored by at t business. Next level moments need the next level network. Move to the cloud. So, the question is. Cyber attack as cyber criminals expand their toolkit, we must expand as well. We need to rethink. Next level moments, need the next level network. [speaker continues in the background] the network with 24 7 builtin security. Chip . At t business. Im so glad we did this. Im so glad we did this. Im so glad we did this. Im so glad we did this. Im so. Glad we did this. [kid plays drums] life is for living. Lets partner for all of it. Im so glad we did this. Edward jones hows the chicken . The prawns are delicious. Oh, i have a shellfish allergy. One prawn. Very good. Did i say chicken wrong . Tired of people not listening to what you want . Its truffle season ah thats okay. Never enough truffles. How much are they . Its a lot. Oh okay im good, that its like a priceless piece of art. Enjoy. Or when they sell you what they want . Yeah. The more we understand you, the better we can help you. Thats what u. S. Bank is for. Huge relief. Yeah. Good morning. Welcome back to squawk box live from the Nasdaq Market site in times square. Checking the futures after the rough session on friday. Dow indicated down 200208 point. Chevron is down. It is a stock deal. This is what you normally see in a stock deal which we will talk about in april second. T you see the nasdaq down triple digits as well. Most of this is from the tenyear yield over 5 now. It feels comfortable there at this point. Is there anything good . Not much of an inversion between the twoyear yield and tenyear yield. That is usually how it fixes itself as the recession finally happens. The numbers on thursday for the Third Quarter gdp. 4. 5 with estimates as high as 5 . The recession we have been talking about and talking about and waiting for and how do you do that with the gdp of 4. 5 . That and the fed. A nightmare for them. Who knows how long it will l last what was i going to say . I dont know. Check out bitcoin over the 30,000 level. 5 is above china. Didnt china do 4. 5 . I think youre right. Maybe the strongest developed country current gdp globally. Crazy. 4. 9 in the Third Quarter. 4. 5 is the estimate. The whisper number. Chevron is buying hess in the allstock deal valued at 53 billion. It is 171 a share. That is not a big premium over the friday Closing Price. This comes after exxonmobil made the move to buy pioneer re reso resources. These are major deals in the oil batch. You see hess and chevron shares on the move. Chevron down 3 and hess shares are up 1. 25 . John hess will join the chevron board. 4. 9 premium. It will be a cash flow per share in 2025. The Free Cash Flow, he told us, will double by the year 2027 and they are increasing their Dividend Per Share by 8 come january. That will raise the Dividend Per Share to 163. A lot of people anticipated after the move from exxonmobil and that deal in the Permian Basin setoff speculation with the drillers of another big deal. Mike wirth said they have been talking to hess for last six months since the rumors of exxon and pioneer. It would not make sense for them to double down in the Permian Basin because they already have more acres than exxon combined with pioneer. This is a different deal from ghana. We will dig into details on this. The Conference Call coming up at 7 30 a. M. House republicans s will ha more candidates to consider for speaker and jim jordans bid failed. We have emily wilkinsworking the phones from d. C. To see where this is headed next. Reporter good morning, andrew. The race for speaker is getting complicated. Nine republicans will announce they will run for the top spot. They worked phones this weekend. They will make their case in person tonight at the Candidate Forum and tomorrow which feels like groundhogs day with another Conference Meeting with another vote on the nominee and once one is chosen, they need to go to the floor and get the 217 votes. Something that neither jim jordan or Steve Scalise was able to do. Former speaker Kevin Mccarthy has backed tom emmer. He serves as majority whip and third member in the gop. He told Kristen Welker that republicans need to select a speaker as soon as possible. I just know this is not a time to play games. This is embarrassing for the Republican Party and emba embarrassing for the nation. We need to look at one another and solve the problem. Reporter Congress Member mike flood has been circulating a unity pledge that republicans back whoever is the nominee for speaker. Congress member neal said it feels like even jesus cant get to 217. Lets see tif this brings abouta resolution. Becky. Thank you very much. For more on the legislative log jam, lets bring in Donna Edwards and kevin brady. The former texas Congress Member on the ways and means committee. Thank you for being with us this morning. Kevin, lets start with you. Your party and you are looking at whats happened here and you are glad you are not dealing with this at the moment. Donna, it is nice to see you. Becky, it has been painful. A lot of good people in the House Republican conference that just want to get back to work. It has been frustrating for them. I think in a sense, the election tomorrow may be a bit of a fresh start in a sense with nine candidates. Half of whom have been in leadership roles and voted on and elected conference wide or near conference wide. A lot of talent in that group. I think we will know probably by 1 00 tomorrow who that speaker nominee is and how close they are to 217. I think the conference is eager to arrive at that consensus. I think they will give this person more time than scalise had. I think they will be eager to get to 217 before they head to the floor. It has been raw the last 20 days among the House Republicans. Not easily moving past some of the battles. Look, i would not discount the quality of the people running and ability to gain consensus from both ends really of the republican conference. There has to be frustration from the original eight who voted to remove Kevin Mccarthy from the speakership position. To set down this pat h and not know whats there. To say you have to vote for whoever causes frustration for kicking this process off in place. You dont see a Freedom Caucus place holder or necessarily on the other side of the spectrum a place holder to block. There may well be two or three candidates in there that are anm for everyone because you have to get back to the business of the house. Where do we go . What issues will happen . Will they be able to legislate quickly or is there too much back and forth . It is interesting. Good to see you as well, kevin. To think about times when kevin brady and Donna Edwards could have policy disagreements, but come together on some issues. I think that right now were in a situation where if a speaker does not come out of this round here, i think it increases the pressure to come with some kind of agreement about a temporary speaker. You look at what is ahead for the next several weeks and you have the budget that needs to be finished and appropriations. You have the aid package that has to be done. Theres a lot of work to be done between now and the end of the year. You cannot have the chaos that continues. Unfortunately, i think looking at this group of nine candidates, im not really sure that any of them can at least on a first or second ballot come up with the 217 thats necessary. I think that increases the pressure as it should. The American People are looking at this and thinking the chaos is not good for us in the United States and it is horrible for the rest of the world. You know, the pressure is on. Congress member brady, kevin, you referenced where i was going to go. You have the Freedom Caucus guys way over here and you have some guys who were elected in areas that voted for joe biden. That defines where these guys are. You will not get jordan or somebody over here who doesnt satisfy the Freedom Caucus. Who out of the nine is palatable . What about byron . Is he too freemany or scalisey . That is the problem donna is alluding. There is no way they will go for a pro tem thing. It is easy to get mccarthy back up and get four guys to reverse their votes. He had 96 of the caucus. I dont see that happening from the dynamics which occurred since that day. As you know, 96 of House Republicans agree with you. This should never have happened. Among the nine, i hesitate to pick one or two. Here is the point. They are all well known from the conference in their leadership positions which have been supported before. You know, congress has donna will tell you, is a bit of a high school. You get to know these people well and the respect they have and ability to build consensus. I think you have a number of candidates who can do that. I think the pressure is i dont believe there will be a coalition. Donna, you could do present. That would not kill them . You know look, i dont i agree with kevin. I dont really see that happening. I think at the end of the day, if a speaker doesnt come out of this part of the process, that it really does ramp up the pressure. Theres too much that has to be done. It is not like there are things that people want to do, but there are things that must be done in the next couple weeks and congress cannot remain stymied like this. As the Senate Moves Forward on the aid package, where does it go if the house doesnt have a speaker who can function . Emmer has been there for a while and headed up some important components. Byron donald hasnt been there that long. Do you think emmer is the guy . Im saying this honestly. Hard to predict because things have been moving so quickly here. From the leadership position, anyone in the key leadership positions start with the base of support Going Forward. In the short timetable, that may be key. On the other hand, people may be looking for frequent fresh outside the box thinking. The pressure is getting the speaker from House Republicans themselves. They are ready to go. Kevin and donna, thank you. We will see what happens. Clearly there is action taken this week, we hope, we will see what happens. Thank you. Coming up, were watching the yield on the ten year at 5 . We will have a breakdown of the action at the top of the hour. As we head to break, check out the regional banks. You heard srikumar talking about it. There could be trouble with rates going upo icy. Squkl well be right back. 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All you need is one weekend to take your garage from unusable to unbelievable. Visit us at newageproducts. Com. Welcome back, taylor swift dominating the box office. He the domestic total now at 130 million, and i just nogoalo tell you watching last night, shes there again. I saw. But kelce is like, okay, she likes you already. You dont need to did you see him . He had 150 yards or something in the first half. You think hes just trying to show off . Yes. And by the way he was just unbelievable. Ne and then a touchdown he made, he just moved the whole entire pack. He was such a not for nothing, but i was getting a little bit i was thinking, wow, i wish he wasnt with her. He is a stud. University of cincinnati guy. What do you mean move on . For anybody who was wondering whether its real or not, i heard from when they were at saturday night live that theyre really into each other. It was real for me last night. Although, mahomes made it pretty real for me too. Lets talk about whats going on with the Screen Actors Guild and hollywood major studios. They plan to resume contract negotiations on tuesday after the studios had previously called a halt to the talks due to significant disagreements by both parties. A group of Hollywood Alisters including Scarlett Johansson offered to kick in 150 million in dues to help end the stalemate. That didnt do it. Joining us right now is matt bellamy. Where are we really . What do you think is going to happen on tuesday, and is this going to follow the playbook of what happened with the writers since it sounds like some of the big ceos are going to sit down as they did with the writers . First of all, its a great sign that they are actually resuming talks because as of friday, this was still a stalemate and the actors kept saying come back to the tabl. The studios had walked out of negotiations, the actors wanting a per subscriber fee on streaming services to go directly to the union. The ceos, especially netflix are calling that a tax or a levy, and the union is basically saying, no, this is a fee that will allow us to share in success if you get more subscribers, the union will benefit. This is our content. Thats really where they have the standoff on the last go around. Its unclear, what if anything has changed because