Nearly six weeks after the union began a walkout. And Morgan Stanley says it has its new future leader. Dont miss a first on cnbc interview with ted pick and current chief executive james gorman lets begin with the nasdaq which is set to fall deeper into correction territory the ndx coming off the worst day of the year. Now down 11 from the july highs. It looks like the mega caps are catching up to the decline of Everything Else i think theres an overwhelming sense that they all went too far. That they all got overvalued i do not share that. Well get to meta. These are not ultra expensive stocks, theyre a couple turns in pe. Theyve become major sources of fund i think its more correlated with the bond market than earnings yes, google did not tell a good story, it wasnt like they missed big meta, otherthan a few lines that were about meaningful spending, meaningful hiring and also obviously difficult to advertise when you have a wash, it was quite good. Now, the stock is down literally 20 points from where it was after they first reported. Im just trying to present this is more of a function of revulsion of companies that got too big and bonds. Today we have a bond market thats tame. People use these to sell they dont even bother to listen other than a snippet im hearing the same from any number of other Market Participants this morning. Almost saying its a market thing. Its not a meta thing. Im so glad meta, to your point, jim, and i did speak to three people who own the stock and have for some time theyre contention is that was a great quarter. Everything was largely positive. You did scare some people because of the commentary around the ad market. You gave a wide range, which perhaps also sort of, again, in terms of where things may end up for guidance im told, by the way, in the callbacks, after the call typically then theyll call around and sort of call back to some accounts and the like they said things are already turning a bit. Not dissimilar to what we heard from snap, saying there was a dislocation a bit during the beginning of the war maybe things are coming whback a bit. Operating margins amazing. The discipline or the belief they had the discipline in spending still in place, and if revenues were to sort of moderate, they would be disciplined again. Thats their strategy a different day to your point. I think many people would say, granted they own the stock, that this stock would be higher, not lower. I dont think the cfo meant to panic anyone when she was stating what she saw i remember when the war broke out in iraq, suddenly our sales plummeted. I said, why is this okay idiot, dont you see, people dont advertise when theres a war . Right this is the cfo, susan lee talking last night about potential volatility coming into q4, weve been seeing continued strong advertising demand including in online commerce and gaming, having said that were seeing more volatility at the start of the quarter. Thats why we widened our range to capture that activity while we dont have material direct revenue exposure to israel and the middle east, we have observed softer ad spend in the beginning the Fourth Quarter correlating with the start of the conflict, which is captured in our q4 revenue outlook. Jim, i think it was roth this morning that said investors were hoping to unlock an algorithm that could provide a pathway to 20 next year. Some argue they didnt get the incremental evidence that that would happen look, theres a moment in the Conference Call where you have to say am i dreaming or did mark zuckerberg, one of the hardestnosed Business People in the world is saying ai glasses, particularly rayban glasses could meaningfully be terrific they can deliver ai through smart glasses that may be a killer use case. If thats true, then i can unlock anything i want i think the skepticism comes from those of us who got burned by google and google glasses i went and i said what am i doing with these this mark zuckerberg, he knows things that we want, looks at reels. Reels is so good, he doesnt even have to break it out. Now net neutral to revenue. So im saying when you throw a lot of money away in reality labs, were making a bet if you like the stock that zuckerberg has not lost his touch listen, i got people who think 18 is going to it be a low number for eps next year and they could hit the 20 number. If you back into that number, we can all do simple math, were talking about a 15 multiple. Is this a steel mill . Which could be compelling that said, market today is taking of and there are concerns about the ad market going into next year or into the Fourth Quarter. Well see. By the way, we got amazon. Maybe amazon will turn it. How about nvidia . If we get aws Revenue Growth above 11 meta did come in below the 100 billion operating expense number, many said if you come in below that, its a good quarter. Amazon, looking for 11 Revenue Growth aws, the hope is 12, 12. 5. The ad market is important for amazon, too. We may get yet sort of read on that its funny can i analogize completely away from this so people dont think were just talking about tech im close to mastercard, which is a Great Company. Yeah. Our executive producer was in my office when we were going over things. Out of nowhere they report the number looks great i said the revenues look flat, flat with what people are looking for, not flat i was going to say, mastercard is up 21. I said throw that thing away. I found that david, well probably talk later about the Parent Company of our network. I think well have to talk now about the Parent Company of our network. Why are you leaving . The stock is down a lot dont take it personally. Its not your fault. It isnt . It isnt my fault . Were talking about comcast. Comments on the Conference Call are shellacking the stock. Shellacking the quarter itself showed a loss of 18,000 domestic broadband subs investors were looking for gains, small gains, so that worried people my expectation coming in was when we talked about it, i would mention the 18,000 loss. On the call, ive been beaten to it, Jason Armstrong, the cfo of comcast said the following, the broadband market remains highly competitive, particularly at the lower end as we continue to manage this balance we expect growth to remain strong and our primary driver or broadband Revenue Growth with somewhat higher subscriber losses suspected in the Fourth Quarter compared to the 18,000 loss we just reported. Thats not helping things. Comcast down 7 . Looking at charter, i would assume that is also getting hit. What is going on with the lower end on broadband maybe we should think about verizon now. Yeah. Fixed wireless has a capacity limit. They can only do so much then theyre done. Verizon added, tmobile added. I also thought if peacock losses would somehow peak and you would have good numbers cavanaugh, the peacock numbers seemed like they werent going to come in as bad as i thought revenue up 64 right i know where people think, great, why dont you talk about how much your house is worth when you talk about comcast. It is a big issue. Its personal, but verizon did seem to be better. We can stay on comcast, but, jim, brunswick boat sales down polares sales down harley sales down. We would rather experience it rather than pay for it brunswick, there was a period where we thought brunswick was secular growth because people found the outdoors david, the outdoors, okay. Really . Just okay . Bugs and stuff. Its outdoors, its no good. If its cooking at home, mccormack, thats the best performing food stock. Maybe you could say it doesnt have that much taste other than spice, so it doesnt have weight, so its not a function of the wegovy, and hershey theres got to be a moment this morning where people say sure hershey is great now theyre already doing it hershey organic up 9. 8. You dont sell hershey before before halloween they did say consumers are starting to buy candy closer to halloween. Theyre optimizing candy now . Optimizing spend. David, its halloween i know. Ive been eating all the halloween candy already. Youll need braces. Oops, not. Align. Align was bad. People no longer care about whether their teeth are straight apparently people are still drinking some soda dr. Pepper, not a bad quarter. Really hot summer, maybe people drank more carrier global. Well get to a lot of those names. Have to get to autos, ford and the uaw do reach a tentative deal to end the labor strike after six weeks. Phil lebeau has the latest lets give you the numbers behind the pay increases that the uaw members will be receiving if they finalize this contract that ratification vote likely going to happen next week, maybe a bit longer it basically comes down to this, 11 pay hike immediately, once the contract is radtified, 25 p25 over 4 1 2 years base rate payer will be brought in at 28 an hour. Heres something you dont see anymore. The picketing has stopped. This is video from what weve seen over the last 40 days outside of ford plants workers picketing. That has stopped the workers will be going back on the job soon. Some actually are going in now, but the ramp up of production at the three plants shut down, that will be more gradual ford is working with the uaw in terms of getting everything up to speed there couple other things to keep in mind, if you look at shares of ford, this strike, the estimate is that it cost them 1. 