On squawk box, mohammed el. S p giving back about 40 of the gain from friday. If you look at a longterm chart, its hard to identify these conflict points as being turning points. That being said, the market is in a rational, localized way, punishing those groups that seem like theyre going to be, perhaps, disadvantaged, like the travel related. You get a bit in defense and energy. Its reflex. Theres a lot else going on. We kind of had a cushion because oil prices backed off from their highs. Treasury yields, theyre proxies based on futures and etfs look like theyre easing back a bit as well. You know, i think sentiment was already pretty reserved. It wasnt like everybody was bullish and excited. Therefore, there wasnt a lot of Risk Appetite to immediately take out of the market. On oil, is there a sense it does anything more than set a higher floor . I dont think so. You can make the case in either direction, it doesnt have much impact or this geopolitical risk premium that should be in there, i suppose, maybe its a bit higher. At this point, no, it doesnt seem like its that relevant specifically when youre talking about the weekly inventories and things like that. As we think about the overall equity reaction today, how good of a job historically do the markets do in kind of digesting geopolitical tensions . I think the market is generally pretty good at looking past the immediate conflict to say, bottom line, what should we be discounting here, if anything, based on the stuff the market really cares about . If theres not a transmission mechanism through oil prices, if you didnt get a quick rush to safety in Treasury Bonds that caused you to change the discount rate, it seems as if, in general, we do a decent job of it. You know, i can remember during the syria conflict, the market was getting corrected, it seemed like it was weighed down, but when you look back on it, it was a seasonal blip that coincided with what was going on there. Yeah, seems like there could be some algorithms. Its always the case that theres much much else going on relative to the real world headlines were all preoccupied with. Mike, thanks so much. Turning back to the conflict in israel, the total death toll now has exceeded 1,200 as fighting enters its third day. Israel has ordered a full siege of the gaza strip. Today Energy Minister of israel katz said he has issued an order to halt water supply to gaza after cutting off electricity and fuel supplies on sunday. Joining us now to break it all down to break the Geopolitical Impact down is Atlantic Council president and cnbc contributor, fred. Thank you for being here. I know you were scheduled to fly to israel yesterday and that flight got canceled. What were you hoping to accomplish in the region for this business trip and how has the events of the weekend changed that . Thank you for asking about that. I was going to be on a plane last evening to host a conference in israel with president netanyahu, with ministers from arab states that had normalized with israel on greater economic integration. You talk about the impact on markets now, but theres going to be an impact on economic potential. Theres huge potential in the middle east. If only their economies could integrate more widely. We had to pull down the conference. We dont know when well be able to reorganize it. This really sheds light on the situation in the region, which is theres this battle, this contest between modz earnization and moderation. You see that in saudi arabia, the uae and, of course, the forces of hamas, radicalism and terrorism, which seem to raise their ugly heads every so often and no time as bad as this one. Whats your prediction for how this all plays out in terms of the political and economic stability of the region especially as it pertains to israels neighbors that it was seeking more normalized ties with . I think the big victim is efforts that saudi and israel normalization. Those talks have been far advanced. U. S. Officials have spent time in israel and saudi arabia. There was the prospect of a deal if not the end of this year, the beginning of next year. People were giving it a 50 50 chance. Right now you have to give it a zero chance. The saudis wont be able to go forward with this right now. Part of the deal would have been netanyahu reaching some sort of accommodation with palestine the palestinians. Thats not going to happen right now. But theres another thing to look at here, which is in a way, this is an iranian proxy war in israel. Even if they didnt plan it. Even if they didnt give the green light for it. We dont know about that. Theyre providing the money, theyre providing the weapons, theyre providing even the wherewithal to build the tunnels. And saudi arabia has to look at this and say, well, if iran can do this in israel and israels got a much more robust sector than we do, what happens if iran turns on us . Over the long term, saudi arabia could come back to this because theyll want the defense deal with the United States that would that would have been part of this normalization agreement. How long do you think it will take for things to cool off to restart that process . Not even the Current Administration and through 2024. Part of it depends on how far netanyahu goes now. There has been comparison to 9 11 in the United States, pearl harbor. Where that comparison has looked at is the surprise attack, caught by surprise, intelligence didnt see it coming. Third of all, the rage inside israel as there was rage in the United States. But the United States may have gone too far in its wars in afghanistan and iraq. Netanyahu should take that lesson. If he