5 level. Todays action coming ahead of the busiest week of earnings. A number of key Economic Data points, whether youre a bull or a bear, theres a narrative to hang your hat on. Lets bring in mike santoli, cnbc senior markets commentator. Whats the bull case . The bull case is yields are going up largely because the economy has been stronger than expected. The bottom were seeing in earnings is going to hold. Well actually have progression higher in s p 500 earnings. The market should eventually reflect that. The other piece is the fed is at the end or near the end. Everything going on with yields is also maybe taking the pressure off that end of things. The market seems to roughly agree about that. The other one is sentiment and positioning and seasonals have primed the pump for a decent rebound attempt at the end of the year, i would say. Youre talking about shorts, in other words, coming off very short, equity exposure is coming down, in general. Yeah, all that stuff seems to be building. Honestly, ive been saying it for a few weeks, maybe that for the seasonal trade to work, people have to lose faith that its an upside case. And the bear case . The bear case is what were seeing in yields is going to undermine whatever strength weve already seen. If you look at the way the markets actually behaving, cyclicals breaking down, small caps breaking down. Its not acting like a bull market. Its not acting as if the economy has staying power. That, to me, is number one on the bear case. And valuation isnt really compelling yet. Not just because yields are higher but even in an absolute sense, paying 17, 18 times earning for the s p is not necessarily a recipe for great future returns. All that mixed together, combined with the fact that you had some slippery technicals. All the stuff that makes the market look oversold also makes it look treacherous. Because the markets have big woosh lower type moves when youre already oversold. I think thats why people were anxious coming into monday. Tony dwyer called it higher for shorter, meaning he thinks the data is going to roll, yields will follow. Ultimately, thats the solution for higher yields, probably is that. I think thats why the market was so reluctant to unwind that recession trade. Because they knew they would be right eventually . Yeah. Youre always looking for the turn. Yes, we have a disinverting or steepening yield curve, which is another warning signs. The reason we were so deeply inverted for so long is because everyone assumed we would get that eventually. The geopolitical risk is oil is elevated. Gold is elevated. Hasnt had that much of a market impact, though. When you were talking about a changing of international order, when youre talking about the u. S. Potentially having to get involved in a conflict, this is not the typical middle east conflict. No. Especially if roads lead to iran. I do wonder if investors are underestimating how serious it could get. I dont think theyre rushing to price anything in but i think it partially explains the hesitancy to buy the dips aggressively. Explains people happy to sit in cash. Yeah, were not seeing a lot of buying on the long end necessarily, but i think thats the x factor making people feel more anxious than they otherwise would with one quarter left and the s p up a decent amount. Mike, thank you. Laying out both cases with no bias either one. Take your pick. You decide. Lets focus on the bond market, the center of the universe. Tenyear yield crossing above 5 for the first time in 16 years. We backed off that level. What to follow is relief for stocks. Our next guest says its time to look at the longer end of the curve to offset the risk. Joining us is deputy chief Investment Officer jeff sherman. Whats the strategy around fixed income right now . Sara, its been the same trend weve been advocating for really through the course of the summer. This is having a balanced portfolio of risk. When i say dont add to credit, it doesnt mean you should own credit. This is not the time with yields where they are today to be going down and reaching for the bottom tiers of credit. You can be good enough in the credit markets today, we have Investment Grade bonds that yield 6 today in Corporate Credit u. S. You have highyield bonds at the upper end of the higher end of the Credit Ratings that yield in the 7 , 8 , 9 range. So, there are places in the credit markets that still make sense. But in order to do that and be comfortable with some of those risks, why not own some of this treasury market as well . So, as you mentioned, we went over 5 in overnight trading this morning. And it seems like it all of a sudden is a catalyst when the u. S. Market woke up, that 5 mark. It really sent buying into a frenzy today. Again, this isnt something where investors have missed this move to date. Its only these balance risk in portfolio, bond portfolio that nowadays yields 6 to 7 . That looks a lot more attractive getting a return thats likely to have those levels versus taking some sfek lative risks, as you mentioned with all the geopolitical risk out there today. What ultimately do you think turns the tide on this bond selloff weve sneen. Ultimately, you need people to wake up and say that this is a level you feel comfortable owning this for the cycle. I think as we grind through the year, the technicals have been horrific on the bond market. Weve had all this issuance weve been talking about. The massive deficit. We have a dysfunctional government that says maybe we dont get any relief in any of these factors on the short term. Ultimately as investors are looking to position portfolios for next year, youll see a big turn in people looking at the bond market. The stock market, even for all the pain weve seen in the last lets say, couple of months or so, last month or so, youre still up over 10 . Theres this natural rebalancing. If you go through last friday, the barclays u. S. Aggregate is down 3. 