we know that on the sag side, they have not changed in their demands. Well see what the studios come back to the table with or whether the unions willing to back off of that. What did you make of what the what the actors, what George Clooney and the like and Scarlett Johansson had offered. Listen, you know, good for them, they want to end. They put a proposal out there. It doesnt seem to make much sense both legally, it doesnt really understand labor law because they want to essentially eliminate the cap on dues that can be used to fund the union, but that doesnt really make sense because theyre not negotiating a benefit here for the union. Right. Theyre negotiating benefits for the members right now. So more money going to the union is nice, but it doesnt really change the ultimate structure that the union is fighting over so its pretty much been rejected by the Union Leadership and for good reason. Matt, at this point of the ball game, lets just talk about calendar. I think what the ceos and frankly actors are now looking at is the calendar, meaning when can movie production and tv production resume if a deal were to be struck, how quickly can those things get going . What does that mean to the summer Film Box Office come 2024, i think investors are starting to think about that in a way they hadnt before. It was a nice thing for some of these companies and streamers to hold on to cash for a bit. At some point you have to start investing in the future of the business. What does that calendar look like to you . Right now we are perilously close to losing the entire year. Most people believe that productions will not begin before january at the earliest. Theres a slight chance that theres a deal this week or next with the followup, the ratification and all the other things that potentially they could start up before the end of theier year. The chances are 2024 at the earliest, and weve already seen the summer movie calendar get completely reshuffled. Theres almost no chance that disneys big summer movie dead pool 3 is going to make its may date. Theres a number of other things, Stranger Things is not coming back when they thought it was going to. Were going to start to see the ramifications of this strike in content and the bottom line into next year in a way we havent seen so far. Weve got to go. 30 seconds, apple jon stewart, im so curious since were talking about streamers. What do you make of the idea that there were creative differences . It sounds like jon stewart departed or apple said were not going to do it this way if youre going to be talking about china and ai. And the campaign. He had some plans for the campaign show. The fact that apple, one of the most sensitive imagewise companies in the world was willing to do a show with jon stewart, thats his brand is kind of taking things apart and going into uncomfortable places. They got two seasons out of it. Last season i think people were watching a little bit more than they were the first season and he got some attention and i think they started to Pay Attention and say this isnt necessarily for us. You think hell land somewhere else . What did you say . Will this show land somewhere else or is it over . I think its over. He could land somewhere. Theres an opening at the daily show. I dont think that will happen, but someone would pick up jon stewart in a second and say, listen, do what you want to do, just not apple. Probably not amazon. Probably not disney. Or netflix even maybe, i dont know. Netflix probably would. Netflix would probably take a jon stewart show. Weve got to go. Theyve shown a willingness to be open. Weve got to run. Well see you, thank you so much. Squawk box coming right back after this. Why choose a sleep number smart bed . Because only the sleep number climate360 smart bed lets you each sleep up to 13 degrees cooler or warmer on either side, while you both sleep at your ideal level of firmness, comfort and support. Your sleep number setting. And now, our new next gen smart beds have temperature benefits, so you sleep better night after night. And now save up to 500 on our new sleep number smart beds. Sleep next level. Shop for a limited time only at sleep number. Ameritrade is now part of schwab. Bringing you an elevated experience, tailormade for trader minds. Go deeper with thinkorswim our awardwining trading platforms. Unlock support from the schwab trade desk, our team of passionate traders who live and breathe trading. And sharpen your skills with an immersive Online Education crafted just for traders. All so you can trade brilliantly. upbeat music awww. Awww. Awww. Nope. Constant Contact delivers the Marketing Tools your Small Business needs to keep up, excel, and grow. Constant contact. Helping the small stand tall. Experience the art of High Pressure brewed coffee Constant Contact. With the lor barista system. Enjoy richer, bolder flavors that satisfy your senses like never before. Inspired by french artistry and elevated by High Pressure, its a dramatically different coffee experience complete with a kiss of velvetsmooth crema. The lor barista coffee and espresso system. Now brewing peets coffee. Good morning, breaking news in the oil patch. Chevron buying hess for 53 billion in an all stock deal. We have the details straight ahead. Dow futures tumble as the tenyear yield once again tops 5 . Well get you caught up with whats moving the market this morning. The latest on the israel hamas war as more humanitarian aid makes its way into gaza and israel steps up air strikes. The second hour of squawk box begins right now. Good morning, and welcome back to squawk box right here on cnbc. Were live at the Nasdaq Market site in toim square. Im Andrew Ross Sorkin along with becky quick and joe kernen. The dow off 176 points, the s p 500 looking to open down about 21, 22 points right now. Nasdaq off about 86, 87 points. Treasuri treasuries, the tenyear note sitting at 5, the twoyear at 5. 120. If you are just waking up, chevron is buying hess in an all stock deal for 171 a share. That works out to 53 billion. Chevron says that the proposed deal has a total enterprise value of 60 billion. The 53 billion is the number that people will focus on. Hess ceo john hess is going to be joining chevrons board. Chevrons ceo mike werth and john hess will be on squawk on the street at 9 00 p. M. Eastern time. I did speak with mike wirth earlier this morning, talking about how theyve been talking about this for over six months. Says that the company is going to be see Free Cash Flow doubling by the year 2027. Thats their plan with this. They say it will be accretive to cash flow per share by 2025 and they are planning on increasing their dividend share by 8 to 1. 63 a share in january. Theyre going to be increasing their Share Buyback by 2. 5 billion. Thats what theyre doing with cash, giving it back to shareholders instead of using it on this deal. He talked about why they do that in the oil patch, why they would prefer an all stock deal. Oil prices can move rapidly, trading just below 90 a barrel f. It drops by 60 a barrel by the time the deal closes, you look like you paid too much for it. That also makes sense for john hess is and his family who own about 8 of hess through their trusts and individual ownership positions. Thats a very big deal on a tax advantage basis to have it in stock instead of cash. Right now chevron shares are off by about 3 . Hess shares up by about 6 10 of a percent. The symbol aac earlier, its hes now. You remember when it changed from a am ra na, hess, 2006, i thought, its not om ron hess anywhere . And there was 1969 hess merger with petroleum. They did a 3 for 1 split in 2006 and dropped the omarona and just became hess. Useless information, im good at that sometimes as you well know. Treasury yields ticking higher this morning. The tenyear back above 5 as investors assess the process, liesman is a faithful squawk box viewer and you say it there, and it comes out here. I was afraid to say, yeah, i was afraid to say that some people were above 5 for gdp. I didnt even want to say it in case i was wrong. You told me that the average is 4 1 2, but atlanta fed you see that . Atlanta fed, 5. 14. I got a bunch of folks here at 5 and change. Wow. Inventory something . I mean, what flukey things . A lot of its you have a lot of different aspects, joe, but you alsohave the consumer doing quite well. And ill tell you whats happened this week. Not with cars. No, no, but look at the retail sales numbers, joe. They caused everybody to revise up the numbers. And the other thing is it kind of continues into next quarter. Whats happening this morning is markets just barely catching their breath from that Stronger Economic data last week, a full slate of fed speakers. Now you have more data this week that should show the economy is still resilient, but inflation will make some modest moves in the right direction, and ill explain that. But before that, i want to get to the big news, which is the tenyear top at 5 , up around 10 from the friday close. A more modest rise in the twoyear has closed the gap, you guys talked about this or the inversion to around minus 11 or minus 12 basis points. Thats the smallest cap since july 2022. Three factors drive in the tenyear. It was kind of interesting, fed higher for longer. Dead issuance higher for longer. Growth at least for now higher for longer. Markets not buying the growth but they are selling the debt issuances and the fed. No more fed speak this week praise the lord, but the market has to digest what is mostly expected strong Economic Data. Heres what were looking at. New home sales should be up. Thursdays gdp, we talked about that already. Durable goods should also be positive. The month on month core probably goes up, but the year on year ticks down when it comes to the corps. They drove down the outlook for another rate hike but pushed ahead into the summer of 2024, call it july, and a conviction for a rate cut. Now, one of the mysteries is theres been little of a flight to safety trade on the tenyear amid risinging geopolitical tensions. To the criticism of the last hour, we go back and forth on this. He says the feds lost control. I start to think, you know what . What would happen to yields if the fed said, hey, were going to be cutting rates on the shortterm. Joe. Yeah, i dont know. Yeah, there was a like so many things, steve, there are people on both sides that have totally differing differing take on whats really happening. So you at this point, your contention really is that the fed is in control and deliberately jawbone, the long end to where it wanted it to go. No, i dont think thats the way im looking at it, joe. I dont think the fed deliberately jawboned it. I think its letting the market do the work for it. I do think the fed has some control over the curve. You said he got deliberately more hawkish intentionally. Jay powell. I think he gave us higher for longer intentionally while he backed off in the nearterm and the idea of hieking rates. I think that the long end what the fed would consider to be way too high or out of control. It could have an impact effect on the market here. I think the bigger story, joe, is whether or not secretary yellen and the folks at the treasury step up and along with the Biden Administration and give a sense to the market that, hey, we see whats happening here. We care about whats happening here, and were going to be addressing the long run fiscal outlook for the government, and i think thats something that they have to do in order to get control of whats happening with rates here. Okay. All right, steve liesman, thanks. Okay. Joining us right now is jpmorgan Asset Management Global Market strategist. Good morning to you. Youve been listening to this conversation. Do you want to weigh in on this piece of it . Absolutely. I think that it is a question of control versus what the fed is finding convenient. If you look at the short end of the curve in terms of twoyear yields they havent moved a lot recently. In that sense theyre pretty well under control in terms of garnering shermt rates in the area they want. The issue is a long end and with them stepping back as a major buyer, theres really only one way they can influence the curve. I think the big issue at the long end of the curve is the big existential issues in terms of supply, federal finances in the long run and how we finance the deficits we need to at higher and higher rates and whos going to be the buyer given the uncertainty. I think its more convenient for the fed in terms of further rate moves that you have the long end moving higher doing some of the work for them, tighter financial conditions. Whats your prognostication at this point about what they do next and when, if theyre going to do something . Lets not take another rate hike off the table. I know that people came out of last week thinking that powell was very dovish, but i actually heard a very balanced view of were in restrictive territory. But further rate hikes might be necessary, but theres further tightening in this calendar year . Potentially in december. Youre thinking november off the table at this point . I dont think there was Strong Enough signaling to say were going to do one more rate hike soon. Most of the fomc participants saw another hike. All of them changed their mind in the last couple of weeks. Could a really strong gdp number change that . Potentially. We had a string of strong data. I think the real gdp numbers that were likely to get later this week have been well forecasted for months now that this is going to be a really strong print, when you add onto that higher cpi, higher jobs, higher retail sales. 