9 billion. We will get a more definitive number likely this afternoon thats when ford reports its q3 results. Theres going to be a strong profit for the Third Quarter, but i suspect most of the questions on the analysts call will be with regard to the uaw contract what does this mean in the future for ford in terms of ev investments and how the company is positioned for future investments . Look at shares of ford versus gm and stellantis yes, the strikes continue at gm and stellantis one interesting note today came out from rbc capital talking about the impact of this ford deal they said we expect a brief relief rally i think we may be seeing that already today with ford. By brief, youre looking at maybe a 5 pop all right phil, we talked about the market what about stellantis and gm how close . Well, theres definitely progress being made there. Any time you take out the two largest and most profitable plants for those guys with gm its down here in texas, the arlington plant where they build big suvs and for stellantis up in the detroit area where they build the ram 1500, that got their attention. I think we see gm next and then stellantis timeframe . Your guess is as good as mine. Theres no doubt those two strikes that were initiated this week has gotten the attention of ford, thats one reason why ford was quick to resolve this before they reported earnings today they didnt want to come out and say were making x billion of dollars knowing what happened after gms report earlier this week a positive, different tone versus the one just mentioned. I thought this would be scorched earth. I thought fame would go for 30 or 35. The next thing i want to know, will farley pivot, recognizing what toyota is saying, go allin hybrid and make us want to own this stock because then we wont lose so much in ev he already has gone very heavy into hybrids he made that announcement a couple quarters ago. Youre seeing that at ford, theyre pivoting that way. Having said that, you wont seafood, gm and stellantis give up the ghost when it comes to electric vehicles. Are they going to scale back they have already said theyll do that. I think thats what well see more of. Phil, well talk to you in a bit with southwests chief bob jordan those shares opening near a nineyear low. I just like ford. It could be a winwin. After the break, servicenows Bill Mcdermott is with us breaking down the latest quarter. Stock getting a lift from strong Sales Guidance well get to tractor supply, Morgan Stanley, ibm, honeywell, Royal Caribbean, hertz in a minute the power goes out and we still have wifi to do our homework. And thats a good thing . Great in my book who are you . No power . No problem. Introducing stormready wifi. Now you can stay reliably connected through Power Outages with unlimited cellular data and up to 4 hours of battery backup to keep you online. Only from xfinity. Home of the xfinity 10g network. Sometimes its good to have unmitigated positive numbers we have servicenow now who crushed it last night. Just crushed it on every single element. And we have Bill Mcdermott in person, a delight. Hes the chairman and ceo. Most important line of the call, ai it is not a hype cycle, its a Generational Movement and giving you multiple 10 million contracts. Why is that . Jim, a couple things about servicenow that a lot of people dont know this is a Company Operating at the rule of 55 when you take the Revenue Growth and the Free Cash Flow margin operating at the rule of 55, its the First Company of alltime in Enterprise Software to be on the doorstep of 10 billion in revenue at this point in our history Fastest Growing ever whats happened is Digital Transformation has turned into business transformation. How do companies deflect the pressure from their people using Digital Technology how do Companies Avoid having employees swivel chair between 13 applications on average a day burning up 33 of their productivity and now how do Companies Take generative ai to rethink the game in terms of their business processes . That, theyre doing all on one platform with servicenow with one User Experience that is consumer grade so, jim, youll love this. We went live on a pricing skew on generative ai for one day we had multiple deals of multiple million of dollars. Thats because of vancouver and you fondly have offered the finest security proposal, therefore federal contracts love that exactly the air force being one i want you to talk about the United States air force is the Third Largest deal weve ever had at servicenow it was a phenomenal example of using one platform with one User Experience to completely reinvent the way in which the u. S. Air force goes about their business but, jim, youre a big fan of nvidia major profits, and you went jen with the first name, like yoda hes a good friend of mine. Were building Large Language Models from the gpu up through the nvidia stack to fine tune Large Language Models on the servicenow platform at mass scale. Nvidia is also a customer of servicenows that adopted our platform as the new standard for this generation. Were proud of Great Companies like fedex, nvidia, the United States air force and so many more that understand that business Transformation Management is what every great ceo needs to be doing. Theyre doing it can you explain what you just said what that actually means . In terms of building the stack for generative ai. Youre not thought of in terms of spending did youre not spending the money that meta or alphabet or microsoft are in terms of Large Language Models or goggle Computing Power what are you doing. Right on. Were doing domain specific generative ai built into the servicenow platform. So, whats different about us is we require far less compute power than those Large Companies you just mentioned to execute for customers across our platform every single thing in our platform is now energized by generative ai. That includes how do you manage your assets, how do you run operations, how do you run risk, security, governance, compliance how do you give your employees a great experience fedex, 500,000 employees on one portal to give them a great experience customer experience. How do customers selfself why should they wait for a call agent . Jim, i have another one for you. David, youll love this well run out of time engineers engineers now text app development, completely reinventing engineering complex. In new york, the banks you have here, they have thousands of engineers. Well transform what they do every day. You moved the whole Software Market earlier in the year with your comments about macro and elongated sales cycles are you seeing any echo of that right now . What i said in the Second Quarter of 2022, which is what youre referring to when the ukrainian war broke out, i said there will be challenges at the global macro level and that was correct. I was the first one to claim that the market reacted that was on your show, jim the market we acted. Then the truth teller, as it may be, reinvented the way we create value for our customers, truncated the sales cycles and made sure return on invested capital, taking costs out, improving productivity baseball the calling card of servicenow thats why weve run with this market to carls point, you have a read on spend overall. Yes weve gotten some mixed reports lately from some of the Big Tech Companies what are you seeing on the ground these ceos are very concerned about the macro. Theres no question. You have a couple of wars, high inflation, high Interest Rates, and the hangover from covid. They need to digitally transform their companies, take costs out and improve productivity they need to buy into generative ai if they dont and their competitors do, their Business Models will be superseded by someone else theyre all talking about optimizing spend except for your customers. How does that happen our customers wouldnt spend if they didnt get a great return on their investment theyll spend a dollar if they can get 10 in return with the service now super platform for Digital Transformation, you get an roi uncommonly good. I have to tell you, youre a godsend on a day like today. Maybe you can turn it. Maybe you can turn it up you have to want it more. We want it more. Whats the rule of 55 come on. Thats Revenue Growth plus Free Cash Flow margin. David, they say youre a Great Company if youre operating at the rule of 40 theres only one company in the software industry, servicenow. I know the name of that company. He beat salesforce to 10 billion. Thank you generative ai says now. Now theyre giving me the hook. Thank you for coming on. Please come on personally every time i love being here with you guys you know that. Thank you for having me. Dont be a stranger opening bell coming up in about 4 1 2 minutes. All right. Lets get a mad dash in and then an opening bill. Adobe. Yeah. I want to keep this in the family of what we just heard from Bill Mcdermott of servicenow people are saying generative ai, show me somebody who is making money. Now we have three. Servicenow clearly, microsoft without a doubt with copilot and this with adobe, this is still number one for the Small Business person and individual if you want to know how to incorporate generative ai so you literally become every big as any business because your name plate is so good adobe. These are three companies other than nvidia that are not part of the hype cycle someone might say that ibm also delivered. They had a good generative ai numbers, they keep their Free Cash Flow up, which is excellent. I think adobe, servicenow, microsoft and nvidia im working on a magnificent seven, remember faang, that went completely youre working on a new generative ai . Who is actually making money. Amazon, we dont know . Man up im working on it lets get to the opening bell here at the big board, bit wise at the nasdaq, a korean bush daysed social media platform jim, i guess in the line of social media, well keep our eye on meta today. Absolutely. Meta i put my cards on the table it was a great quarter. Yes, there is going to be theres going to be people who say its not right to advertise when theres such bloodshed, but they also say when it runs its course, which wars do, we have to go back to advertise and well advertise with meta, with amazon web services. Ill call attention to a company thats small but doing a good job. Carrier. This is a company that is hvac doing a very good job. He pumps now in european. He made a big acquisition a lot of downgrades to sells theyre doing well watch this one from the tenor of we had so many easy shorts its been great to be a short seller watch carrier as a litmus test as whether the shorts are overly shorted and pressing their bets. Bernstein with a great note we got about a third of the s p earnings in. Up about 11. If you take out the magnificent seven, down nine yeah. Now we decided that magnificent seven should be valued the way the downers are. David said something yesterday, when you look at the companies were talking about, meta, alphabet, billions and billions as opposed to hundreds of millions right . Maybe you can help in this, we sometimes we cant grasp the magnitude of a Company Making 30 billion a quarter the number i know our viewers may get tired of me saying it they never tire having started many years ago, the numbers are staggering. 