1 . This is the worst performing year, outside of last year, as of last friday, it would be the worst year on record second year on record for bonds. Sorry, i cant speak. Ultimately youll see investors waking up saying, 5 on a treasury market . I dont have to take risk. I can lock this in for a long period of time. Youre seeing that with institutional buyers. Weve seen that with some longer duration, the people who own longer treasuries come back into the marketplace and start to get excited about these yield levels. I wonder how youre thinking about credit quality and some of these delinquencies, late payments in the face of what appears to be still a very robust labor market and how that picture changes if, in fact, employment also rolls. Carl, as we say, the recession occurs as soon as the labor market rolls over. You are starting to see delinquencies. Theres some news out last week about some of the highest delinquency rates youve seen on autos. Were seeing this in lower quality borrowers in the subprime mortgage market, fico scores, and seeing broadbased in consumers, whether its credit cards or consumer loans. The problem with looking at measures like gdp, which well get this week, which was expected to be a very strong number, is that it is very backward looking. The labor market is one of the last things to roll over there. You are seeing some weakness in credit. And its the resumption of Student Loans coming back into the market. That hasnt trickleded through the economy yet. You were talking about Higher Energy prices as well and the risk there as well. Dont forget that a lot of consumers, you know, the pain point they feel, number one, are the pricing at the pump and also as we go into the heating season, the cool winter season, demand for Higher Oil Prices or Higher Energy, takes a bigger part of the budget in discretionary spending. Just because the labor market has been resilient doesnt mean it will continue. So far you have this Inflection Point in the market. Either were going to continue to grind along and this economy will be great for the next 6 to 12 months or youll start to feel a little more pain. So far, some of that data is starting to show a little cracks but its too early to say its a recessionary call today. I highlighted last hour the 1. 7 trillion deficit for physicianial year 2023, which was Just Announced on friday. The fact its not set to improve. That this is happening during a time of high growth and that there are serious concerns now about supply and demand in the treasury market. Do you guys see this as a big driver of the action right now and a potential worrisome issue . Well, sara, the thing about it is youve seen this deficit has been a problem for really the last seven or eight years. And during the last administration we really expanded the deficit during good times as well. Were doing it once again. So, what you see is theres this addiction to structural deficit. It does become a problem. Were seeing again, as debt rolls over, thats when it becomes a problem. A lot of the coupon out there in treasury is still at very low levels, like Corporate America where you have at the consumer level. The problem becomes when that debt rolls over, if yields are where they are today, those coupon and Interest Payments reset meaningfully higher. This becomes a bigger problem in the medium term where ultimately the debt service eats up so much discretionary budget within the overall budget. So, it becomes a bigger and bigger issue. So, the market seems to always look for a reason to explain price action. Thats really been one of the largest explanations over the last two months for this rise in yields. Some people talk about the growth story, some people talk about this. Both are in concert of why we have higher yields. Ultimately i think what you see is this isnt a problem in the next three, six or 12 months. This is something that will be a real big problem when more of this debt rolls over in three to five years. I think investors are thinking about that, perhaps thats why there is a little more term premium in the marketplace today. Ultimately the u. S. Will pay its obligations. The question is just the value of that dollar when ultimately it comes down to pay that back. Jeff sherman, really good color and commentary on the move in rates. Thank you very much for joining us. Thanks for having me today. From double line. It is a bit of a merger monday. Chevron announcing it will buy hess for 63 million. Its the second Major Oil Deal this month. Pippa stevens has more. This all stock deal is all about diversifying chevrons portfolio which had been light on longterm growth opportunities. Hess brings guy anna to the table which is the real prize in the portfolio, becoming one of the most important growth areas for nonopec oil production. Heres what chevron ceo told kr cnbc about the deal earlier today. The duration on our cash flow, we bring these two companies together. I talked about longterm growth and longterm value. This extends our visible Growth Profile into the 2030s. Over the last tech decade we saw companies outspend cash flow, not create value for shareholders. Chasing growth. The industrys got the message. Shareholders expect a return on capital. Companies across the industry have become more disciplined. Shareholders have demanded that capital discipline. Acquisitions can be the only option to grow output. As energy