4. 5 for the consensus versus 5. 4 whatever it was for the atlanta fed. If theres a number north of 5 , i would think that that would potentially change the scenario. I dont know if it will change it for november just because it seems like they want to not catch the markets off surprise, especially when markets have taken down their probabilities of a hike in november. But i think that they could start signaling for december more strongly. The economy usually goes up 2 . Whether its 4 or 5 , thats a big difference. Were basically looking at double normal growth. What did you think about powells comments last week where he effectively, i thought, was saying, look, you know, im not that worried about most home homeowners. Im not worried about 2008 crisis. He was saying basically in terms of mortgages and the like because people are locked in, that, you know, there hasnt been any real movement. The problem is that youre affecting new buyers and youre affecting durable goods orders and things like, you know, automobiles, so how do you think hes thinking about those sort of two sides of the coin . Its interesting. On the one hand he said i think some of these long and variable lags are not going to be as long and variable because the central bank can well forecast things and markets can price them in. You look at things like mortgage rates, Companies Issuing debt and how far theyve turned things out. These lags could be much longer because of how long people have locked things in. He also nodded to the fact that are we headed towards an era of supply shocks . And i think thats a big one because ultimately when we think about housing and the lack of housing supply and many of the other supply issues geopolitically related, commodities related,ed question is are we still in this pandemic aftermath where were kind of getting through some of that. Or are we going to see more concerted supply shocks in different areas over the next several years. Is that going to change how they think about that . I think that we might see on the margin a little bit more on the supply shock. The housing issue is a big one, i think, when it comes to inventory. Weve got to run, but finally, are you surprised and we havent i mean, we talked a little about israel and hamas this morning, is there any risk baked into the situation of just whats happening in the middle east and how far that could go . I think that broader conflagration, it clearly will be an issue if we have more regions brought in and that affects oil prices. Because things are contained, we want to monitor it. It doesnt seem like an immediate risk. These things can get out of hand quickly, so we want to continue monitoring that tail risk. Thank you. Nice to see you this morning. Israel ramping up air strikes against hamas as humanitarian aid continues to flow into the gaza strip. We have the latest on the war next. And later, a big week for tech earnings, a breakdown of the names you need to wah. Tc squawk box will be right back. Announcer this cnbc program is sponsored by baird, visit bairddifference. Com. Cmon, were right there. Cmon baby. 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. The israel hamas war now entering its third week, Israel Holding off a Ground Invasion for now. Meanwhile, two american hostages were released on friday, but hundreds still remain in the gaza strip. Joining us right now is aaron david miller, former middle east negotiator for the u. S. State department where he served six secretaries of state, and now senior fellow for the Carnegie Endowment for international peace. And aaron, what do you make of this at this point . There are reports this morning that the United States has been pressuring israel to not to hold off on its ground offensive to try and give more time to negotiate for the release of more hostages. Its been unclear in terms of whether or not thats actually happening. You think thats the case . Yeah, becky, thanks for having me. Look, the situation clearly is going to get worse before it gets much worse. The headlines, as bad as they look, i think passes some pretty serious trend lines. The administration has clearly not only leaned on the israeli or at least a delay a massive Ground Campaign into gaza in order to provide more time and space to see if there can be any unilateral releases of hostages, but theyre also working on the israelis to avoid a preemptive strike in the north. It is that northern front, israel, lebanon. If youre worried about plunging Financial Markets and rising oil prices, that is the front to watch. Regional escalation involving israel and hezbollah along the lines of the summer of 06, which lasted for 34 days. This time its going to be much worse. With the possible involvement of a israeli iranian confrontation. What would prevent that from happening . I mean, the mood in israel is probably much worse than it had been back in 2006. No doubt. The lessons that hezbollah and israel drew from that confrontation, which lasted 34 days in which 5,000 guys with relatively unsophisticated rockets and missiles shut down the northern half of the middle east preeminent military power, israel for 34 days. Now youve got hezbollah with 150 150,000 weapons with various ranges and modality, and youre going to see a massive israeli counterstrike if those missiles are launched. I think both sides right now are still adhering to the socalled rules of game. Miscalculation, misperception, and extensive israeli Ground Campaign in gaza could, in fact, property hezbollah to get involved. Rules of the game change pretty significantly i would say two weeks ago when the incursions into israel. Yeah. The rules of the game between israel and hamas changed fundamentally, but not between israel and hezbollah in the north. Hamas wanted to break out of its straight jacket. They wanted to inflict as much pain and suffering on civilians as possible in order to provoke regional unrest and to some degree theyre succeeding in the sense youre now got proiranian, militias striking u. S. Military bases and forces in iraq and syria. Youve got hezbollah heating up the northern front, and we still havent still havent witness what had i suspect is coming, which is a comprehensive israeli effort not just to decapitate hamas but to undermine its sovereignty andcapacity to govern in gaza, which of course triggers the whole question of whats the after like. Yeah, i guess, thats the longer time goes on, perhaps the more hope there is that this doesnt spread and become a much larger conflict. Youre saying you kind of look at it as the opposite. Youre waiting to see what happens next and think that, you know, this calm right now is not going to last . Well, were 17 days in, and we havent even seen what arguably is the main event of this conflict, which is an israeli effort, not just to avenge the deaths of 1,400 israelis, but to try to create a new reality in gaza. 2. 3 million people, 21,000 humans per square mile. Densely populated a tunnel system hamas has constructed which is probably half the size of the new york city subway system. Were operating in an area of land 25 miles long. Its going to be a very difficult and bloody fight. Whether the israelis can accomplish what they seek to do is unclear, and it puts the United States, i think, in a very difficult position. The administration wants to support israel and rightfully should, but biden has been counseling netanyahu and his war cabinet and reminding them publicly and im sure privately about the lessons of nin9 11, wh essentially mean think very carefully about how your means are correlating with the ends you want to achieve. And remember, military power is just an instrument to achieve a political outcome, and thats the real problem here, and i think the days ahead are going to be very gloomy and very bloody. Aaron, very quickly, if israel does launch a ground offensive, does that necessarily mean that hezbollah will come down from the north . Depends on the number of civilian casualties and, in fact, if the israelis are out to extinguish, literally owblitere hamas, it may be that hezbollah is pressed to enter the fray. Theres so many uncertainties here, not to mention the fate of the hostages once military operations begin on a massive scale. Aaron, thank you very much. Thanks for having me. Coming up, stocks to watch ahead of the opening bell. Check out the futures down 171 points, and were watching the tenyear this morning, back above 5 . Well be right back. [soldier] take a look at this theyve left us a gift. [soldier] i think we misjudged them. I love horses. birds chirping [soldier] we should open the gate. Lets see what charlotte thinks. [narrator] at crowdstrike, we monitor trillions of cyber events to detect threats and prevent breaches before they happen to keep your business from becoming history. We stop cyberattacks. We stop breaches. We stop a lot of bad things from happening. Crowdstrike. Protection that powers you. Icy hot. Ice works fast. Heat makes it last. Feel the power of contrast therapy. So you can rise from pain. Icy hot. Only the sleep number climate360 smart bed lets you both sleep up to 13 degrees cooler or warmer on either side, and at your ideal level of comfort. So you can rise from pain. Your sleep number setting. And now save up to 500 on our new sleep number smart beds. Sleep next level. Shop for a limited time only at sleep number. 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. Lets get to dom chu with a look at this mornings premarket movers. So andrew, weve got a closer look at our stocks to watch skand the big merger news has got to be in the oil and gas patch. Mega cap and dow component chevron inking a deal to buy smaller rival hess in a 53 billion transaction, all stock worth roughly 171 bucks a share for hess. Hess shoulders will get 1. 025 shares of chevron for every share of hess they currently own. The deal is expected to help chevron with its exploration plans in south america and grow its u. S. Production footprint. It comes a couple of weeks after rival exxon mobil agreed to buy u. S. Shale oil and gas producer Pioneer National in a 60 billion deal. Chevron shares down about 3 as you might expect in an all stock deal where theyre doing the acquiring. Hess shares up about half a percent as well. On the analyst front, shares of pinterest, the social media platform is up roughly 2. 5 . 25,000 shares of volume, getting some help from the team at stifel, which is upgrading shares from a buy to a hold and raising the target price of 32 bucks. They think theres still plenty of room for growth outside the domestic u. S. Market and pinterest is operating in a better macro environment for digital advertising. Those shares up 2. 