40 billion in a year on capex at alphabet or microsoft, 30 billion a year at meta the revenue, the Free Cash Flow, its astounding. Yes just the numbers themselves taken separately from the performance and whether or not its meeting the performance obviously that is hoped for, the numbers themselves, the size of these companies is staggering. Its the size its very hard to grasp. Jeff marks put out a great note on meta. This company was not doing nearly as well last year as its doing this year. Thats rather amazing. Yet its 17 times earnings thats kind of attractive. If they do the 18, not to mention some believe as much as 20 next year you can back into a multiple you can do the math. Less than 15 times, 16 times, even if they come in at 18 yeah. Yeah. That would be cheap. That said, theres always a concern that hes going to just spend too much. Yeah. Yeah meta generated more than quoting jeff marks, meta generated more than 13 billion of Free Cash Flow in the quarter bringing the total through the first three quarters to 31. 5 billion in Free Cash Flow for all of 2022, they generated 18. 4 . Thats what you get when you have the margins theyre putting up highest in a couple of years, right . Yes then again, they had they are meaningfully employing, increasing their headcount, meaningfully spending on the part of the company that people dont understand does he have something that we if we put the raybans on and were i dont know, were at a baseball game or the world series, would i be able to say when did we last have what did ted williams bat the year before he came back from the war . Would it give me an answer would it have an ad for the red sox . We need to see it. Hes seen it i was in his metaverse versus apples metaverse, apple has their zip code either way, you dont think its a revamp of google glasses. It wont be like that . I think hes too smart. I cant do that. I trust him. Maybe were so short on supply for trust right now that but if amazon says jassy has a great number and we have greatnumber from microsoft, maybe someone will say im willing to bet it might work apple im buying it thats my wifes berth day. Dont want to mention what i bought im on the phone with some Virtual Assistant last night, chris, who was dynamite. Im looking at apples numbers what do they have to do . They need the phone to show growth but the amount of money they make and they raise the price of their subscription no one will not take it. The Service Revenue is enormous its recurring it gets a higher multiple, but thats all baked in already, isnt it it is baked in. Thats why i told people to own it, dont trade it im not telling people, listen, you have to buy apple. I just like it its the best american best company in the world i cant tell you carl, i would much rather you be in you know what . This is the time to be in bristolmyers. Dont be in the best company in the world. We did not get to the revlimid guidance today. No. Bristolmyers is very disappointing. I have to change the price multiple for bristolmyers is shrinking rapidly. As it the stock price look at that in stark contrast to the eli lillies of the world or the eli lilly of the world i took a picture yesterday of twinkies, the hostess twinkie, i dont know, you buy a thing of doughnuts, you only want one doughnut you want to do ms pick . No. Im going to deny your request i will do endeavor you are picking the picker. Theyll talk to picker later. James gorman and the incoming ceo of Morgan Stanley, ted pick. Lets talk about this, the stock is up 18 . Endeavor, remember, of course, most recently in the news because of the merger of its usc with wwe creating tko of which they control it. Go back to the ipo, back in april of 21 i believe it was, you can see, its not been a good performer thats including the move up today. Thats frustrated ari emanuel who runs the company and maybe even silver lake, its largest stakeholder and the company that controls endeavor. Late yesterday we got this given the continued dislocation between our Public Market value and the Intrinsic Value of our underlying assets, we believe an evaluation of Strategic Alternatives is prudent. What does that mean . We may sell the company. Silver lake made it clear were not selling to anybody but us. So they might buy in what they dont already own. Silver lake believes in endeavors business and is not interested in selling its shares in endeavor to a third party nor in entertaining bids what silver lake is interested in doing is making a bid potentially to buy the company and take it private. What will that look like will it happen how do you make sure thats fair to minority shareholders youll have a special committee. And again, theyve done this before do they come with a number that endeavor and the committee can be happy with . Will it have a three in front of it as many hope it would having spoken to people who are not ari and are not silver lake, you take the stake in tko, you look at what is being paid for caa at 7 billion, they have a bigger agent business. On location they say is worth a billion. The studios business they have, worth as much as 10 bucks a share. They can go on and on and tell you why this thing is very much undervalued. They will also, however tell you i know you cant say too much that they have not communicated very well with the street at endeavor they sent mixed messages the last time is when the stock went down sharply after they signed that tv deal, the rights deal for part of the wwe, the raw deal still to come maybe the communication from the company has not been the greatest not going to be anything there for the pga. Well watch this closely if there is a buyer, it will be silver lake. And the price, im told if it does happen, the deal could be reached before yearend. Well see. Now we can talk about ted pick you know, i did want to mention, in terms of communication, theres an upgrade today of livenation, which communicates its story incredibly well. I was going to go out on this gdp analysis, ill put it so people can understand. Two words, taylor and swift. Experiential, football is back, travis kelce how did it happen . Thats a metaphor. When the nation is going nuts for entertainment, Royal Caribbean, whether it its taylor swift, you can see its not cooled down yet. Hats off to our fed chief, jay powell, had he start cutting rates and gotten this gdp number would have been regarded as a fool theres a lot of discussion about it, if you just took the headline, fed has to do more, but that core pce number maybe thinks they cant afford to stand pat. Then we have these auctions coming up. In the 90s we used to follow the bond auctions, how did they do how did they do . Were back there was a fiveyear yesterday that wasnt so hot thats what people have to start watching things that you havent cared about in years, lie how did that auction go rick santelli, well have to get these numbers. If the auctions go badly like what happened yesterday at 2 00, thats when you had the breakdown. Well look for that today we mentioned southwest earlier today. Stock trying to bounce off the shallows, that is going to be a nineyear low today. Lets get to phil lebeau live in dallas with bob jordan hey, phil. Hey, carl bob, good to be down here once again in the hangar where you do some work on your aircraft you basically meet expectations in terms of your Third Quarter both on top and bottom line. Your guidance about capacity has spooked investors. Your stock is now at a nineyear low. Why are you pulling out or why are you slowing down your growth and capacity as much as you are . Id start first with we had a great quarter the Third Quarter. We had record operating revenues, record passengers, record rapid rewards revenues, record new rapid rewards members, record ancillary revenues were forecasting record revenues and record passengers again for the Fourth Quarter you know, the whole sector is under pressure, obviously. Costs are rising a lot of that is labor costs a lot of times it takes a while to absorb that we plan to make some capacity changes here in 2024, just to recognize the fact that travel patterns are different business is strong, but its still restoring. Our leisure demand is strong but the patterns are different than prepandemic we will take capacity out of the First Quarter and reducing capacity for 2024 to the 6 to 8 range, which is all capacity thats carried over from 2023. Did you get over your skis in terms of how much capacity you