partners, pickering said stock for stock reduces Balance Sheet risks. Wall street analysts striking a cautious tone with citi saying this deal wont have the, quote, zing of recent others, while mizuho said it increases execution risk around planned financial targets. Back to you. The prize of guyana, how long has this been out there . We were talking to paul sankey and he said thats what this deal is about, what chevron was after. Prior to 2019 they were not producing at all and now producing 300,000 barrels a day. That is the growth opportunity. And chevrons major rival, exxon, is the key producer there. Theyll be working alongside together, theyll be working together in guyana. They want to move away from concentrations like the permanenten basin. Analysts were saying they dont have any longterm growth opportunities. So, this deal has less synergies in the here and now given the asset base for hess is different but longer term this deal can ensure chevron can continue to grow output in these other areas even when areas like the permean are unchanged. Were continuing to monitor the latest in the middle east as the Biden Administration advises israel to delay a Ground Invasion of gaza allowing more time for hostage negotiations and humanitarian aid to reach the area. Jay gray joins us from tel aviv with more. Jay . Reporter its an interesting change of events here with what looked like ground assault all but prepared to move in with the idf. Now we get this information that the white house is asking for a delay. We learned during the day today that the idf now believes there are 222 hostages being held by hamas at this point. We know two americans have been released. But that is all since the attacks of october 7th. We know that the stepped up bombing runs by Israeli Forces have continued over the last 24 hours and have included hits on 320 military targets, they say, including tunnels, including some of the Operational Command centers. Weve had reports of civilian areas that have been damaged by these air attacks as well. We know aid is moving in but its not moving in at a pace thats really doing anything to satisfy the desperate need. 17 trucks yesterday. As many as 20 today. Food, water, medicine, all very important. But the u. N. Says about 4 clip of what they saw as far as supplies moving into the region daily before the war began. Fuel is a desperate need. In fact, the u. N. Saying thats just as necessary as food or water at this point. We know that the hospitals that are still operating have about two days of fuel left. So, thats a very concerning situation. And i know that there are negotiations going on to try to get some fuel in. What israel has said and really hasnt wavered on this is fuel is not going into gaza during this war. That they are too concerned it may fall into the hands of hamas and be used to fuel the war against them. I mean, the hostage release is interesting. What is the latest you know on this strategy of not going to the ground to continue hostage negotiations time i look they move the number higher. It was 210 known hostages, including some with potentially Serious Health problems. Reporter its actually 222. They upped it again during the day today. Yeah, its been a back and forth. We know that there have been talks behind the scenes about delays the ground assault. But now its come to the forefront that the white house is asking that they delay this. Does that mean theyre close to a release . We cant know. Obviously, we shouldnt know because these are talks that are going on. The qatari is helping facilitate some of this. Its a wait and see, as it has been over the last more than two weeks now, but clearly theres concern about rolling tanks across the border and getting into what would be urban warfare with so many, more than 200 hostages still being held. Important to note, as you said, jay. The reporting out of nbc urging some caution. At least from western officials. Well talk later, jay gray this morning actually, as night fall comes to tel aviv. The ceo of phillips joins on the other side of this break. Strong earnings, rosy outlook for the tech company has the stock moving up 25 for the year. Plus, media money. A look at the digital ad market as spotify, alphabet and meta rba iory to rept . Wee ckn a moment. Trading at schwab is now powered by ameritrade, unlocking the power of thinkorswim, the awardwinning trading platforms. Bring your trades into focus on thinkorswim desktop with robust charting and analysis tools, including over 400 technical studies. Tailor the platforms to your unique needs with nearly endless customization. And track Market Trends with uptotheminute news and insights. Trade brilliantly with schwab. Nice footwork. Man, youre lucky, watching live sports never used to be this easy. Now you can stream all your games like its nothing. Yes [ cheers ] yeah woho running up and down that field looks tough. Its a pitch. Get way more into what youre into when you stream on the xfinity 10g network. Here in the bay, our cars takes and all of our stuff where we want to go. But, our cars cant take us e with unpaid tolls. Vehicles with overdue, unpaid tolls may not be able to renew their registration until outstanding balances are paid. Payment assistance is available. Visit bayareafastrak. Org ase so go pay your unpaid tolls y and keep your wheels on the welcome back. Lets get a check on consumer right now. Consumers health overall. Philips, they make sonic care toothbrushes, coffee makers, raising guidance for the fiscal year but noting a 9 increase in new orders stemming from continued issues in china. Joining us for a closer look at the quarter is royal philips ceo. Thank