25 . Salesforce down roughly 2 or so just around 15,000 shares of volume, the Business Software Customer Relationship management and Cloud Computing Company Getting downgraded to neutral by analysts at piper sandler. It was an overweight. They cited amongst other things, valuation after a 53 are percent runup. Artificial intelligence initiatives. That downgrade was one of several made by piper across the entire Business Software and Cloud Computing related businesses. Salesforce, watch that move, at least a 53 run is pretty good for sales investors in this environment. Ill send things back over to you. Thank you for that. Were going to be talking a lot more about those yields and maybe salesforce as well. It is part of the dow. Some of the biggest tech names out with earnings this week. Were going to get you up to speed with what to expect. Former Kansas City Fed president , thomas hoe anynig is going to be joining us. Stay tuned youre watching squawk, and this is cnbc. Announcer morning movers is sponsored by bdo. People who know know bdo. birds chirping go. And go and go and go. but what if you. Stop . You work hard, its time for a bank thatll work hard for you. Everbank brings security and a guarantee that youll earn a yield in the top 5 of competitive accounts. Going, thats what got you where you want to be. Were the partners for your next move. Everbank. Advantage, you. [ heavy breathing ] [ lights buzzing ] [ music builds ] [ screaming ] earnings from alphabet, microsoft are expected this week. Joining us right now to talk about what to expect is barton crockett, rosenblatt security senior analyst. Theres been a lot of nervous trading activity as we get closer to the earnings season for some of these stocks. You think, though, that there are some real buying opportunities, you want to lay that out . Yes, look, i think youve got in the kind of Consumer Internet group, front and center in earnings this week, some companies that have an accelerating top line with an expanding margin with just great positioning, and i think youd like to own these companies. I realize theres a lot of nervousness about the macroeconomic position. I think these are companies that youd want to own, you know, whatever the macro and these type of jittery situations are, you know, instances when you want to look to accumulate. Companies in this camp include pinterest. Also, i think amazon is wellpositioned for, you know, revenue trajectory, Margin Expansion along with meta and alphabet, those would be the four companies that id be looking to accumulate heading into this. How much of this is a situation where those Companies Got the message loud and clear. Im thinking of meta in particular about the spend that they were doing to that point. They controlled their expenses, cut back a lot of the spending that had been anticipated. Youve seen strong stuff like advertising go up for some of metas properties too. Yeah, i mean, it is true that many of these Companies Got religion when times are tougher and that positions them really excellently when the top line approves. Meta is a great example of that, what theyve done on the cost structure is really unparalleled and what theyre doing in the top line, theyll be accelerating in their guidance a range of 15 to 24 year to year growth, which for a company this size is amazing. Pinterest at a smaller level is doing something similar, pivoting to an ecommerce focus thats actually positive for user engagement, great for revenues, and an Amazon Partnership thats poised to really contribute. Thats a company thats going to be pivoting from mid single to high singledigit growth to an aspiration of 20 plus over the longer term. Well be inflecting towards that over the next couple of quarters. All those names dont look that unnerved. Meta up 156 for the yeartodate. When i think about jitters, i think about the trading action over the quarter, so over the Third Quarter and so far here in the fourth quarter, and you know, what youve seen is alphabets traded nicely, so is meta. But some of the other stocks like pinterest are down a little bit with the market, and we think that they can do better. For some of the big names, lets say amazon in particular, you dont worry about any of the Regulatory Oversight and the real scrutiny thats being put on these companies right now. Its amazing whats happening with the u. S. Government and antitrust. I mean, filing suits, losing suits at a rate that really is kind of unprecedented in the history of the doj. I think their legal action is less worrisome in terms of their success rate, you know, the cases themselves are certainly debatable in some instances particularly with amazon. I think a couple of things will happen. One is they could succeed. There could be breakups. Thats probably equity positive. Back up one second, equity positive if they were forced to break up amazon . Yes, yes, i mean, i think that youve got, you know, some businesses that if separated, the market would love to own, and you know, i think the multiple you get for what services, with ecommerce and their advantage position there, whats happening on the advertising front, those are businesses investors would like tone. Even if the company loses, you think shareholders win . I think thats the base case, yeah, a breakup is good for equity value. So but thats not a base case. I mean, thats sort of big speculation, no . Thats that is our base case when we look at this litigation is that the stocks are not going to be penalized but probably benefit in a breakup. I dont believe that in this case that in amazon that the justice departments going to prevail. I think amazons got a strong case. I think the Retail Market is very competitive. I think its very hard for them to argue that amazon doesnt compete with walmart, target, and they have to do that to really argue that they have monopoly power, and i think its going to be difficult. If you think that these companies that this company, that amazon would actually do better if it were to split up for the shareholders, do you think that puts pressure on the company to do that eventually . Or do they not have to do it because jeff bezos is going to control too much, and its not what he or other top managers would want including andy chassis. I think if amazon if were wrong and amazons fundamentals were challenged like were seeing at disney, then they are, you know, susceptible to a breakup. But i dont think that thats whats happening right now, thats really completely a different situation. Barton, what would be something that would potentially concern you on any of these companies when youre listening in the Earnings Call . Well, i think that obviously the worry point right now is the macro backdrop, and you know, i think part of the skittishness has been, you know, whats really happening with the economy . I think, you know, everything that were seeing is the economys okay, and that should be a great backdrop for digital ad leaders that are taking share in the ad market. You know, Interest Rates, things start to weaken. Its going to be a more difficult period. Thats why i like to buy Quality Companies with multiples that you can defend with margins that are expanding. I think that that is comfort if youre facing potentially more difficult times in the future. Barton, thanks a lot. Well be watching through earnings season. Well see how much of this actually comes true as you predicted here. Thanks for your time. Great, thank you. Coming up, since the start of the war in the middle east, social media has been flooded with videos, photos of the conflict, making it difficult for scrollers to sort fact from fiction, even more difficult than normal. Were going to discuss the mounting misinformation. And as we head to a break, check out the tenyear. lbeig bk. 5, 4. 98 right now. Wel rhtac this thing, its making me get an ice bath again. What do you mean . These straps are mindblowing they collect hundreds of data points like hrv and rem sleep, so you know all you need for recovery. And you are . Im an investor. In invesco qqq, a fund that gives me access to. Nasdaq 100 innovations like. Wearable training optimization tech. Uh, how long are you. Im done. Im okay. 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. Let newage products transform your garage into an area of your home you can be proud of. Modular steel cabinets let you pick and choose the Storage Solutions to keep your garage organized, with overhead racks and shelving, slat wall, workstations and flooring that let you create a showroom garage to call your own. Designed for diy installation. All you need is one weekend to take your garage from unusable to unbelievable. Visit us at newageproducts. Com. Welcome back to squawk box. The futures have been under pressure but not nearly as much as we had seen earlier. We were down about 200 points. Dow futures right now off by about 150. S p futures off by 17. The nasdaq indicated down by 65. Want to take a look at the mornings dow laggards. You will see chevron at the top of that board. Its down by 2. 4 , of course after the deal that it Just Announced by hess, 53 billion deal. Stocks down by about 2. 4 as you mightanticipate. Banks ramping up a pushback on some capital regulations in a quest to show how news rules impact consumers and Small Business owners. Leslie picker joins us with more on that. Good morning, leslie. Good morning, andrew. The Financial Services forum launching a campaign to magnify the criticism against a proposed hike to banks capital requirements. The banks lobbying group named the initiative to another bill americans cant afford. It impacts everything from americans ability to buy a home, operate a farm and finance a Small Business. Im told the campaign is a sevenfigure paid media buyon digital tv and out of home advertising. The banks have generated support from other trade groups such as the naacp and the National Urban league, which wrote to regulators to express concerns about how higher capital standards could lead to reduced credit availability. Fed chair jay powell said last week at the Economic Club of new york that he expects a lot of comment on the socalled end game proposal while noting that he takes those comments very seriously. Then on friday regulators including the fed, the occ and the fdic extended the Comment Period to january 16th from november 30th for boz l 3 end game. Regulators have defended the proposal saying more capital allows banks to absorb more losses making them better equipped during times of stress. It was a ubiquitous topic in last weeks Bank Earnings with executives from the largest banks down to the regionals detailing how regulatory uncertainty over the proposal is impacting everything from lending to buybacks. This is even before the proposal is passed and it has a long implementation period, but already impacting some of that behavior, andrew. Leslie, just watching it, some of the things that we watched over the last week and hearing about what to expect with this, i mean, is this the reason we saw all that pressure on the stocks and what are people saying comes next . This is a very different situation where a lot of bankers think that the feds split on this, that they might be able to convince them to change some of those rules. Yeah, no, a lot of the pressure came from just what the overall earnings looked like with regard to deposit costs increasing, especially at some of the regional banks. It did have some of an impact on certain regionals that said regulatory uncertainty, you know, namely boz l 3 end game was the reason they were pausing buybacks. You saw that in a couple of regionals. It had kind of a Second Derivative effect of creating some pressure on the stock, and thats one of the key examples that a lot of investors are pointing to in terms of we believe this is going to be watered down at some point. We just dont know how much, and if it looks more like the current proposal that could Impact Capital return, it could impact lending availability. Those are all the talking points from the banking side. Big deal for those stocks. Leslie, thank you very much. When we come back, misinformation flooding social media since the war in the middle east broke out. We will speak to the former global chair of news at twitter right after this. As we head to a break, lets take a look atthe biggest premarket winners and losers in the s p 500 this morning. You saw the losers before. Right now s p is being led by walgreens boots up by 3. 