added here in 23 . Im really proud of our folks. It was a huge effort and accomplishment to get all of our aircraft flying and to get our network restored basically to prepandemic levels. Thats a lot of capacity did you go too far . You never know. We plan for the business restoration to be higher than it is today the main thing is theres Strong Demand for Southwest Airlines. Were taking action going into 2024 to pull that capacity back prudently. First quarter,back after the year if you look at the back half of 2024, our nominal seats next year will be down compared to the same period in 2023 you mentioned in your release this morning seeing a return to historically normal travel patterns does that mean that these slower periods in the fall, this is what well start to see again . And that the travel patterns that we saw coming out of the pandemic, thats pretty much its played out. I do think leisure has returned to typical travel patterns business again, while its were continuing to gain market share and business is growing, it is still not fully recovered to 2019. That produces a different travel demand pattern and behavior. We need to adapt our own network to that. The shoulder period as an example falls off more than the stronger period. Thats why were taking capacity out of january and february. You mentioned something before this interview that struck me. Youre noticing people who travel for business are booking fewer flights. As in the past, five flights a month was typical, now it may only be four tell me what youre seeing there. That makes sense. A lot of Companies Still dont have full return to work theyre working three days a week it makes sense to me that if your customer is not there, youre not going to visit. Business travelers, while theyre flying and flying a lot, theyre flying a little bit less per person than they were prepandemic were adapting to that look at our rapid rewards programs while a lot are leaning away from customers, were leaning to our customers. Were making it easier to get tier status. A lot of it is about business customers who we know are flying less and we want them to obtain tier status. Bob, jim has a question for you. How are you im good. Good how are you doing . Great to see you and phil down there. Great i want to not challenge, but question something you said. You are talking about people going back to the normal travel patterns we had a Gross Domestic Product number today that shows me that there is still in excess of travel patterns when theres something to go to your predecessor used to tell me when we have something to go to, we go. How about the vacation routes . Are those still robust they are. Leisure demand is strong we had record revenues and record passengers in the quarter. Were predicting record passengers and revenues in the Fourth Quarter demand for travel, especially in leisure, it still demains strong our demand for the holiday periods, bookings are rubbing ahead of 2022. Bob, real quick on the pilot contract, are you going to get it done this year . You know, i i hate to predict. Were working really hard. Were meeting every single week. Theres a lot of progress. We want to get all of our contracts done weve actually closed eight of our contracts in the last year we just got a new tentative agreement with our flight attendants, tw 556 yesterday now theres work to be done. It has to go out to the flight attendants for a vote. I want nothing more than to reward our awesome employees won jordan, ceo of Southwest Airlines glad to be down here jim, guess where hell be friday night . World series against arizona im not sure about that i just thought i would throw that out there that was nice, phil i always thought we were friends. I didnt know. I didnt knows there tension there. I did not say i would be at the world series come on you can give jim a little bit of grief. Im going down to dallas for the dallas eagles game on sunday night on nbc i hope to see you then phil, as always, thanks thanks, guys. Jim, we were talking about actually, we should do more airlines, because people talked about death crosses on delta. We talked about this low i actually like delta its inexpensive and because we dont know how many things really did stay postcovid that gdp number tells me that theres an element of travel that is really kind of never going to go back the only thing im finding that will never go back now that the i have to see the world before i die we know that is still with us. I think that you see it with delta. We dont have u. P. S. On this board, thats going to take you back today to mid 2020 as they do lighten up the guidance a bit. Yeah. Thats a tough story im hoping that one day when you had the teamster deal, i thought it would be like the ford deal. Not yet. Watch the ford suppliers xpi is the Semiconductor Company to the autos texas instruments, which was shelved yesterday. I have people who feel this strike is not open and you wake up, other than david who did say he felt a little birdie told him you just felt the strike was about to run its course. Nice. Good call. I did you said it to me i did im just giving you credit. For what . He didnt know jack about the strike he was talking about lucky strike nlcs world series strikes no. I i talked to jim i felt if this didnt resolve soon, the broncos i saw coming off the line, theyll run out. Not. Not. Got some gains on the dow, mild one up 15. Check bonds today as well. Got some data at 10 00 with pending homes. Yields have backed off tenyear 4. 91. As jim said, sevenyear note auction, 38 billion worth back in a minute when the day that lies ahead of me seems impossible to face a lovely day lovely day lovely day lovely day a bank that knows your business grows your business. Bmo. This is a special alert. Israel is under attack and israels enemies seek our destruction. The people of israel need immediate help. Rockets have us squarely in the crosshairs. Our people are targets in their own homes. Many have lost everything and fear for their lives. The International Fellowship of christians and jews has launched an urgent response to rescue those affected by this violent attack. Our teams are on the ground across israel delivering lifesaving aid. Your urgently needed gift of only 45 will help rush food, water, medicine and emergency supplies for jewish families that have nowhere to turn. Time is literally running out. What we need you to do is to act now. Fisher Investments in this market, youll find Fisher Investments is different than other money managers. other money manager different how . Arent we all just looking for the hottest stocks . Fisher Investments nope. We use diversified strategies to position our clients portfolios for their longterm goals. other money manager but you still sell investments that generate high commissions for you, right . Fisher Investments no, we dont sell commission products. Were a fiduciary, obligated to act in our clients best interest. other money manager so when do you make more money, only when your clients make more money . Fisher Investments yep. We do better when our clients do better. At Fisher Investments, were clearly different. [ clock ticking ] were going to have so much fun. You are looking at a live shot of federal court in manhattan where ftx founder Sam Bankmanfried is expected to testify in his fraud trial as early as today well continue to monitor that and bring you any highlights nasdaq down almost a full percent the falling below the 200day. Well get stop trading with jim in a moment. 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. Is it possible my network could take my business yeah. 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. Lets get to jim and top trading. My colleague david faber was on fire all morning. Im going to put something upbeat in his bonnet hertz reports a number i thought was fine but one thing driving it down is tesla tesla price cuts are killing it. They have to drop the price of the cars to spur sales looks like youll like this, its costing a lot to fix them when the repair costs really . High for the yes. I thought they werent supposed to have a high level of maintenance. Thats why. I passed it on to David Montoya was youre going into musk now and montoya going in to princess bride. Ask about these repairs. Happy birthday to the star of that film. Great snpicture. It is the best. How about tonight i have hertz. Well be able to talk more about it i have steve. No kidding. Always enjoyed him at goldman. Straight shooter did talk about musk and repairs, not what youre supposed to talk about. Bahram did not have a good quarter. Life stooim fitness. Planet fitness lost its ceo. My question is, glp1, just in shape. You have to work out harder. I have to find out whats the matter here. You do that. Great show, jim. Servicenow. Dont know what to do . Servicenow. What are you talking about dont know what they do . You cant follow Bill Mcdermott come on. When we come back, speaking of ceos, Morgan Stanley naming ted pick succeeding goanrm both joining us next dont go anywhere. Good thursday morning. Well to another hour of squawk on the street. Im sara eisen and Carl Quintanilla and david faber, live for you as always from the new york stock exchange. Take a look at stocks on the busiest day of earnings. Its a mixed picture, at least in the s p 500, which is down almost 0. 75 real estate, materials and industrials are higher right now. Whats weighing on the market, tech, Communication Services a big part of the story today. Were going to talk about meta and the movers there health care is weaker, tech, energy and consumer discretionary. 10year treasury yields is backing off the 5 level we hit on mond after stronger gdp lower yields across the curve. 