you for having me. Are you seeing a change in Global Consumer demand happening right now . Yeah, we see strengthening of consumer demand and slight also upping of confidence. We are happy we saw that coming back in our personnel business, our consumer business, which grew 7 in the quarter. And thats actually on the back of gradual increase we saw in the first half. We now really see strength and we expect that to continue moving forward. Is that in the u. S. Or globally . Its particularly in the u. S. Also in europe and to a lesser extent actually in china. We see the u. S. Market coming in stronger. We see demands for our Overall Health care businesses, our beauty business really stepping up and thats a great sign of strengthening of our consumer business. What accounts for that . Is it the fact that pricing has come down from super high levels . Yeah, we do think there is now a higher consumer confidence. Some easing of inflation does help. We see also the Energy Prices going down a bit. So, thats kind of helps to have more buying power in the consumers hands. As they have some flexibility, they are starting to spend on our goods, we see them now stepping back in again. With market leadership positions we have in these sergeants, oral care, capture demand and grow. The company has taken a lot of steps on productivity and head count reduction. Do you feel like youre going into this part of the cycle with the best efficiency possible or there are other improvements on efficiency and operating expense . When we started the year and i outlined my plan to bring philips where it belongs, i said the world around us is not business as usual. Weve seen that evolving and unfolding every quarter as we speak. That said, we need to take control and charge of costs early on. Thats where i came out with strong productivity measures on one hand, simplification of the organization. I announced reduction of 10,000 roles, of which we have at the moment implemented more than 7,500 roles. But we also said we are going to work on the cost of our goods and the organization in general. You saw contribution in the quarter of 258 million of productivity savings dialed into our profit increase, which doubled profit in the quarter. As this environment we operate in is still volatile, inflation is still there, we wanted to take charge. We believe we have the right actions were executing on and you see it coming through in our p l. The stock has done really well. It was lower earlier and turned higher. There is concern about the new orders coming down 9 , despite the fact you are sounding bullish on growth. Whats driving that . So, we are coming from a very high order book. Actually, our order book is 20 higher than two years ago. That actually is normalizing as we speak so we need to run through our orders. Better supply we have been working on helps us get high growth so 11 sales growth was a result of that. As we bring the order book down, it helps us take new orders in the quarter. At the same time we had adversity from new china measures that were announced q3. The china government took some anticorruption measures in the china market which caused a market contraction for all players in china. We have also been affected through that. Whats the hottest qcategory . You are so diversified. We had diagnosis and treatment with 14 growth. Those are the Imaging Equipment and also the minimally invasive cat labs we are selling. We also saw good growth in hospital patient monitoring where we actually had exciting 100 million deal in the u. S. Where we were selling monitoring as a service. As i said, the consumer business is growing 7 . While its less than double digit of the total company, its still a strong step up of the personal consumer business. We saw growth across all businesses. We also saw it coming in across all regions, but the u. S. Being the strongest market for us, the economy is the strongest, the demand is picking up and were working very strongly with our teams to grab the opportunities we see coming up. Roy, thank you very much for the status report. We appreciate you joining us today. Thank you so much for having us. Philips ceo going against the grain on some of the doom and gloom and even caution weve been hearing from other Consumer Companies and acceleration of growth. Thats true. Still to come, pharmas pipeline outside of weight loss drugs, there are big opportunities in the Health Care Sector some investors may be overlooking. Well break down a few. The s p closing below the 200day moving average for the First Time Since march. The technical take when we come back. Together, we built something truly beautiful. It takes years of dedication to get to this milestone. The New York Stock Exchange is a symbol of what america is all about the potential of an american dream. It is day one. A lot of work has happened to lead to this historic moment. The only way you can move a Society Forward is a true expression of freedom. 