5 . Squawk box will be right back. House Republicans now considering more candidates for speaker, nine republicans are now campaigning for the job after jim jordan failed to get enough votes to replace ousted speaker Kevin Mccarthy. House majority whip tom emmer of minnesota is the early front runner in this latest salvo. Republicans expected to reconvene to discuss the speaker race today at 6 30. I dont know what theyre doing between now and then. They cant do anything. They can talk to people, try and position things, figure out lets get cranking. What, thent fy havent figured out iot . Its been 20 days. Meanwhile, the israelhamas war has shed light on the momentum of misinformation on social media. A recent report from news outlet Analysis Firm news guard found that 74 of the most circulated posts of misinformation on x in the first week of the conflict were boosted by blue check mark users. Joining us now with more on the digital fog of war, vivian shiller, executive director of aspen digital at the aspen substitute. She was formerly the global chair of news at twitter, the president , ceo of npr, and the chief digital officer of our own nbc news. Vivian, its good to see you. In the best case scenario, the fog of war is almost impossible for anyone to cover with complete accuracy. Thats absolutely true, and its particularly true in the case of the war between israel and hamas because a lot of the resources that journalists usually rely on in these cases are simply not available. Satellite images that are used to verify information are blocked, and theres just a lot of unreliable information. And as you alluded to, it is not helping things that twitter, which for many frankly, for many journalists and many others around the world would turn to for information has now really become a cesspool of mis and disinformation. Im looking at the ten i dont even know how to identify them. Are these the ones that were most circulated. Yeah. The unsubstantiated claims identified by news guard, and i dont even want to mention i mean, i can say this one, okay, one of them, ukraine is selling weapons to hamas. So thats not true. So you could see how that could be picked up and be everywhere and people with an axe to grind there would say, see, weresee,o ukraine, and now its going to hamas. But thats not true. Im seeing major news organizations completely struggle, like, for example, the hospital story. True. I dont know how we can expect any better from you know its just going to get worse on social media. Thats true. I completely agree with you that a lot of otherwise very responsible and respectful news organizations kreld s credulous reported that sbreel bombed the hospital. They have yet to produce evidence. Theres evidence on the other side, still some uncertainty. But at least news organizations are correcting the record. On twitter, the statistic you quote, which is this 74 of twitters most viral false israelhamas warrelated clais is whats pushing out all this mis and disinformation. A blue check mark on twitter used to mean that this person behind the account is who they say they are, not necessarily that the information is true. Elon musk came in, wiped that out, basically made those blue check marks available for sale. Not only that, but he boosted content from blue check mark users to go higher and more prominent in peoples feeds. And the people who are actually paying for those blue check marks, unfortunately, a lot of them are bad actors trying to stir trouble, who have a certain point of view, irrespective of the facts on the ground, or just trying to make a name for themselves. Vivian, i dont know if you want to weigh in on this, but a fascinating story over the weekend about linkedin and a homegrown website that put together, scraping, perhaps, information about employees of Companies Across the country that might have said things that would be perceived as antiisrael. The website i wont give out the address but thank you. Was suggesting these employees were antiisrael or potentially antisemitic. I say this as a jewish person, those things are continue facilitated because i think you can have certain types of conversations without that. But at the same time, theres a certain sensitivity about how those conversations may need to ham. How do you feel about that . And what do you think that the big social Media Companies should be doing or not in regard to this . Yeah. I mean, that kind of doxxing is despicable. Even if somebody said something on a platform, the idea that people are being targeted for their views and this is happening in a lot of places is hideous and its also contributing to increasing tensions amongst groups, between groups in the United States, let alone in israel. I completely agree with you about the conflation between antisemitism and being against israeli policy. All of these things have gotten confused. Its a very fraught moment. And the problem is these twitter and some of the other platforms, like you said this website that scraped information off linkedin, is just setting things to a boiling point. At the same time, vivian, look, there are people who are saying things that are awful, disgraceful, terrible, that are very hurtful and painful and demonstrably antisemitic, and to the extent that somebody is putting together a list of those people so that employers even can see them, youve seen people like bill ackman and others take to twitter saying, look, we should know who these people are. Yeah. Im uncomfortable with that, i have to say. Irrespective of your point of view, i feel like this is a potential incitement to violence and to other forms of hate. And, you know, before the social media platforms basically many of them just significantly scaled back their content moderators, their trust and safety teams, there was at least an attempt. Look, it was always imperfect, but at least there was an attempt to ratchet down the hate speech if something was specifically hateful. It would be taken down or it might be ranked down lower in your feed. And now all of that is actually being ratcheted up. I think this is contributing to what could be a very inflammatory, increasingly so situation in this country. What does that mean as we get closer to an election . There were already so many questions about the election. Yeah. Nothing good. And them you add to that, you contribute to that the rise in the last year of generative ai tools. A lot of people are concerned about these deepfakes. Yeah, thats a little bit of a problem. But frankly, what im most concerned about when it comes to generative ai and the kind of scaling of mis and disinformation is that generative ai allows very specific targeting to groups, even to individuals with specific messages. Those arent available for us to see. Theyre not public. Academic researchers cant see them. Often the platforms cant see them. So there is this social engineering that is happening through the platforms antarctica edm targeted at individuals to try to get them to believe certain things, whether theyre true or not, and to turn against each other. If musk could get the crowdsource factchecking i dont see any other way to do it. If you could refine that and get it to a point where most things were caught, wouldnt that work . I know i yeah. Crowdsourcing is imperfect. It works in certain cases, wikipedia, for example, but when you have wep aponized crowdsourcing, it can backfire. Blue check marks. Verify who people are. I dont have one now because i want plausible deniability. That aint me. Joe kernan, what a blow hard. Not just the blue check marks. He has fired trust and safety teams and his moderators and also changed policy. Right. Anything goes. We dont want to go back to where it was. Theres somewhere in the middle that everybody might be happy with. Vivian, thanks. Appreciate that. Thanks. Coming up, a big hour ahead. Former nba star turned Venture Capitalist anl dre iguodala wil be here. And s. E. C. Commissioner hester pierce with the late ocrto gutistn yprelaon. Experience the art of High Pressure brewed coffee with the lor barista system. Enjoy richer, bolder flavors that satisfy your senses like never before. Inspired by french artistry and elevated by High Pressure, its a dramatically different coffee experience complete with a kiss of velvetsmooth crema. The lor barista coffee and espresso system. Now brewing peets coffee. The first time you connected your godaddy website and your store was also the first time you realized. Well, we can do anything. Cheesecake cookies . The chookie manage all your sales from one place with a partner that always puts you first. we did it start today at godaddy. Com good morning. Futures falling ahead of the first opening bell of the week, and the 10year treasury yield top 5g . Well show you whats moving and talk about what the milestone means for fed. And a big oil deal. Chevron will buy hess for 53 billion in stock. Details ahead. And fourtime champion Andre Iguodala will lay out his life after basketball in the vc world now that hes announced his retirement from the hard court. The final hour of squawk box begins right now. Good morning. Welcome back to squawk box. 8 00 now on cnbc. Were live in the Nasdaq Market site. Im joe kernen along with becky quick and Andrew Ross Sorkin. Five for five this week barring whatever. Circumstances. U. S. Equity futures at this hour have improved. We were down 250 on the dow, now down 168 points. Treasuries, the 10year above 5 , but it recently has come down a little in yield, 4. 99 right now. The 2year is 5. 1 . Bitcoin is interesting. Well above 30,000. Been struggling all weekend to get there and finally did. Actual actually closing in on 31,700. Big moves in the 10year. There are. Real moves driving things one way or the other. We have big news this morning. Chevron says it will be buying hess for 53 billion in stock. That working out to 1. 71 a share, a small premium, 4. 9 over hess Closing Price. Hess shares right now are indicated down by about 1. 52. Chevron is down by 2. 3 . Hess ceo john hess is going to be joining chevrons board, and well talk a lot about this. This is a big deal that comes on the heels of another big deal, that 59. 5 billion of exxon for pioneer natural resources. That was in the Permian Basin. This is different. Theyre looking at guyana, a unique structure there. We spoke with chevron ceo mike worth. He talked about cha this means. This is an allstock deal. The cash theyre keeping around, a lot goes back to shareholders. This should be accretive to cash flow in 2025. They think it will double by 2027. The cash back to shareholders will be done e done through Share Buybacks, increasing that to 20 billion. And the Dividend Per Share, which theyve been raising by about 6 annually, theyll raise it by 8 this january, so 1. 63 a share. Talked about guyana saying they dont think they need to expand when it comes to the Permian Basin because they have a lot of acreage there, more than exxonmobil and pioneer combined. But theyve been talking to hess for over six months. This has been going on for a long time. Well keep an eye on it. But hess shares are down. It should be one i mean, its one for one basically. 1. 025. Chevron is going down 3 or 4. Its one for one stock. If you were a hess shareholder now its up a little built, but if you were expecting a big premium from takeover, it didnt happen. I love the sound of almarata hess. They got rid of it. John hess liked it better as hess. And the hess trucks. Who needs those guys . Mike worth and john hess will both be on squawk on the street i think in the next hour. Lets get over to our senior markets commentator for some senior moments, mike santoli, what are you watching . The s p 500 has been up the last 15 mondays in a row. Were not really set up for that, although the losses you mentioned in the premarket have been narrowed a little bit. So much piled on this market. We know whats going on with rates. Under the surface, a lot more weakness. On the s p, you have it dipping below that 200day average. You could take another 15, 20 points off of this. We have a bit of an undercut here. Still showing a little bit of wear and tear from the yield. I want to look at the yield curve, the 2 versus 10year yield curve. Not only are we getting up to 5 on the 10year, obviously kind of a focal point of whats gone on because of that level, but also the yield curve has been uninverting. It was steeply inverted, now going back up towards zero. When it has been inverted and goes back to positive, that has been a precursor in the past with a three to sixmonth or eightmonth lead time. It happened here in the 2000 and 2001 period and 2007 into 2008. This is one of the concerns of the message here. If you ask me, whats happening is different. Its mostly the longend yields going up, so the economy is strong, the fed will stay pat. Therefore, we have to have longterm yields higher. It doesnt make sense for them to be back where they were below the shortterm yields. On the other hand, in the prior times it was mostly shortterm collapsing because people saw the fed coming to the rescue of a weakening economy. Were still negative, so we havent had that uninversion just yet. Do want to look at some of the damage outside of the actual market capweighted s p 500. This right here is all stock markets in the world outside the u. S. Thats the equalweighted s p. That looks similar on a yeartodate basis. We all know the seasonal factors. Well see if any of that matters, joe. All right. Mike santoli. Noah is here. Hes talking about the inverted yield curve and uninverted. That means a recession is coming. Thats why well have a 5 print on thursday. But mikes right. This time its not the short end. Correct. Its the long end making the move. That is a different situation. Noah blackstein is here. Well talk about the markets, the impact of rising bond yields. He is a senior Portfolio Manager at dynamic funds. What do you make of that uninversion . If its different, because its the