30 minutes into the trading session, three movers were watching meta, to begin with, under pressure despite beating estimates, cautionary commentary around advertising meta and the entire tech just head down 2. 2 on the nasdaq. Its only tuesday. Shares of comcast slumping sorry, thursday. After posting a surprise loss in broadband commerce more later this hour ford on the move after reaching a tentative to end a labor strike includes a 25 pay increase over the terms of the agreement poerds is going to report earnings after the bell. We have more data. Pending home numbers crossing the tape up 1. 1. We were looking for a decline of 1. 5 and down 11 compared with september of last year of course that comes on the heels of decent new home sales data yesterday theres clearly some housing activity taking place with Mortgage Rates where they are. Just another data point confounding of strength in this period of the cycle and this period of Interest Rates though i think we have to top it off with gdp coming in at 4. 9 we expected a strong number, that was stronger than consensus, not as strong as the hasnt fed, but they were way out of consensus, but driven by the consumer 4 growth in u. S. Consumer spending might be surprising after more than 5 of basis points tightening. The inflation and all the other headwinds, so far so good for the Third Quarter and marked a pickup from last quarter. Jobless claims out to 10 higher than last week but nothing to worry about in terms of stress and layoffs. Watch continuing claims because that does see an increase and those are the people basically still on Unemployment Benefits were going to want to watch that to see about the health of the labor market whats interesting, guys, is that these strong data points, they dont necessarily match up from what were hearing from big companies. For instance, ups, taking down their Sales Forecast and cautious commentary on the health of the economy and the strength of demand if we can pull up the ups ceo, we expected to have conditions in the Third Quarter to be challenging and they were. The Macro Economic environment remains weak which is just interesting on a day where we get 4. 9 growth ceos have a direct view of whats happening in the economy and a realtime view, and so the gdp data looks old. And it may well be old. I mean, theres any number of commentary off of these calls that indicate the belief that things are softening a bit we talked about it in the ad market as it related to snap today to meta. Maybe a minor blip maybe not. Theyre related as well to geopolitical turmoil to a certain extent. People see that stuff and dont make Big Decisions to commit a lot of money. I noted the hersheys commentary as well talking about the value consumer hershey has been a big loser, worries about the obesity drugs prp here is the commentary, many cutting back on discretionary purchases looking for deals, buying smaller sizes we have seen more category and brand switching with deflationary perimeter categories and more satiating foods out performing the perimeter of the store. Downshifting in terms of growth even with this big gdp number now in our Rearview Mirror were downshifting. Not going to get a number like this in terms of household spending, gross private investment they worked well in the Third Quarter, and you have to Pay Attention to what ceos are saying though it is a little confusing because if you get a higher Third Quarter gdp number you would think that even with a step down, Fourth Quarter is going to be better and First Quarter of 24 will be better. Not like were falling off a cliff. Some of the new data points have been pretty strong. Yeah. Even if you take out government, take out inventories, take out experts, final sales to private domestic purchasers still 3. 3 a solid number on private, and thats doubling the prior quarters r rate in their view too fast for the fed to take victory lapse laps. The ecb is on pause, inflation remains elevated not too early to talk ability cuts according to christine lagarde. A similar message were going to get the pound threeweek low the boe has done they have higher inflation system so it was thought they would continue hiking. The ecb on hold, bank of canada on hold, the fed on hold turkey not on hold. Turkey hiked 35 . Their inflation is like 100 or something crazy not a barometer for the global central banks. Lets dig deeper into the tech results. We got a few ibm one of the top gainers on the dow after some strong numbers there. Just wanted to highlight a few of them for you. The software numbers came in a lot stronger, 8 consulting numbers, slight miss but a strong 6 . Healthy growth for the first time i thought this was interesting, they broke out ai as a revenue driver not necessarily in the esults, but said that our book of business in the Third Quarter specifically rated to the generative ai both in the low hundreds of millions of dollars. So if theyre it comes in software and consulting, selling these Generative Ai Services to other businesses like an ey was one of the examples on fixing their hr platform. If they do 200 to 300 million a quarter on generative ai and its material and notable a company like ibm which some say doesnt get credit for being a generative ai player, is starting to show how its moving the needle for them. Yes. Yes. People remember watson. They remember the promise of watson and all the things that we thought were going to come and never did. They would disagree, but i would argue there was hype around it. Yeah. Jeopardy thing. Yeah. More than that. Health care really is where they saw it not jeopardy. I think that in terms of this current wave, what ibm is seeing is the Digital Transformation is now sound like Bill McdermottDigital Transformation. Thats what it is its why they say that tech spending is going to be 2 to 3 higher than gdp growth he continues to see happening into next year. Meantime well talk about meta this morning despite weakness of softness in the ad market, keeping outperform and 385, joining us at post nine is jason. Thanks for coming in a big discussion this morning about whether or not there was enough evidence last night that you could get to 20 in 24. Is that the crux of the debate i think it was making people more concerned that if the middle east turned into something bigger, that would have an impact on advertising. Snap could put that out there, but i think investors didnt believe that because they have some of their own issues and to the extent you have a Guidance Range 13 to 24 growth, thats unusually wide, when pressed why that low end they did mention the middle east and that was something that investors were not really focused on before today. Meanwhile, as for the Revenue Growth and operating margin, is that a reflection of the decisions they made a couple quarters thing reelz got to revenue neutral in three years 70 improvement on engagement, 40 engagement from reelz and then a 6, 7 improvement on core instagram and facebook from ai the investments theyre making are driving engagement you can see the revenue numbers. Coming off of the apple product changes. Why is the stock down 6 . Is it on worries of the ad market all the other ad stocks today are down, maybe not the same magnitude, but everything connected to Digital Advertising is down today. Again, snap said it, it wasnt a focus, meta. This is a little bit powellesque it was a bit over talked i dont think theyre seeing it right now, but theyre giving themselves cushion in case things dont go in a favorable way. Did you get a sense operating expenses below what many were worried they would hit, and, you know, put cost discipline is the year of efficiency going to be years of efficiency. The bears were worried about expenses over 100 billion guiding 96 and change. Thats where the street was. Theyre kind of hitting that historically they use expenses as a way to manage the earnings, and so presumably theyll chip away and come in below 96 next year. So you think they continue to be focused on efficiency you believe them they did talk about shifting people in the organization, backlog of hiring, but i clearly think mark the stock is trading at 14 times 25 earnings, right. Thats a crazy multiple and so i think look, mark knows what he needs to do. I mentioned ai with ibm breakingist out. What did we learn about generative ai driven advertising and when thats going to be material yeah. Right now its more like the ai changes the font, it changes the background its not creating the digital image yet, but at their meta connect day, they did show a product that isnt live yet that can create an image in five seconds and presumably thats the precursor to ai generated ads. Well look out for amazon tonight. Thank you. Good to see you. Thank you. Comcast shares under pressure this morning. We came in or at least i came in this morning focussed in part in terms of the earnings because domestic broadband subs declined by 18,000. That got overtaken by the Conference Call and comments from Jason Armstrong that indicated that weakness essentially is expected to continue i think we have that for you take a listen. The broadband market remains highly competitive particularly at the lower end during the quarter we recalibrated pulling back on some of our Promotional Offers targeting this segment to remain consistent with our strategy of competing aggressively but in a financially disciplined way. This means striking what we believe to be the appropriate balance between broadband subscriber growth and our put growth as we continue to manage this balance we expect growth to remain strong and our primary driver of broadp band Revenue Growth with higher subscriber losses expected in the Fourth Quarter compared to the 18,000 loss we reported in the Third Quarter. That is having an impact on the stock. It had been down 8 , but up over 6 shares of charter, one of its Key Competitors down 4 . Again on concern about the lack of growth in broadband, as their competition from fixed wireless, over builders, at t, you know, certainly could expect that is in part the case on other fronts, by the way, for our Parent Company, peacock continues to be a focus and continues to be a consuming a lot of cash. The cfo, mr. Armstrong, said continue to improve in terms of financial performance, now expect full year 23 losses from peacock about or around 2. 