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. When youre looking for answers, its good to have help. Because the right information, at the right time, may make all the difference. At humana, we know thats especially true when youre looking for a Medicare Supplement insurance plan. Thats why were offering seven things every Medicare Supplement should have. Its yours free, just for calling the number on your screen. And when you call, a knowledgeable, licensed agentproducer can answer any questions you have and help you choose the plan thats right for you. The call is free, and theres no obligation. You see, medicare covers only about 80 of your part b medical expenses. The rest is up to you. Thats why so many people purchase Medicare Supplement insurance plans like those offered by humana. Theyre designed to help you save money, and pay some of the costs medicare doesnt. Depending on the Medicare Supplement plan you select, you could have no deductibles or copayments for doctor visits, hospital stays, emergency care, and more. You can keep the doctors you have now, ones you know and trust, with no referrals needed. Plus, you can get medical care anywhere in the country, even when youre traveling with humana, you get a competitive monthly premium, and personalized service, from a healthcare partner working to make healthcare simpler and easier for you. You can choose from a wide range of standardized plans. Each one is designed to work seamlessly with medicare and help save you money so how do you find the plan thats right for you . One that fits your needs and your budget . Call humana now at the number on your screen for this free guide. Its just one of the ways that humana is making healthcare simpler. And when you call, a knowledgeable, licensed agentproducer can answer any questions you have and help you choose the plan thats right for you. The call is free, and theres no obligation. You know medicare wont cover all your medical costs. So, call now and see why a Medicare Supplement plan from a company like humana just might be the answer. Watching shares of lilly today. Citi hikes its target to 675, 14 upside. Citi continues its bullish narrative on lillys diabetes and weight loss drug pipeline. Stock up almost 60 for the year so far. While weight log drugs have captured the streets attention, where are other opportunities in the sector . Angela peebles is here for the first time in a long time. Thanks for having me. Tell us what you see in the space. Yeah, carl, theres a lot of excitement around targeted chemotherapy drugs called agcs. Rbc puts that category at 30 billion by the end of the decade. There are about a dozen approved and more on the horizon. Both Big CompaniesLike Astrazeneca and Smaller Companies are in the space. Also making a big bet is merck, committing up to 22 billion to partner with daiichi on three experimental adcs. And merck showing new data showing combining adc with keytruda doubled survival rate in bladder cancer. Bioagain and iesai is working on a new drug. An incredible version should help peak sales up to 8 billion for jeffries. Analysts are keeping an eye on Smaller Companies working on drugs for alzheimers. Were still waiting for the fda to approve eli lillys drug by the end of this year. We talk about how many advances in this golden age of research and so many areas, and some of the stocks get challenged. Is that mostly about covid comps or the fact the street has obsession about other things . Its so many things right now. People say innovation is just better than its ever been, but a mix of things like higher Interest Rates and also just this covid fatigue and people so focused on what was covid and now obesity drugs sucking up a lot of the oxygen making people reluctant to make big bets in this space. Are the insurers, will they play along . The big piece is alzheimers and cms making it easier saying they will start cover leqembi more than they were for the previous drugs. We still have to see what the uptick looks like as these drugs roll out there are some requirements. Doctors have to register people in this registry that cms is making. The question then becomes like how onerous is that and will people adopt it more widely . Those are tougher longterm questions but the space is still fascinating. Great to have you in. Lets get a news update with dom chu. Alaska airlines said it diverted a San Francisco bound plane to portland over a security threat. The airline said it was operated by subsidiary horizon air and had to be rerouted on sunday with an issue with someone in the cockpit. According to the seattle times, citing air traffic radio traffic, an offduty pilot tried to shut down the engine while in the cockpit jump seat. Law enforcement is inves investigating. Maryland police on the hunt for a man suspected of gunning down a judge in his own driveway on thursday night. Police say the suspect targeted the judge who ruled against him in his divorce case earlier that day. The suspects suv was found near the West Virginia border on saturday. There is now a 10,000 reward for information leading to an arrest. And americans are falling behind on their car payments at the highest rate in nearly 30 years. Fisch says the percent of subprime borrowers 60 days late on their loans rose to 6. 1 in september. That is the highest level since 1994. Ill send things back over to you. Yeah, high rates taking a bite. With snap, alphabet, spotify earnings on deck, well get a check on the Digital Media space. Wall streets hope for an ad turnaround. The actors in the studio set to resume negotiations tomorrow. Well talk about where we stand and why it is so crucial for the furef e viinsttu othmoe dury. Im going to sell my Life Insurance cuz i dont need it anymore. My kids are grown, my wife is great, lets settle up the score. Its time to travel to paree, spend retirement happy. Call 877selleasy. 877selleasy. 877selleasy, and sell your policy. You can sell all or part, live your life and play it smart. 877selleasy, and sell your policy. If youve had a change in health, or youre over 65, and paying for 100,000 or more in a Life Insurance policy you dont need, get paid for it instead. Then take the money that you get, go to live it up, you bet. Call 877selleasy. 877selleasy. 