long end versus the short end, what does that mean . Is this a precursor of a recession coming in three to six months . Crazy to think with such a strong gdp expectation for this week. I agree with mike. Usually when the curve is uninverting, the fed is slashing short rates because theres a problem in the economy. The short end is dropping faster. This has been the long end coming up to meet the short end. Theres very few instances of this happening in history. Its hard to extrapolate whats going on. Weve had so many abnormalities since the pandemic. People calming for a recession from the last six months to three years. Signals are a little bit off. Thus far, the economy seems fine. There are certainly stresses. Autos we heard about. Some stress in Small Business and housing because of where rates are. Credit has been thus far contained, but spreads are starting to align a little bit here. I think this is all in line with the fed pause for sure. But if rates are higher for longer, maybe thats the long end saying, okay, we get it, we believe. Or is it a sign that, hey, the bond market, the buyers there are worried that theres a lot of other bad things coming and fewer buyers that will be around. So they dont want to be youll have to pay them more in order to jump in here. Theres a lot thats been i dont know what higher for longer means. Im not sure what the fed is referring to. Are they saying nominal yields will remain high . Maybe they wont cut rates even if the economy turns down. They dont control the lond l long end. Nearly 250 basis points since july. Thats very tight. I think thats why theyre talking about financial conditions. Powell seemed to say a lot of work has been done for the fed more recently. They could stim have positive real yields and be lowering rates next year and keeping the real rates the same. Im not sure what higher for longer means. If theyre doing quantitative tightening and rolling off the balance sheet. Theyre doing that, holding rates while inflation continues to fall, thats still tightening. Im not 100 sure what higher for longer necessarily means or what theyre referring to. In terms of the long end of the curve, you have term premium, supply, quantitative tightening, popular trades in the bond market, you have whatever japan is doing in Monetary Policy and longerterm demand for u. S. Treasury. Theres a lot going at it in order to try to extrapolate. Thus far, there seems to be a lessening of the risk of recession in the near term anyway. That seems to be priced into the bond market, which isnt bad. But we have to watch streds, especially on the credit side. What about the stock market . Do you think it will bottom out here . Have we seen the worst of things . The it up . I think its put a tremendous amount of pressure on the stock market since july. Especially if you look at it today, the nasdaq 100 is up 33 or 34 . I was looking at midcap growth proxy, up 2 year to date. The further you go down in market cap, you can see the pressure of yields. I think thats where the opportunity is, especially if youre looking for longerterm areas of secular growth, sort of what we do. I think those have been sideways for a while. The fundamentals are improve, and we havent had the big move. Theyre as much beneficiaries of ai as any of the megacap tex stocks are. Well get earnings this week, which is important. 8 trillion of market cap reports this week. Thats important. But i started in the beginning of the networking era, the beginning of the internet, the second wave of the internet and the beginning of the cloud. Ive never seen anything like ai before in terms of return on investment and productivity. Ive never seen the cost savings or technology implemented so quickly thats give son much return in cost savings for corporations. Pcs, the cloud, well figure it out. This, you know, the way its reducing labor costs by 90 at call centers, whether its searching unstructured data like emails and using generative ai to save more, ive never seen anything like it. This is real and a secular area of opportunity. I think the bull market is every unit of output is going to require less labor. Youre talking about it not as an ai power just necessarily for technology stocks. Youre talking about stocks writ large in a company that is taking and implementing that will have far better margins. Correct. Its going to transform American Business and corporations that are employing ai to reduce labor costs and do things more efficiently and productively for sure. So, where do you buy as a result of that . Are there ai stocks that you like or just looking broadly. You mentioned petrogas. Right now ais focus has been on compute. Looking at nvidia and data centers. Compute matters, and its important. The most important thing is data. None of this matters if your data is garbage. Garbage in, garbage out. Its corporations taking their data and putting it into the cloud, even smalllanguage model, and being able to then improve their business processes and discover cost savings. At t talked about last week with earnings. They said theyve been able to reduce head counts when it comes to Something Like their call centers, Customer Service centers, and second of all for when they dispatch people to fix these lines. You would look company to company and say im going to like this company a lot better . I think the companies that are enabling so theyre moving toward the cloud, they ale need new databases. Its a new stack of technology. Theyll need data breaks and databases. Thus far its been on whos building the data centers and whos got the chips. The next wave is getting that data and learning from that data. Thats the Software Side of this. Every American Corporation will be transformed by ai, not just to the benefit of the big tech companies. You look at things and say this is a time to be fully invested in the market since you think this opportunity is coming . Im a longterm investor. 50 to 70 of moves in stocks are driven by rates right now. Its 70year highs in terms of whats been going on with rates. If youre in this for the next six months, you can get 5 in treasury, you should. Thats great. If youre in this for the next five to ten years, you sort of have to be in equities and you should use weakness as your opportunity. Theres longterm drivers is this weakness, though . In the market . Yeah. Where were looking right now. For sure, especially in the i think in the midcap space, which has been lagging, for sure. I look back in 1991, where you had that 30 nasdaq correction around the gulf war and stuff it wasnt the leaders of digital equipment and ibm that took off. That was the beginning of the first part of my career with the microsofts and oracles. This is that next transformation, certainly in technology, but it will have implications in health care, retail, industrials, energy. Its doing it much more efficiently. This is probably a multidecade but certainly multiyear phenomenon. Knoah, thank you. When we come back, a rare interview with s. E. C. Commissioner hester pierce on the biggest issues of the government regulator and what theyll be weighing in the world of crypto. Next, an athlete businessman calls it a career on the nba hard court. Iggy will be joining us just days after announcing his retirement. You cant buy great conversations or moments that matter, but you can invest in them. At t. Rowe price our strategic investing approach can help you build the future you imagine. T. Rowe price, invest with confidence. swords clashing had enough . No. Arthritis. Here. Aspercreme arthritis. Full prescriptionstrength . Reduces inflammation . Thank the gods. Dont thank them too soon. Kick pain in the aspercreme. Only the new sleep number smart beds let you both sleep at your ideal level of comfort. Your sleep number setting. And now, all of our new next gen smart beds have temperature benefits. And now save up to 500 on our new sleep number smart beds. Sleep next level. Shop for a limited time only at sleep number. Is it possible my network could take my business to the next level . It is with comcast business. Powering all your devices with gigspeed wifi. And you get fast downloads and uploads. Pick it up pick it up oh we got this because its powered by the next generation 10g network. More speed for your business . Its not just possible. Its happening. Get started for 59. 99 a month for 12 months. Plus, ask how to get an 800 prepaid card with a qualifying internet bundle. Comcast business, powering possibilities. Welcome back to squawk box. Been watching the futures this morning, and theyre down still, not as much as they had been earlier, but off by about 155 points, s p down by 17, the nasdaq off by 65. A big part of that is treasury yields, although treasury yields have turned around too. Youve been looking at the 10year above 5 earlier this morning. Its still up sfr where it was on friday, 4. 997 . Stocks leading the dow, dragging it lower, chevron at the top after its deal for hess was announced. That stock is down by about 2. 6 . Joe . Were following a few stories. First, chinese ecommerce platforms including jd. Com, alibaba are now offering a steep discount on the iphone 15. Sector report from a statebacked news source in china says tax authorities are looking into several units of iphone and foxconn and other officials have conducted land use investigations on that company. Two sources told reuters they believe the foxconn probe was made public for political reasons. The companys found toer is running to be president of taiwan. Meantime, after nearly two decades in the nba, our next guest is retiring from pro basketball and pivoting fulltime to the world of Venture Capitalism. Joining us right now is Andre Iguodala, iggy, fourtime nba champion, the golden state warriors, and an allstar olympic gold medalist. What havent you done, andre . Its great to see you this morning. Congratulations on a pretty remarkable career. Thank you. Really appreciate you having me on this a. M. It aint over, though, because you are taking what youve been doing off the court, the side hustle of sorts thats been going on nearly for almost a decade in your career while you were on the court, and now moving into the Venture Capital world fulltime. What is that about . What is that like . And just tell us a little bit about your thinking about retiring to begin with . Yeah. Well, i started, you know, investing ten years ago. Its been an amazing learning expe experience, shadowing founders, shadowing vcs, their firms, taking internships. But the schedule started to get a little bit too busy, so decided to step away from the court. The court was actually taking time away from invest, so going fulltime investing. You know, basketball has helped me, being in the business of sports and Media Companies, thats enabled me to understand the both sides. It was time to stem away from the court and fully invest. So, you have a partner, rudy kline thomas, and a fund now, 200 million, if not more, with him called mosaic. What have you been looking for and what are you trying to do . Were focused on enterprise, fintech, health care, and sports companies. You know, over the last ten years of investing in the space and having some of the best mentors has enabled me to learn from them and position myself with opportunity thats come about with this fund. What we want to focus on isnot just backing the best companies but also being obsessed with changing the way representation of minorities in the industries that were investing in. So, we have many plans to kind of tackle that initiative. How important was it for you to be a part of the warriors . I ask that in the context of you now being a Venture Capitalist. Given the community that exists around palo alto and San Francisco that you were a part of. Well, this is where its all happening, you know, disruption starting here. Some of the best backed companies, all different sectors, software, the sass world, been able to learn from some of the best minds. Zoom, jennifer, so many different folks that ive been able to interact with. You know, oracle arena, some of the best and brightest minds being at every single game. Thats how you got into this, right . You met a whole bunch of these folks in that community at the time, right . For sure. You know, on the court, at the games, you know, courtside or off the court, you know, being able to interact, like i said before, having the opportunity to, you know, shadow some of these founders and see what theyre looking for in the markets, the goto market strategies, and being a real steward or student of the businesses and now have an opportunity to take that and, you know, have the Player Technology summit, introducing other athletes to the space, and trying to be at the head of this investing in the tech world for not just, you know, athletes but the best founders and ceos. Is your experience rememberly replicatable . Youre a special unicorn in this ecosystem. A lot of players are constantly asking for advice saying, how can i get a 200 million fund itself . Its kind of like golf. You have to be obsessed with it. Theres a lot of work that goes into it. We spend our whole lives getting ready for the nba. You have to have a similar focus in order to be a great tech investor. As they say, you only need one company to hit, but for me, its bigger than just investing, as i said before. We want to change the way the ecosystem works, how the representation and the participation of minorities hasnt been able to exist at the same levels as everyone else. So, just getting my foot in the door. But i want to wedge the door open to bring others like myself who havent had the opportunities to know whats going on as early as everyone else. Andre, whats maybe the most interesting thing, youve seen something thats surprised you, something youve learned, like, okay, this is a company thats really amazing . Got anything in your sights right now . We have a couple companies. A company like vessel, which we think will be a real disruptor in the real estate industry. A company jump im really excited about. It will change the way we interact with live events, with ticketing, and coming from the sports world, im excited about that one. A1 is an nfl agency. As of right now, we think of it as ac 2. 