8 billion saying thats better than the previous outlook of losses of as much as 3 billion. This is expected to be the peak year for losses at peacock on the ad market which we were talking about with jason, mike cavanaugh, Company President , said in terms of advertising, he says the ad market has remained soft and hasnt necessarily gotten worse, despite a little bit of sequential decline, but it hasnt gotten better at the same time. General uncertainty. He cites about economic conditions, of course, out there as you explained earlier that can be reflected in decisions. Advertising as a lead time on some of the other parts of the economy. You have to make those decisions early. Yep. As we have a lot of earnings movers to get to road map for the rest of the hour ken view, owns tylenol and benadryl after reporting results. Were going to break down the numbers of their ceo with hour. A number of stocks falling to near covid lows. Well break down the names that one analyst calls an opportunity. Finally, Morgan Stanley officially naming a new ceo a three decade veteran of the firm, ted pick, alongside james gorman, to talabt throk oue ad ahead when squawk on the street comes back 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. Welcome back big news in banking today. Morgan stanley naming its new ceo. Leslie picker joins us with special guests hi, leslie. Hi, carl. I am here with ted pick, the newly named ceo effective january 1st and james gorman, current ceo, soon to be executive chairman also effective january 1st. Thank you so much for being here first on cnbc interview since the news announced james, why ultimately was ted selected for the role . Beats me. Was it i told you i would get you to laugh. Fivemonth process. Dennis, who ran the comp Development ManagementSuccession Committee led the process. Todd who led the board were involved we were doing this from three years ago. You know, we had three phenomenal candidates. Ted, you know, on the business side, he had grown up in Capital Markets and ran equities and brought that to be the number one or two depending on the quarter and went into fixed income and turned that around in 2015 and 2016. He had taken a great business and made it better, business broken at the time and fixed it. We gave him banking, made him copresident and gave him i. T. Had all the business skills, but he had the strategic skills, the ability to knock through some complex problems weve faced hes been working side by side with me for decades. Hes a great leader, has tremendous fellowship and passion, outstanding choice. Ted, i know you said you dont expect any major strategy shift while in the role, but is there anything you want to put your stamp on . Any vision you have thats different than what weve seen in the last 14 years first of all, thanks for having us. This is a special day for me and for the firm, and im so thankful to james for getting the ceo nod. Its the privilege of a lifetime the Business Strategy is sound there will be no change in strategy we know who we are after 15 years of transformation under james extraordinary guidance, a strategy where we have a worldclass wealth and management business, world class Investment Bank and so many opportunities to grow both globally its a strategy in place and were going to keep with it. Well get into the individual businesses in a moment, sticking with the succession theme here, james, this is a firm thats had some history in terms of succession battles, and my reporting and others reports, has indicated that has not been the case this time around. This is a concern that two people who were also contenders, dan and andy, who didnt get the job of ceo, theres concern they might leave. Do you have any commitment from them, you know, that they have an expanded role, but a commitment they plan to stay firstly, theyre phenomenal executives friends of both of us. I have a known andy 30 years, worked at three different companies. Dan has been on my operating committee eight or ten years they both done incredible jobs integrating etrade. Unfortunately we can only have one ceo. But theyre both going to be copresident s. Work with ted running the firm and yeah, theyre going to stay. Theyre committed to Morgan Stanley. I know people doubt that and actually saw an Analyst Report the other day downgrades us because they thought we would have a mess here and turned out we didnt. We have worked hard on our culture, values and on the team at the top to make sure this worked i couldnt be more proud of all three of them. Ted, james is like a in part, all the articles being written today and when you announced the Succession Plan in may, a lot of it was shaped by the Wealth Management side of the business buying, building, wealth investment management, buying out smith barney, etrade, and the growth of this more durable business has led to a multiple thats higher than a lot of peers. The street seems to like it. Your experience in Investment Banking and trading and how do you plan to tackle, you know, this curve here and continue the momentum after q3 saw a bit of a retrenchment in terms of momentum in this business. Sure. The first piece of it is andy and dan. Two exceptional partners, terrific friends, we have known each other forever and work with clients and do town halls together having those two exceptional leaders in their jobs getting expanded roles is a key part of why this is going to work. And the reality is, youre right. We got to where we are largely because we transformed the firm. We sought out the durable revenues james had bravery, he had vision, and we grew the business we grew the business organically and made these two gigantic acquisitions after we had integrated smith barney after the financial crisis in etrade. Three acquisitions, the firms integrated the reality is that firm having both a winning wealth and Asset Management business alongside an integrated Investment Bank is a special combination and having those two work even more closely together is something that andy, dan and i will be working closely with james on. In terms of Investment Banking you said on the call last week when the fed indicates it will stop raising rates the m a calendar will explode because theres pent up demand. Sure. When we spoke in july you said that the business had bottomed out, indicated a turnaround was imminent there. Do you believe thats the case how confident are you in the banking if we see some sort of recession next year . I was early and said we were seeing green chutes and somebody said, you forget to water them you know, listen, were not that good, but we know in any weak period when its happening. Inflation was sticky coming down the fed had to move aggressively and they did i think theyre likely within a quarter basis point, quarter of 1 getting to where we need to go at that point youll see i mean you saw the chevron deal. Thats a huge deal the whole Energy Sector is transforming right now youve seen it in the Banking Sector and a number of transactions over the last couple years as theres more consolidation. Its coming. Whether i happen to think i thought it would be in the Fourth Quarter, thats more like i think now Fourth Quarter because the announcements have picked up but it takes six months for the revenues to hit a little bit of a lag. Its coming. The least of my stresses in life. Theres no doubt strategic m a is coming. Three years of the pandemic, war, second war, board rooms can wait so long now the large cap m a cycle. What about strategically for Morgan StanleyInvestment Banking revenue at this firm was down 27 i know when theres muted activity things can get lumpy. But your peers saw stabilization in Investment Banking in the Third Quarter. Anything youre doing when it comes to talent or strategic shift to kind of build that back up when those green chutes are watered and do start to actually blossom youre well positioned. Were working it hard bankers are working it hard and closely with folks in fixed income and equities to bring the integrated Investment Bank and in Investment Banking three to six month lag before deals close you want to look at the forward pipeline and the forward pipeline has gotten sequentially bigger with each passing month, mid cap offerings, largescale m a across Industry Groups thats the most interesting part given we have higher Interest Rates and the world has gotten smaller, m a across the entire industry arena and for Morgan Stanley thats a strength because we have industry strength all over the world. Im curious, its interesting because i was looking back to james first interview for cnbc in 2010, talking about dodd frank and now were also look at significant regulation at the basil 3 end game in the higher Capital Requirements that will be falling under your purview. How do you plan to prepare for that new regime . Is it a matter of shifting around Capital Allocation plans or are you looking at potentially buying any businesses that are well capitalized to help prepare for that ill just kick in here because ive been youre the forefront. Ive been living it for a long time. The fed has asked for proposals of all kind to comment on this proposal here. This is going to take a long time you cant change your Business Model anticipating something might happen you need to know what will happen weve carried excess capital for 10 years we have the highest capital ratio of any of the largest banks in the world right now we have buffers. It wont change our strategy whatsoever thats different from do the banks need more capital . I have a strong view they dont. The large banks are well capitalized. Proven year in and year out. But if the rules actually come through in any form close to where theyre proposed, weve already got it no, wont change the strategy one bit. That was a strategic decision for the last ten years, james focused us on having many firms have 50, 100 basis points and now that gives us options. James gorman, current ceo, soon to be executive chairman, ted pick, incoming ceo, appreciate you both sitting down with us for your first broadcasting interview. Thank you. David, ill send it back to you. I will take it. Thank you as well for bringing that to us coming up right here, former crypto king and ftx founder Sam Bankmanfried set to take the stand in his own defense that could happen, yeah, today and well be live from the courthouse nt. Ayitusex 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. 