877selleasy, and sell your policy. Checking on shares of salesforce moving a little lower. A downgrade to talk about Piper Sandler cutting the name to neutral from overweight on increasing execution and m a risks. Analysts say they add a. I. Monetization is still uncertain. Given the stocks run up, the name doesnt appear particularly attractive at this level. According to piper. Though the context is important, carl. Its the best performing dow stock so far of the year, even better than microsoft, up 53 on a lot of the progress made since all the activists piled into this stock. Jeff smith from starboard told us he still thinks theres a lot of value. Meantime, lets turn to earnings in the media space. Digital media earnings are on deck as spotify, alphabet, snap all report this week and will reveal in some i whats the state of the ad market. Well break down what you need to know to get ready for those results. And the hollywood actors studios prepare to resume talks as that strike crosses the 100day mark. Can they come to an agreement before the fall tv schedule and next summers movies become completely upended . Julia boorstin is on both stories. Lets begin with earnings this week. Carl, its going to be a busy one for earnings. In addition to spotify tomorrow morning, then we have snap and alphabet tomorrow afternoon and wednesday we have meta. These tpz will give us insight into the state of the digital ad market. There are a couple of trends expected to really drive ad growth. Weve been hearing from lots of sources and lots of different analysts that the ad market after a weak year last year stabilized and started to see a momentum picking up in this in q2 and is expected to see momentum picking up in the second half of the year. Theres this overall question of momentum. For the digital ad players, carl, the question of how theyre using a. I. To better target ads, create ads and measure ads impact. Thats a key thing to watch as well. As we said, the actors strike this weekend in a joint statement they said theyre resuming negotiations beginning tomorrow. Top execs from the studio, our parent Nbc Universal will all take part. How easily can we rekindle this, julia . Im glad theyre getting back to the table. A lot of people are concerned about the massive Economic Impact here. The Writers Guild has resolved their strike. If you look at the combination of the Writers Guild and Screenactors Guild were talking about 6 billion impact to the economy. That number will continue to grow. What im hearing from sources in the industry, theres a lot of concern if the Screen Actors Guild does not resolve their strike within the next two to three weeks, we could start to see it have an impact on the film slate for next summer. It seems like summer 2024 is a million years away, but the reality is it takes a lot of time to finish these movies, maybe some of these movies had to pause production or complete shooting these movies. Then this question of getting them done and marketed in time to get them ready for audiences. And, carl and sara, the big question here is how do you maintain Box Office Momentum . You dont want to train consumers to think, there arent great movies at the theater, maybe i should stop going entirely. Were approaching that time where this is going to be a complete void . It wouldnt be a complete void but you would see an empty Summer Season. The Summer Season is the most important for the box office. The summer starts, the beginning of may, thats when the Summer Box Office starts. You have to Start Marketing these films months before that. The question is really the uncertainty here. They dont know if theyll have actors, that puts everything on pause. We are also coming up against the end of the year. You also have to think about the kind of weeks or in certain occasions months it might take to reramp production. They want to have certainty thats going to happen. I think once they come to an agreement in principle, theyll probably accelerate things so they can get moving before they have sort of the restarting process of the vote and everything like that. I think theres a lot of anxiety on both sides to get this done so people can get back to work. Absolutely, julia. Thank you. Julia boorstin. The s p has risen 11 on a total return basis, including dividends. Without the magnificent seven, that return would only be about half of a percent. Well check on the big tech stocks as we check off a by us week of earnings. Back in a moment. Answers, its good to have help. Because the right information, at the right time, may make all the difference. At humana, we know thats especially true when youre looking for a Medicare Supplement insurance plan. Thats why were offering seven things every Medicare Supplement should have. Its yours free, just for calling the number on your screen. And when you call, a knowledgeable, licensed agentproducer can answer any questions you have and help you choose the plan thats right for you. The call is free, and theres no obligation. You see, medicare covers only about 80 of your part b medical expenses. The rest is up to you. Thats why so many people purchase Medicare Supplement insurance plans like those offered by humana. Theyre designed to help you save money, and pay some of the costs medicare doesnt. Depending on the Medicare Supplement plan you select, you could have no deductibles or copayments for doctor visits, hospital stays, emergency care, and more. You can keep the doctors you have now, ones you know and trust, with no referrals needed. Plus, you can get medical care anywhere in the country, even when youre traveling with humana, you get a competitive monthly premium, and personalized service, from a healthcare partner working to make healthcare simpler and easier for you. You can