0 and how we think about athlete tos. We have really big plans for there. Not sharing too much on that one but what about jump . That sounds really interesting, especially considering some of the pressures that have come on ticketmasters and some of the others at this point. What would you do differently . We just see how fans are interacting with their teams in the stadiums a little bit differently from all the data thats going on. You know, you hear about the big plans going on in l. A. With the clippers and Steve Ballmer and now they have the most restrooms weve seen. Small things to make that experience a little different. As the game goes on further and further, you know, whats available within the arena, how can you get a bigger experience or change your experience or lastminute change . You may not be able to make it to the game, but you can still be able to use that ticket or profit from it at some point with someone else who may be at the game who would want to change seats. We look at jump as something thats really going to disrupt that business and how it is a b2b platform for teams. Andre, talking about teams, you now own a bunch, but i know your dream, i think, is maybe to be one of the owners of an nba team. Do you have your eye on one . I know lebron would like to own vegas if it comes up. Yeah, yeah. Everyone is having that conversation. And what better way than to finally be in a space where, you know, athletes and the way media rights have gone, you know, theyve been able to accumulate this wealth to where they can participate in some of these transactions with ownership in nba teams. Weve been having a lot of these conversations in our communities on the sports and music side. But, you know, Michael Jordan has been able to do it. Magic johnson. You know, shaquille oneal. The greats have been able to do it. Im very, very sure lebron james has his eye on it. But, you know, timing is everything. Obviously, with the new cba that just came out, a lot of players are seeing opportunities, and we want to take full advantage of it. Andre, thank you for being on the broadcast. Congratulations on a remarkable career on the court, and we know youll have a remarkable one off the court. We hope youll come on in and keep us updated with all your progress. Look forward to seeing you soon. Thank you. Look forward to checking back in with you. Coming up, well speak with former Kansas City Fed rpresidet thomas hoe anything. Your dedicated fidelity advisor can help you open those doors. They can help you create a retirementincome plan designed to balance growth and guaranteed income. And provide access to specialists who help with Estate Planning to look out for future generations so youre not just growing and protecting your wealth. 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Powering possible. adventurous music be ready for any market with a liquid etf. Get in and out with dia. Lets talk about the impact of higher Interest Rates on the feds thinking and policymaking, former Kansas City Fed president thomas hoenig. Its also good to see you, former president hoenig. You point out if we dont do anything till december and didnt do anything in december, its been six months with a 25basis point increase, and yet we still hear that were in a tightening cycle. Your point is that maybe even the fed itself isnt exactly sure where we are in this cycle and isnt exactly sure what their next move should be. I think thats right. They are being cautious. As i said, if they wait till december, six months. And in the meantime, you know, the economy is growing stronger than people anticipated. So we will move along that line, and they are going to try and wait and see. In the meantime, rates are going up because very candidly, we spent a lot of money, the government did, in the last three years, actually the last ten years, but the last three years, enormous amounts of money. So the economy is stronger than people thought it would be. And the government still has to pay its debts, and so theyre borrowing more. Theyre putting tremendous amounts of additional new debt into the market, and thats you know, if the economy is strong, people are still demanding money, still looking for credit, so you have the private sector not releasing their demands as much as you would have expected, even though it is slowing, the Government Spending and borrowing much more, Interest Rates have to rise. Theyre finally recognizing that the crowdingout problem is occurring, and thats also because the fed says its not raising rates, the fed funds rate, but it is in quantitative tightening, so its not willing to buy any more of this debt. So, the only parties buying this debt are foreign interests with dollars, and that we know is slowing. That leaves it on the domestic hands. So, with credit not falling as rapidly in the private sector and the Public Sector needing more, Interest Rates are going to go up. And thats what youre seeing, a delayed effect of a very expansive policy over the last free v t three years. That almost sounds like Interest Rates are not untethered, but its like the fed is, indeed, just watching the long end, watching rates go up, and is thats playing into the feds hand. Thats what the fed wants. And it doesnt need to raise fed funds. Well, i dont know if its playing into their hand, but certainly that is the effect of their policy, because quantitative tightening means youre not buying this debt, and that leads to fewer people in the broad sense to buy them so Interest Rates have to go up under those circumstances. Remember, the stimulus effects, while theyre moderating, are still in play. I mean, the infrastructure act is still having an impact, the chips act is still having an impact, the Inflation Reduction Act is still a very strong subsidy program. Thats having impact. A lot of demand in the economy in the private sector, despite the fact that commercial real estate is having great difficulty. You still have this basic increase in demand, and the governments demand coming even higher, youll have Interest Rates rise. So, its perhaps an effect of the plan to bring inflation down. Whether they anticipated this much, i dont know. Would you be doing anything differently . Is it a policy mistake to not have raised fed fund rates more . Well, certainly they could have raised fed funds more, but this fomc is very concerned about going too far. Theyre very concerned about initiating a panic. I think last march has affected their action Going Forward. So, theyre being, shall we say,less insistent that the inflation rate comes down to 2 in a short period of time. So, theyre going to wait and see. And i would suspect they wont move unless inflation actually goes up. They will let things work through unless inflation goes up. So, theyll hold their actions except for the quantitative tightening, and that they will give up if there is a financial crisis of some sort. Its almost like i dont know if im reading it right, we have to go, but the fed was dealt a hand by the Biden Administration in the fiscal situation, three years of just of all this spending, and theyre doing the best that they can, essentially. Thats a generous term. The fiscal poll sill was very expansionary, and Monetary Policy was very agreeable. Now we have the effects of it. All right. Well, you got the chiefs, so i dont think you should be in too bad a mood. You have taylor swift. Its not like she was hanging out in kansas city before. I mean, youre on the man, baby. Youre happening. Yeah. The gdp raises in any city shes in. Travis kelce, do you think everythings good for what shes doing for the chiefs. Were in the middle of a desert. Got it. Thank you, thomas hoenig, former k. C. Fed president. Coming up, s. E. C. Commissioner. He hester pierce joins us on what the s. E. C. Is facing. When you think of investment risk, do you consider climate risk . Changing weather patterns are impacting the way we live and the value of businesses large and small. This can mean disruption to supply chains, changing demand for products and shifting regulation. What does this mean for your business, your clients, and your investments . Ice offers data and markets that can provide critical insight. Manage your climate risk with ice. Power e trades awardwinning trading app makes trading easier. With its customizable options chain, easytouse tools and paper trading to help sharpen your skills, you can stay on top of the market from wherever you are. E trade from morgan stanley. Power e trades easytouse tools make complex trading less complicated. Custom scans help you find new trading opportunities, while an earnings tool helps you plan your trades and stay on top of the market. E trade from morgan stanley. Ameritrade is now part of schwab. Bringing you an elevated experience, tailormade for trader minds. Go deeper with thinkorswim our awardwining trading platforms. Unlock support from the schwab trade desk, our team of passionate traders who live and breathe trading. And sharpen your skills with an immersive Online Education crafted just for traders. All so you can trade brilliantly. Is it possible to fall in love with your home. Before you even step inside . Discover the Magnolia Home james hardie collection. Available now in siding colors, styles and textures. Curated by joanna gaines. S. E. C. Commissioner hester pierce joins us. Good morning to you. Love to get your sense of where the state of some of these regulations around crypto stand right now. Theres been so much speculation, even in the past several weeks, about where a bitcoin etf might land. There was a moment, as im sure you recall, where a report came out erroneously, apparently, that one would be approve ud. That would be the blackrock one. But a view that, given some of the things that have happened in court recently with the s. E. C. Losing, that maybe the s. E. C. Is now more open to approving one of these types of funds. Is it . Well, good morning, andrew. I cant say whether or not the commission is ready to approve a bitcoin exchangetraded product. Ive been thinking we should approve one for the last five years so that the logic for why we havent has always mystified me. The court case obviously is an important factor in the landscape, but i cant guess my colleagues approach to this topic. The reason i ask is theres a sort of speculative fever taking place throughout wall street and other parts of the crypto world that believe that, given those court results or those losses, if you will, specifically that one loss, that it would change the thinking of the other commissioners at the s. E. C. You spend time with them. You talk to them. Do you see any shift in terms of that type of thinking, just even generally speaking . I really cant speak to what were going to do on the bitcoin exchangetraded products. Generally, the agency has not been very good when it comes to anything related to bitcoin or any other crypto asset. Look, i hope that every day i hope that theyll wake up and say, you know what, we need to take a more productive approach. That hasnt happened yet, but im of course hoping that it will. I guess the question is, should the