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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. Schools and businesses are closed this morning and people who live in and around lewiston, maine are told to shelter in place as authorities continue a search for a mass shooter. Officials have not confirmed the death toll at a bar and Bowling Alley in lewiston, but sources tell nbc news 18 people are dead and 60 others are injured, four critically authorities shared photos of a man with a rifle and named robert card as a person of interest in connection with the shootings. Israel says it conducted a rare targeted raid overnight into northern gaza using tanks military officials called the raid part of the preparations for the next stages of combat. The mission came hours after Prime MinisterBenjamin Netanyahu said israel is still preparing for a ground invasion. And a colorado judge tossed Donald Trumps latest attempt to dismiss a lawsuit seeking to remove him from the states president ial ball lost in 2024 because of his role in the january 6th capital attack a trial on his eligibility is due to begin in just a few days. Carl, back to you. Thanks. Got new development in the ftx fraud trial today. Sam bankmanfried is expected to begin test fig in his own defense today. Kate rooney joins us with the latest hi, kate. We are getting updates from inside the courtroom behind me the prosecution has rested its case the defense is kicking off what they plan to call two witnesses, 20 minutes each and then Sam Bankmanfried the defendant here plans to tell the jury his side of the story today we could hear that in the next couple hours this is a risky strategy if he is found guilty the move could add years to his sentence. His defense team saying in a letter to the judge yesterday that they plan to show he was operating in good faith. Theyre going to talk ability sbfs intention to comply with authorities in the bahamas, discuss his understanding of industry practices and expected to face intense crossexamination by the government if found guilty legal experts tell me any judge would sentence more harshly if they suspect the defendant lies in sworn testimony. The judge has discretion as one expert told me in that sentencing there are guidelines but judges dont have to follow those precisely and theres already been history of tension between bankmanfried and the judge here judge kaplan over the summer he revoked Sam Bankmanfrieds bail accused him of witness tampering, warngds him about pushing the limits and scolded the defense team multiple times in the courtroom in the past couple weeks the upside is persuading one juror that bankmanfried did not have criminal intent one person siding with the defendant would mean a hung jury the jury has sat through heartfelt testimony and heard from three insiders including his former girlfriend and they all say they knowingly committed fraud at the direction of Sam Bankmanfried. He has pleaded not guilty to seven counts of fraud and conspiracy. Amazing hes been a risk taker in life before heres a big one kate rooney. Bitcoin reporter turned court reporter. The nasdaq into official correction whats at stake with the markets. Consumer company kenvue shares dropping after cutting ldnd ftlook citing the weaker co alu season. The ceo joins us next. Dont go mae where you got this. Lets go. Gobble gobble. Ive seen bigger legs on a turkey rude. Who are you . Im an investor in a fund that helps advance innovative sports tech like this Smart Fitness mirror. Im also mr. Leg day. 1989 anyone can become an agent of innovation with invesco qqq, a fund that gives you access to nasdaq100 innovations. I go through a lot of pants. Before investing carefully read and consider Fund Investment objectives, risks, charges, expenses and more in prospectus at invesco. Com. Investment objectives, risks, charges, expenses heres why you should switch fo to duckduckgo on all your devie duckduckgo comes with a built n engine like google, but its pi and doesnt spy on your searchs and duckduckgo lets you browse like chrome, but it blocks cooi and creepy ads that follow youa from google and other companie. And theres no catch, its fre. We make money from ads, but they dont follow you aroud join the millions of people taking back their privacy by downloading duckduckgo on all your devices today. Welcome back to squawk on the street. Im dominic chu. The s p 500 right now trying to bounce off the worst levels of the session so far in early action as you can see behind me, real estate is the best performing sector so far today. Among some of those leaders you got ventis and avalon bay communities, crown castle, Sba Communications and kimco realty. The best performing stock in the sector so far is American Tower after the Real Estate Investment trust that specializes in Wireless Communications and Data Center Infrastructure reported better than expected Quarterly Results and raised its fullyear forecast for property revenue and how much cash flow gets generated. American tower said ceo tom bartlet will retire in february of next year and replaced by steve up androp who runs the tower and Data Center Operations ill send things back downtown to you folks at the new york stock exchange. Latest gdp data helping cut early losses but the nasdaq is sliding deeper into correction territory. Talk about where the market may go from here, Research Founder and ceo adam barker is here with us at post nine. What great day to have you in. Thanks for having me. First off, its just are they shooting the generals on mega cap tech . How important is that . Well, you know, at roughly 30 of the mega cap for the big seven its hard to see a scenario where the market rallies a lot and they dont participate. You need them to participate the earnings season i would say was mixed for the collective lot. I could see mark to market doing worse than i did maybe two weeks ago. If i look forward i dont think they have anything thats impairing their outlook in any one, three, fiveyear view, or i feel good about the fundamentals i think you want to own those names and you want to own the market for any longer term perspective. Are you seeing value in things like the russell . I dont and thats a very popular topic among investors i talk to that look at the chart of the valuation of large versus small cap and they think it looks elevated and want to make a case for small caps you see that work today. Youre thinking thats interesting because usually in a risk off trade small caps lag. I dont care thats the right move in a sixmonth view i believe the small caps have more margin expansion. When i look at wages and i look at costs like commodities and pricing power, i dont think the snaps have more and we did a note where we broke down the market when you do that, value looks cheap among mega cap and small and growth looks expensive for both when you sort of sectoror and normalize it, i dont think the snaps look that cheap. What are you so im curious, we have you on a lot. Whats top of mind for you when it comes to the market you know, honestly, im really thinking about underneath the surface, like which industries and sectors are getting dislocated things happen like staples and utilities selling off because of rates in ozempic and buy a high quality name like coke when i had to pay 30 in the past. Used to be offensive to buy these defenses because theyre so expensive i dont know Health Care Services people hate that sector in an Election Year but theyre getting cheap and have pricing power. Im finding things i want to own under the surface and thats more of a topic than trying to make a market call where you have to get rates right and understand, you know, so i think theres im kind of excited about wanting to long or short things under the surface. Just to harp on the nasdaq correction for a moment. Its not like were going into another rate hiking cycle. The last time we saw the nasdaq in a big correction. What is actually going on here financial conditions, right when financials get tighter, you could argue that should be the case worry about this six month ago hard to know what causes the 10years is back up in the last three months and finally people paying attention to september. I look at those and think, rates are probably closer to