choose from a wide range of standardized plans. Each one is designed to work seamlessly with medicare and help save you money so how do you find the plan thats right for you . One that fits your needs and your budget . Call humana now at the number on your screen for this free guide. Its just one of the ways that humana is making healthcare simpler. And when you call, a knowledgeable, licensed agentproducer can answer any questions you have and help you choose the plan thats right for you. The call is free, and theres no obligation. You know medicare wont cover all your medical costs. So, call now and see why a Medicare Supplement plan from a company like humana just might be the answer. Upbeat music upbeat music 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 yields on the tenyear sliding now after crossing 5 earlier this morning. Almost back to 4. 85. How have higher rates impacted the tech sector in particular in deirdre bosa is digging into that before the big week of earnings on techcheck. Higher yields are hitting the tech complex in different ways. Mega cap at one end of the spectrum. They look safer, more defensive in this environment. Theyre more mature businesses but growth at a reasonable price. On the other end of the spectrum are startups. Theyre still building. Focusing on growth and pushing profitability out to later when their business scales. The problem with that, though, is that rising yields makes that Business Model incredibly unattractive. Valuations come down because the current value of those future cash flows is less when rates are higher. At the same time, their borrowing costs are increasing. A double whammy leading to more startups just shutting down. Carta helps startups and vcs and found nearly 550 tartups have closed shop this is year, more than 467 for all of last year. And concludes this has already been the most difficult year for Early Stage Companies in at least a decade. Rising rates, the tenyear yield hitting 5 . That will only amplify those challenges. You can see the pace of closures spiked in the Third Quarter. One high profile name was bezos backed convoy, a trucking startup that raised 260 million at 3. 8 billion valuation just 18 months ago. It was expected to surpass 1 billion in annual revenue. Even round after round of layoffs could not save this company. Its failure has raised fears that the wave of closures could only be starting. Ceo of angel list, another platform for startups and vc funding, he says it could get worse before it gets better. A major expect are generative a. I. Startups. The picture could not be more different at the already established cash flow generating mega caps. Apple, its sitting on 167 billion in cash and investments as of last quarter. Alphabet, 150 billion. Microsoft, 120 billion. Now, if that cash is yielding 4 at a minimum in the relatively riskfree treasury market, thats now near 7 billion coming in the door at apple annually before it sells a single iphone. We could see, guys, is more calls to distribute that cash to shareholders. This upcoming earnings season is going to be critical in terms of buy backs and dividends. I wonder if well also see some companies with the big cash and the big cushions take advantage of what were seeing with Smaller Companies, either the unprofitable public ones or as the startups, as you say, to buy . Yeah. And maybe a Regulatory Environment that doesnt look as scary as it did a few months ago with some developments like microsoft, activision blizzard. The standards, the bar is getting higher. If you can earn at a minimum of 4 in relatively riskfree treasury market versus betting on one of these cashlosing startups, that changes the calculus a little bit. I gave you the example of convoy, the Trucking Company that went under. In the letter to the staff he said a lot of the Strategic Options just fell apart in recent months. They were talking to Different Companies about kind of an acquisition, but it just doesnt look as attractive in this environment. So, its got to be the reasons have got to be there. Like i said, theres an exception in the generative a. I. Space. Thats really where youre seeing all the deals and the capital being raised. Tough financing environment. Deirdre, thank you. The s p 500 crossing below the 200day moving average on friday. The big technical level. What does that signal for the market . Next well discuss when we come right back. The first time you made a sale online with godaddy was also the first time you heard of a town named dinosaur, colorado. We just got an order from dinosaur, colorado. Start an easy to build, powerful website for free with a partner that always puts you first. Start for free at godaddy. Com ah, these bills are crazy. She has no idea shes sitting on a goldmine. Well she doesnt know that if she owns a Life Insurance policy of 100,000 or more she can sell all or part of it to coventry for cash. Even a term policy. Even a term policy . Even a term policy find out if youre sitting on a goldmine. Call Coventry Direct today at the number on your screen, or visit coventrydirect. Com. You want to be able to provide your child with the tools or resources they need. With reliable internet at home, through the internet essentials program, the world opened up. Fellas, fellas. Thats how my son was able to find the hidden genius project. We wanted to give yall the necessary skills to compete with the future. Kevins now part of this next generation of young people who feel they can thrive. Lets close out the hour we began, at the bond mare ket. A valuable alternative to stocks, but if you are going to stay in equities, there will be an opportunity in health care over