does go too far, he could actually bog himself down and israel down in a way that could really hurt it at a time when it could reach a greater normalization with saudi arabia and more generally. Its a very, very tough set of calls the president netanyahu has got to make right now in israel. Finally, fred, can you help us understand how all of this intersects with Ukraine Russia and the u. S. Role in providing aid on that front as well . Look particularly at patriot missiles. There are only so much to go around and israel is going to need a bunch more. Having those, ukraine needs a lot more. The geopolitical implications of ukraine are so high right now for the United States. The president has said hes going to give a speech to the American People. This was before the hamas attack, a speech to the American People on the situation in ukraine. Of course, that funding for ukraine has been held up by the difficulties with the ouster of the House Speaker. So, these two things coming together, there are some natural links to this. Not to mention, that iran is not only supplying hamas, but its also supplying russia with a great number of drones as well. So, there are Global Implications to this. Its hard to know how far theyll reach. But certainly worth watching. Yeah, the global interconnectivity is certainly complex and, youre right, we dont know the full scale of them at this point in time. Its something well be watching. Fred kempe, Atlanta Council ceo, thank you. Meantime, the Intelligence Community here continues to react to the attacks on israel. Eamon javers is in sea island, georgia, at a conference where i imagine this is the subject of the day. Reporter youre right. This is the sea island, georgia, the annual cipher intelligence conference. I just spoke with a former cia officer who has extensive experience in the region who said he thinks the information war over the next 24 hours is going to be the key. He expects hamas to try to bait the israelies into largescale strikes in gaza to cause extensive casualties and they can use those casualties on social media. He thinks the saudis will be watching carefully, that same information war, how it plays out to see if they can proceed with talks on their normalization deal with israel, which he thinks at this moment is at least still possible. As you were just talking about with fred kempe. I also spoke with retired rear admiral mark montgomery. He commanded a Carrier Strike group in the pacific in the navy. He said the group headed to israel will be immediate lid useful in Ballistic Missile defense to provide a check against iran. I asked him whether u. S. Special forces on those ships could be used in hostage rescue operations if it is deemed that americans are in danger there. Id be very dempb shall to the israelis, despite the failure in intelligence, they tactically have a much better understanding of gaza. They fought there heavily in 2005 and they picked target sets out theyve been hitting the last few days. Clearly the israelis are the tactical experts on gaza. As deferential he said he would be, he said the United States will reserve the right to do what it needs to do to protect americans in the region, guys. Back over to you. Eamon, im curious from an intelligence standpoint how important it is to thread the line between explaining exactly what the u. S. Strategy is going to do to help and ensuring that those hostages are, you know, safe and continue to come home safely to their families. Reporter yeah, look, from the cia veterans ive talked to here, their sense is that the hostages in gaza now are in very, very difficult situations. Very difficult to gather intelligence. You saw the intelligence breakdown in israel in terms of this attack coming in the first place. Finding where all those hostages are, identifying the particular structures theyre in and coordinating operations to go and get them is just an enormously complex task. The israelis, of course, know gaza very well, as you just heard admiral montgomery suggesting. The u. S. Also has Tactical Forces that can go in and do that sort of thing. But gathering the intelligence on where they are, and it would be a president ial level decision on the u. S. Side whether to get involved or not. That involves some con flikz with israelis. Israelis may not want american boots on the ground at this stage. They might say, this is our area, we know it well and well handle all operations here. Eamon, great color, obviously, on a tragic story, especially where you are. Well look for your help continued. Ema eamon javers. The markets, its clearly about energy, highs for the day, as well as for gold, up more than 20. You have the vix still above 18. Stocks flirting with their lows of the session. S p below 4290. Oakmark releasing its most recent buys and sells for q3. Well take a look at the six names its adding to its portfolio including health care, energy and one legacy tech stock. Stay with us. Youre probably not easily persuaded to switch mobile providers for your business. But what if we told you its possible that comcast business mobile can save you up to 75 a year on your wireless bill versus the big three carriers . Its true. Plus, when you buy your first line of mobile, you get a second line free. There are no Term Contracts or line activation fees. And you can bring your own device. Oh, and all on the most reliable 5g mobile network nationwide. Wireless that works for you. Its not just possible. Its happening. 