public take anything away from the fact that a blackrock or a fidelity or somebody of that size, scale, perhaps reputation is applying for these things, that that somehow is validating this space in a way that perhaps maybe some of the smaller firms that had applied for such types of funds earlier did not . Well, i think its a reflection of the fact that there are a lot of firms that think the public is interested this these kinds of products. Again, you know, people have to be careful about trying to read the tea leaves of what agencies are doing. Im not going to contribute to that. Im just going to say that, you know, obviously were seeing more and more interest from firms in these products, and i hear a lot of interest from investors in these kinds of products, as well. What is the lesson . Weve all been watching the Sam Bankmanfried trial taking place downtown around crypto, and weve watched coinbase has started to open up franchises and things in other countries and the like. Have you felt a shift in terms of the way washington and your colleagues are thinking about crypto at all . I mean, look, the events of last year were not positive for cryptos image, certainly. Its a good moment for all of us to sit down and think about how did we get to this place. I think theres a lot of work the Industry Needs to do thinking about applying, you know, traditional lessons from traditional finance that had been learned the hard way over the years, applying those in a crypto space. But theres also an opportunity for regulators to sort of think what could we have done differently . I think one thing we could have done differently is to craft a framework that provided people clear guidelines and made the United States the kind of place where Crypto Companies wanted to be registered and based. And that would have been very helpful for them distinguishing good actors from bad actors. We still have the opportunity to do that. I think there is a lot of interest on the congressional side to try to do something around crypto. You know, again, my agency has done has mostly focused on bringing enforcement actions, which is just not a really efficient way of bringing regulatory clarity to the space. Do you have any sense that real legislation is going to weve had a number of lawmakers come on the program and talk about legislation. The house doesnt even have a speaker, and you think to yourself, weve talked for a decade about regulating social media and all sorts of other things that a lot of people talk about and nothing gets done. Do you have reasons to think something will . Well, i mean, i caution about reading regulatory tea leaves, and im careful about trying to read political tea leaves. But i would say that there is widening interest in trying to do something. And whether its a broader bill or taking things piece by piece, i dont know. But i think theres clearly perceived to be a need to do something in this space, and i think thats really encouraging. Has your view shifted at all . We have, by the way, on the screen, i dont know if you can see it, we have bitcoin, ether, solana, and others on the screen. Theres thought about which ones matter. Have you sort of changed or shifted your views around that . Do you say to yourself bitcoin is one thing in its own special camp and maybe ether is another and the others are Something Else entirely . Ithink different Crypto Assets have been developed and different blockchains have been developed for different purposes, and thats something that people are doing a lot of experimentation with. So, its been interesting to me as a regulator, not a technologist, to watch that experimentation, to watch different uses for the different blockchains emerge. And, you know, look, the market is going to ultimately decide whether any or all of these stay around. And, you know, well see how that develops. It will be fun to watch. But there are different uses for the different blockchains. Do you think some of them are just pure speculation . And if they are, do you think that they should be regulated . Meaning part of the issue has been theres been skepticism inside the s. E. C. And elsewhere that some of these things may be real and others not at all. And if theyre not at all, maybe theres no need to regulate them because by some degree youre endorsing what it is. Well, look, i think people speculate about lots of different thing, and especially in low Interest Rate environments, people speculate about lots of things. Its not my job as a regulator to tell people what they can and cant purchase and what they can and cant speculate about, right. Speculation is what makes our markets work. I encourage everyone to be skeptical about everything theyre buying. So, yeah, you should be if you are interested in crypto and youre thinking of buying a crypto app, you should be asking a lot of questions and try to figure out what the purpose of a particular crypto asset is. Thats fine. But the idea that by affording people a Regulatory Framework were providing a regulatory seal of approval is the rong wrong way to think about things. We at the s. E. C. Have a job to be disclosure regulators. So, if were given the job to write disclosure regulationses for Crypto Assets, that is not a seal of approval. Commissioner, we appreciate you joining us. Look forward to seeing you again soon. Thanks for having me. Thank you. When we come back, well dig into chevrons allstock deal, a big merger with hess. Opening bell rings this morning. Take a look at treasury yields this morning, the fiveyear sitting just under 5 . Were coming right back. Welcome back, everybody. Chevron is buying hess in an all stock deal thats valued at 53 billion. That works out to 171 a share. The deal comes just weeks after exxonmobil made its move to buy pioneer natural resources. Joining us right now in the latest consolidation move in the oil patch is senior Portfolio Manager from tortoise. You pointed to this idea that there was potentially going to be a lot more consolidation just in all of those drillers in the Permian Basin. This is not that. This is a very different deal. Hess has big operations in guyana. Thats part of it. Do you still think theres going to be a move to consolidate within the Permian Basin . Good morning, becky. And i think there is still possibility for the Permian Basin to be consolidated. Theres still hundreds of producers. If you just look at the core acreage in the Permian Basin, thats still really held by a few players. Obviously, pioneer had the biggest position, but others like diamondback have a big position there as well, and theyll be attractive to others. As you highlight, this is a different transaction. Chevrons got a good position in the Permian Basin, can continue to grow, but this gives chevron an opportunity to grow outside the Permian Basin as well. This is an all stock deal. Mike wirth made a big point of saying they do that because you can move so much in the commodities business. You can see oil drop 30 bucks, rise 30 bucks pretty easily and neither side wants to feel like they made the deal at the wrong time. They had a lot of cash, though, all these Oil Companies do right now, and i guess the question is, what do they do with that . Chevron and exxon are tending to give that money back to the shareholders. I like that idea, and i think their stocks, generally speaking, have performed. This year, not as much, but thats a little bit because of oil prices but i still think that if these Companies Continue to remain disciplined, continue to return capital to shareholders in the form of higher dividends and buybacks, the Energy Sector will become a place that a lot of people will want to invest in for that reason. They have to be skconsistent in doing that. This transaction will allow chevron to play that out not just for this decade but several decades Going Forward as well. What do you like in particular . The Big Oil Producers of some of the companies that will fall to consolidation . Its probably both. If you look at what chevron and exxon have done, theyve really solidified their position as being the leader in growth and as we look over the next couple decades, wheres the oil growth going to come from . Wheres the natural gas growth going to come from . On the oil side, and you look outside of saudi arabia, its going to come from guyana, the Permian Basin. Later, i think the market will participate as well so chevron and exxon have established really large positions there, and theyre going to be able to be a significant player as Global Oil Demand for growth likely continues to grow, at least over the next decade , if not beyond that. There are economies of scale if this works. Whenever you see a stock deal, the acquiring company goes down. At this point, if you believe theres going to be economies of scale and overlap and they can save some money here and leverage some operations there, is chevron should it be up . Is it a buy here because of the combined power and the future that these combined companies have together . Is it more positive than separately . I agree with you, john. I think its a buy. If you look at it by its, its dividend yield is probably double the s p 500. Its Free Cash Flow yield is probably around 9 or 10 . Free cash flow yield for the s p 500 is 5 . That spread is too wide. This transaction, as you highlight, just basically enhances that Free Cash Flow yield Going Forward. Grow the dividend. All right. Rob, we got to run. Were almost done. Got one more interview here, but we appreciate it. Little more than half an hour to the first opening bell of the week. Joining us now, marcia norton, morning star chief Investment Officer for the americas. Your point, i think, is that people didnt really listen to the fed or at least didnt take it seriously about higher for longer. Now were seeing that is the case. The tenyear yield goes up and the stock market seems like its stuck in the mud. But finally, you think that the tenyear is worth youre getting paid to go maybe ten years. Yeah, joe, its a really interesting evolution over the course of 2023. We start the year and the markets are pricing in a fed pivot. Theres no real respect for what the fed is saying around higher for longer and over the course of the year and especially over these past few months, were seeing this tremendous push higher at the long end. Not only are we getting the fed tightening at the short ends but were seeing this move higher in the long ends and thats representing both what the fed is saying and the strong Economic Data and concerns around treasury auctions and the like. Theres a lot of forces pushing that tenyear higher, and for the first time in our models, its looking like its above fair value and something that we want to edge into. So, that makes you increase your allocation to fixed income . Well, its kind of a pushpull here. When you look at our multiasset portfolio, were neutrally positioned between stocks and bonds, but i think bonds are finally at a point where theres absolute value in that space, and so i think its something that were really going to consider. I think one of the first moves that were doing is pulling from an area like alternatives, hedgelike strategies, and moving into fixed income, given the improving yields, but i think were really going to have to wrestle, and i think investors around the world are going to have to wrestle with this question between equities and fixed income, because fixed income is in play today. We only got about 30 seconds or so. Is the economy u. S. Economy ever going to slow down . You know, thats the billion dollar question, i guess, but when our economist takes a look at it, what hes looking at is a tremendously tight environment and yes, theres lags with it but now we have tightness longer end as well and there is an expectation that that will start to slow the consumers roll, slow the roll in the labor market and we are going to see a slowdown. Our base case is for a soft landing. Okay. Going to try and do that with this show here, too, marta, because we got about 13 seconds. Going to try to land this baby on an aircraft carrier. Eight, seven, six. Im losing time right now. Make sure you join us tomorrow. Squawk on the street is coming up next. Good monday morning, welcome to squawk on the street, im Carl Quintanilla with jim cramer, whos back, david faber at post nine of the new york stock exchange. Futures trying to recover as the tenyear peaks just above 5 . Plenty of m a to get to today, including a mega deal in the energy patch and the biggest week of earnings season on deck. Our road map begins with stocks sliding to start this new week of trading. S p closing below its 200day mo moving average for the first time