the coming months. Jeff, you have had great tactical calls all yearlong. I remember talking about 4300 with you a few maybe a couple months ago. What will be most productive in the shortterm . Its a great question. I hope i am on point here for the Fourth Quarter. You hit real yields and theres no doubt those are a problem not only from a valuation perspective but obviously the reverse of the tina play. On the Fourth Quarter we have a couple things going for us. One, sentiment is good enough its not spectacular but good enough to provide for the seasonal tailwind we historically get. We have a good oversold condition where we are retesting that, and the 20year lows spiked a week ago, and i am optimistic we will climb to 44 maybe 4500 between now and the end of the year, and i am concerned about the yields and, more importantly, the real yields have started to indicate triple b spreads are moving higher. That will be a challenging equity in 2024. Yeah, gross enactment on the tape, and gross in this case, recession in q4. Do those longstanding recession calls pick up steam here . Maybe they do. Its not our job. Neil does that and he does a great job, and hes not seeing that in the Fourth Quarter or next First Quarter of next year, and he thinks the fed is on pause. We are seeing dear ration in some of the industrials and construction and engineering broke down, and leisure products broke down, and those are more esoteric, but they are Interest Rates sensitive and gdp sensitive, so we are seeing cracks at the margin there. We have been talking about how miserable it has been in Health Care Stocks unless you are in obesity. Are there opportunities here or how do the charts look . They are not pre sesenting themselves, yet, sara, but we are getting an idea of where things are too good or are so bad they might be good, and we are getting that with health care. The ratios are a bismol, and theres no salvation there other than the distributors and a few select facility names, and a few esoteric names, and it reminds me in the past over the 30year career, you see strange core larry affects, and airlines will be more profitable because people will be skinnier, so airlines are a buy. I have not heard that one. Oh, yeah. That is making the rounds. You get those kinds of impats and it becomes a head scratcher that maybe the sentiment and maybe the belief is just too onesided here. I think there are good opportunities. We like to wait for relative strength to break out, and thats not happening but we are in the environment where we want to start looking for and doing the work on names we think we make the turn in 2024. Does that extend to some of the regionals, especially coming off of the results last week, and looking at what the kbw is doing this morning . The regionals, it seems like they should be. When we look at the data, its not there to the point keep in mind, when all of the constellations align here, what we are really looking at, its not there yet for the bank index, whatever etf or index you want to use, but sentiment is in the right spot when you look at the eft flows, and appears good sign but i cant tell you the returns have been so bad, even though it feels like it, they have not been so bad on a risk adjusted basis we cant make that call right now. What do you say aboutoid . Oil. Well, if you are talking about crude, its tricky because gasoline doesnt look good, and net gas is probably more of our favorite and that looks interesting in the breakout through three, and 3 that is, and that looks great on a longterm basis. You have yings and yangs and energy, and we are finding the like in storage, and the path to least resistance in crude is higher. Jeff, it feels like the most aggressive yearend targets at this point are coming from the chartists, and i know piper is looking at 245 by the year end. Are we learning on i think part of it has been discrediting of the idea that the yield curve had to creation a recession and all the different metrics that were out there and are giving so much pause for 2023 didnt seem to play themselves out. I suspect those philosophies are not wrong, and i dont think thats necessarily the wrong way to approach the markets, but the charts always tell us when those things come back into vogue. I think if these triple spreads gain foothold here, whatever rally we have, 4500, 4400, which is our target, that will be a better seller to be not be embracing, and thats driven by fundamental factors that we are seeing in the spreads, but if we see the deterioration of the credit from the real yields than the rally is likely to fail and thats an Important Message for 2024. Wow. Jeff, thanks as always. The week is just Getting Started with the biggest week of earnings still ahead. We will hear from the big names in tech, and we will get more commentary from powellon wednesday. Slow Economic Indicators kicking it off with pmi tomorrow, and then Third Quarter gdp on thursday. And the deflator will be key, and thats the feds preferred inflation metric on friday ahead of the fed meeting, and they are hoping to see more progress on inflation, on target but lower is where wall street is expecting it to come in. Yeah, and gm and ford and intel, the mega cap techs as well cocacola. Overall, the earnings have been decent and the outlook we will be paying to is if the Third Quarter can keep up that will last into the Fourth Quarter of next year. Lets get to the judge. Thanks so much. Welcome to halftime report. This hour, what might be the big rate for tech stocks, and the Investment Committee debating, liz young, and joe and steve weiss. We are green across the board. Theres the tenyear note yield, 48