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. Watching shares of capital one, up 4 . Baird says to buy now with trough multiples. Loan loss reserves per share. The stock flat on the year, although you can see some significant ups and downs during the last year or so. Speaking of capital one, the stocks is big holding, oakmark fund outperforming the s p by 2 in q3. During that period the fund added six names while exiting three positions. Oakmarks Portfolio Manager bill nygren joins us to talk about some of those moves. Good morning. Good morning. Walk me through the thinking on some of these. Well, as you know in the market this year, its been a twotiered market. Growth stocks dramatically outperforming value stocks. I think the spread through nine months was Something Like 2300 basis points. And oakmark is a value investor. A year ago we had purchased some of the beaten up above average growth names and what youve seen in our portfolio throughout the past six months, including the last quarter, was weve been selling off the names names we purchased like uber, adobe, and they have undervalued because they performed by so much. Cvs, phillips 66, all single digit pe companies that are returning a lot of capital to shareholders. We think theyre great businesses. At single digit pes, a lot can go wrong and we dont have to lose money. I thought cisco was interesting as well. Networking so important to the i. T. Stack. Can you talk about that . From early in my career, cisco traded at such a high multiple. You knew it was a great business, but the multiple was so high, a lot had to go right to justify that price. Of course, thats changed recently. As cisco went through some flattish years we think theyre on the path to getting back to low to midsingle digit growth rates. I think it hits that spot that falls between the cracks where a lot of Value Investors arent comfortable buying Technology Stocks and growth and Technology Investors dont Want Companies that are generally returning a lot of cash to hareholders. We still think cisco is a great business. We think most of their capital is going to come back to us both as Share Repurchase and dividend. And if the Company Achieves the mid single digit growth rate theyre shooting for, we see no reason it shouldnt get at least a market multiple if not somewhat higher. At the price were paying for it today, that would be a great outcome. We just talked about capital one in the leadup to this segment and also i see financials are the largest weighting in the Oakmark Fund Portfolio with 41 as of the end of june. How has that changed . As we look ahead to earnings season kicking off at the end of the week, which, of course, is including a lot of the larger banks, what is your expectation there and how are you trading the sector . First, i want to make sure we dont unnecessarily panic our investors. Yes, financials is about 40 of the portfolio. But well under half of that is traditional banks. There are a lot of Technology FinancialTechnology Companies that also end up in the Financial Sector the way they get divide up. Our belief is the Banking Industry is in better shape today than its been in a long time. The quality of the assets on the Balance Sheet is strong. Theres a lot of capital to support it. And the stocks are at a relative multiple to the s p, thats as low as theyve been in about 30 years. Capital one is a name that we really like, leader in credit card services. One of the reasons we like capital one, it sells at about seven or eight times earning, less than book value. But we think its kind of a sneaky play on a. I. Because capital one has always been more advanced in their use of technology than their competitors. And they have explicitly said they expect more of their processes to rely on a. I. And help them to lower costs and better the outcomes for their customers. Interesting point. I see that it was the largest attracter in the Third Quarter along with iquvia. Whats your take on that stock . On iquvia, we think its a great business, a Contract Research organization supporting the health care industry. The outsourcing of trials makes so much sense for large pharma. And they combines the resource Facility Research facilities along with all of the data that can help Health Care Companies get their trials set up faster and cheaper. We think its a great business. Again, a Large Capital return story for a moderate grower. And kind of falls between the cracks, between traditional value and traditional growth buyers. Finally, bill, i know we always have this conversation about how youre not necessarily driven by news of the day or even the quarter or the year, but does the action in the middle east, the geopolitics element of todays news alter the longterm playbook at all . For us it doesnt. You know, i i would be your worst possible interview for whats likely to happen in the mideast. But i think one thing it does is it highlights the value in a portfolio of energy exposure. Weve kind of forgotten that energy oftentimes moves the opposite direction of almost Everything Else in the portfolio. And theyre cheap stocks on their own merit, single digit pe ratios. We think there are strong arguments for why oil prices should stay in the 70 to 90 range, which is a very healthy outcome for these companies. A lot of capital return to shareholders. But they have almost that negative beta role in a portfolio that helps lower the risk of the overall portfolio. Hence the phillips 66 in the quarter as well. Bill, that was a lot. Im glad we got to some of it. Good to see you. Talk soon. Thank you. Bill nygren. Ian bremmer on the conflict in israel. He joins us in a few minutes. Were watching defense stocks, as we said. The entire sector is higher. Here in hawaii there is always time. Theres time to