peaking and their growth rate will be better than the Broader Market over the next year i think the big seven are probably going to be fine. Whether you have a hiccup or two on google or meta, i dont think it changes tratshe trajectory of their earnings i dont think you want to be negative on innovation or growth in the United States of america. We still got some mega caps to go. Well see what we get. We do obviously, you know, i dont want to, you know, i hate the whole take this one stock and make it a microcosm for the Global Economy if nvidia misses the stock market will get killed i think thats one where people would be surprised if the trend reversed that quickly. Some of these other things we talk about every day have a lot of businesses and it will take some time. I think right now, you know, the riskreward for the market looks good in a six or 12month view, and im saying what can i buy here i love energy. I love some of the staples and utilities. I think i can buy Health Care Services i think retailers are giant shorts and so i think targets stock will go half in the next two or three whoa in half i dont believe this is like the beginning of the end and the market will get killed. Spicy towards the end. The one takeaway from the interview, if nvidia misses the stock market gets killed. I think people would be surprised. Yes. We have a ways to go before they report. Thanks. Good to be with you guys. Up next the ceo of kenvue, shares moving lower on the back of its latest guidance were back in a minute olukai slippers are so comfortable, you wont want to take them off. And with that outdoor worthy sole, you dont have to. The all around best slippers by olukai. upbeat music constant contacts advanced automation lets you send the right message at the right time, every time. constant contact. Helping the small stand tall. 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 shares of kenvue a mover down more than 4 . The company cutting its annual profit forecast on softer demand for cold and flu medicines. Stock is down 30 . It spun off from Johnson Johnson in early may the ceo joins us now first on cnbc its great to have you back on they may not know kenvue but they know your brands like tylenol and sudafed and benadryl and neutrogena why cautious guidance . Good morning. Good to see you again. To be clear, we have fair expectations year to date and we have maintained the base of our guidance for the full year and we factor the range to reflect the softer start of the cold and flu season and when we reflect on the quarter, we had a healthy quarter as kenvue. 3. 9 billion in revenue, 3. 6 organic growth on top of 4. 7 growth last year we are now on the s p 500 index. You see the power of the kenvue Business Model you mentioned the brands of power, the iconic brands that are in everybodys homes thats what we saw this quarter again. Were pleased with our results to date and confident in our future. Growth came from pricing, right . Weve seen with other household product makers, still pricing driving, volumes down 3. 5 have you reached the Tipping Point where you cant pass on more price increase . We see activity continuing to hold our volumes were a bit down this quarter, but twothirds of that was linked to some discontinuation of product last year and softness as we see in the china market so if you accept these two distinct elements our volumes are holding pretty well in a high earnings inflationary environment. What about skin and beauty i think was a little bit disappointing and a big, important category what are you seeing there . Yeah. We see the skin health and beauty segment impacted by the two elements i talked about, last year the softness of the market in china, but we these two elements mask some good underlying strength of our brands, our skin, health, and beauty business is doing well in europe and america in the u. S. We continue to innovate we had a strong season and winter is coming we are launching moisturizers. We are just launching a new neutrogena hydro boost gel cream, nine times more hydration, so important in the wint are time. Excited as the innovation we are bringing to market has been extremely well received by customers. Nine times more hydration. All right. Thibaut, i cant imagine when you drew up the plans to split this off or when j j did, that you expected the stock to be down or lose almost a third of its value in a time since its become a public company. What do you tell those holders at this point in terms of why this has not performed as well as i believe many believed it would when it was split off . Yeah. We are transitioning to a new Shareholder Base what we are focused on at kenvue is the fundamentals of the business, building a Strong Foundation for the future of the company and we feel very good about the strength of our Business Model, the power of our portfolio. That allows us to have sustained profitable growth. We saw it again this quarter with the top line, healthy margins, strong cash flow generation and a dividend of 20 cents in november on top of the dividend we paid last quarter. So thats the kenvue Business Model. We are confidentfuture. But was it mispriced when you split it off that may be your model, and i understand what youre telling your shareholders, but its been seven months and the stocks down 30 yes, we see the stock reacting to the splits, to the exchange, there are a number of elements impacting the stock price. But what we remain focused on is the fundamental of the business, making sure we are close to consumers, close to customers, innovation and bring consumers what we have been doing for 135 years as a product and solutions they need, when they need them, to take care of their own health, the health of their loved ones, and thats what we focused on as we speak speaking of some of those products, i wanted to ask you, since the fda decision that the main ingredient in sudafed for colds, cvs is pulling the products from their shelves. Does that affect any of your other products and does that have a material effect they review around the world ingredients on a routine basis the fda is reviewing one, as you rightly mentioned. They have not made a determination yet. We will work with the agency and customers to make sure consumers will have access to the products they need when they need them. Are they trading down are consumers going to more generic value oriented products instead of brand name products no, we dont see that we see private label penetration to be stable actually down in the u. S. Recently that, i think, has to do with the unique nature the consumer space where our consumers, when its about their health and the health of their loved ones, reach out to the brands they trust that are backed by science, Health Care Professionals that have been in their medicine cabinet for decades, sometimes generations thats what our brands are all about. We see a stronger affinity, a loyalty to our brands. I see the big bottle of listerine behind you thank you. Coming up at 11 00 a. M. On squawk on the street, the ceo of Royal Caribbean shares gaining on raised guidance, stronger results well get a read on the consumer in the travel space next hour. More on hertz, speaking of travel, as those shares hit new lows on the year were back in two minutes. 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. 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. Hertz shares hitting a new 52week low after Third Quarter earnings missed forecast i spoke to the companys ceo who will be with cramer later. First he said about travel demand, were seeing really good sustained demand for product in leisure and u. S. And europe through october. I think well see a strong winter in the context of u. S. Domestic travel. Why are shares tanking right now . The bottom line miss was driven by higher expenses that was all tied to its fleet of electric vehicles remember, theyve been big buyers of teslas evs are now 10 to 11 of the entire fleet whats happening is depreciation on that fleet has gone up. Damage cost also remains elevated for those evs he said over the year elon musk took the price, we know by some of his vehicle, down by a third. We own 35,000 teslas the residual price comes down. We model that resale much lower. Depreciation goes down and that expense grows. It also costs double what a Combustion Engine car would cost. Thats the part im interested in. Why more damage . Do you know . Just in general . I think its newer and the parts like the supply chain isnt fully there to get those fixes. Maybe thats why its more costly now he said its something that will normalize as evs become bigger part of overall fleet. Yes, more damage. Well see if shares of restricted stock unit is not looking so good now. Remember that big comp number, he may get it. Hell be a guest on mad money later today. Right after this hour, though, is another hour of ua osqwkn the street. You wont want to miss that. Dont go anywhere. 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. In the u. S. We see millions of Cyber Threats each year. That rate is increasing as more and more businesses 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. Explore endless design possibilities. To find your personal style. Endless hardie® siding colors. Textures and styles. Its possible. With james hardie™. Good thursday morning. Im sara eisen with Carl Quintanilla. After a golden era of private he can quequity old dominion with an earnings beat. The company says theyre beginning to see a slowdown in demand. Speaking of earnings, a first on cnbc interview, Royal Caribbean ceo Jason Liberty is ahead. They raised guidance up 100 . Markets continue to see some pressure nasdaq has fallen below the