yesterday, down .8% versus a drop of .1% for the dow. also watching yields very closely. the ten-year sitting right at 4.2%. the two-year is getting close to the 4.6 threshold. 4.61 right now. that does it for us today. it's tuesday. we'll check that off our list. we'll see you back here on wednesday. right now it's time for "squawk on the street". good tuesday morning. welcome to "squawk on the street." i'm carl quintanilla with jim cramer and david faber. bank ceos presenting at the goldman conference. our roadmap begins with this rally pause. stocks coming off their worst day in a month. >> china's growing debt risk, moody's cuts the credit outlook to negative citing piersistent

lower growth. cvs raised revenue guidance for 2024, upped its quarterly dividend by nearly 10%. >> let's get to the markets. poised to extend yesterday's losses here. at the open, jim, you've been pretty vocal about the expected chop you think is coming this month. >> we have a couple of stocks with good news. j&j, cvs wasn't bound. e eli lilly. i like a bunch of the research calls. i think this is just another day where interest rates are going down a little. people want to take some profits. i was working on nvidia again last night, which i do every single night. strong demand in japan. there was nothing new from secretary of commerce raimundo, nothing new at all and yet it's down again. i'm starting to think, all right, getting interesting

again. everyone hates nvidia all of a sudden. look, china would be luke i can if it got any chips even if they were allowed to get chips. >> not falling for the line that even the h-20 might not be compliant. >> nvidia is saying point-blank there's nothing new. this zone, this green zone has not changed. david, there is a lot about china today. >> we'll get to some more about it. >> are they our enemy or our friend. if you're nvidia, you're trying to figure out whether you want to sell to japan, to america? is it google? oracle? >> they all need them. >> right. why do we care so much about our friend in china? >> i don't know. don't you think, jim, on friday when you and i were together -- >> i enjoyed that. >> i did, too. you talked about a broadening out, and you weren't negative on

the magnificent 7 but you were at least moving away from them. frankly yesterday, certainly, investors seemed to be moving away from them. isn't nvidia part of that trade as well? >> i'm just saying they're for sale except for apple, apple isn't for sale because of revenue guidance today about app store. i say they're for sale and getting interesting, that's all. they're getting interesting. meta, made some sales, meta, alphabet. stocks dropped like a rock. these are not bad stocks. >> you were talking the other day about a broadening out. talking weird names i haven't heard about. >> it went from broad to junk overnight. >> you're not calling bath & body works junk? >> fantastic stuff.

i bought my wife once. let's take estee lauder. i want david to berate me over the pick. that stock was up the most of any stock along with illumina. >> sold to you. >> thank you. that's all you need to know. david, i was not sitting on a gold mine. >> you were not sitting on a gold mine. >> all right. so, again, estee lauder trades up. is that a good sign for the market? >> look, we're going to -- we're flopping and chopping. you couldn't give away cvs the other day. i like cbs more than cvs. >> which doesn't even exist anymore. it's paramount now. >> i get it. i know all your jokes.

>> no one is talking about theft that i hear. >> cvs's guidance is well met and the plan to change the way they go about next year or the way they go about selling pharmaceuticals to customers. >> a mark cuban plan. >> a little more transparency. >> basically cost plus. >> cost plus pricing model. a little dip hike in there. we'll talk to the ceo at 1:00 today. >> you tell me that this isn't a high-quality company you can get at eight times earnings. i'm game. if theft is the biggest problem they have, i think we're starting to get some solving of it, although there was -- there's people who try to stop and it doesn't -- it can be violent, and that's terrible. >> what? >> we had someone try to stop someone -- someone tried to stop shoplifting the other day and

was stabbed to death in macy's. >> this is the most exciting place in northern philadelphia. one guard was killed -- >> on page one of the inquirer this morning. >> it is a nightmare. how do you tell people as brian cornell from target said, we can't do this. those were unarmed guards, doing their job. this has become a violent department store. it's got one of the highest theft rates in philadelphia. i only put it out because cvs and walgreens have been plagued more than any other companies. >> china is a big story, blue-chip stocks, index falling to a five-year low. moody's downgraded the country's outlook to stable. they cited the ongoing downsizing of the property sector. a little better than

expectations. >> we speak to eunice yu, we get a sense that this is not like the resolution trust. the government crammed down all the savings and loans. some of my buddies bought a golf course in florida. they did terrifically. other guys bought some buildings. it was really just a fire sale. apparently you need like 10 rtcs to deal with. >> it is, again, a lot of the debt that is even harder to see exactly where it is, but at the local level, from these that have issued a great deal of bonds and have been able to pay the interest based on continued sales of land, for example, to property developers, but that over the last couple years has stopped. they've also had increased expenses due to, for example, covid and what they had to do there. there's a great deal of concern

because it is not an significant percentage of overall indebtedness in the country. that's what sort of seems to be the center of the moody's downgrade. a "wall street journal" report about it as well if you want to dig in a little more. nobody is defaulting in any real way. >> the government is not willing to punch. temu, 52 million active users in the u.s. pinduoduo -- as long as i've been? business, there's always at least one chinese stock people are excited about. >> it's pdd. they're as skren dent. last week the stock had a great start because they reported earnings far above estimates. temu is, by the way, one of the largest advertisers on meta, on facebook, on instagram. outcompeting sheehan which we

have to talk about every day. >> henry sheehan. >> henry sheehan -- my agent is henry. we know that's henry shine. >> there's been so much press about it. >> people don't -- >> we moved on from alibaba. >> yes. alibaba is old news. it's all about pdd. >> who got alibaba? >> who got alibaba? is this something to do with -- >> nvidia! they couldn't do the data center spinoff. >> that's true. alibaba shares have been down in part because of the decision not to be able to spin data because they couldn't get ahold of the advanced chips they felt they needed to. you can see since they reported numbers and since they told us that -- >> that was the flavor of the month. >> moody's downgrade for a

controlled economy is kind of an oxymoron. the chinese can call moodies and say what do you want us to do and they'll do it. they sound like us where there's like 535 people calling and saying what do you want to do. they have one guy. one guy is all you need. >> for more on china, let's get get to our beijing bureau chief eunice yoon talk about the broad context of the economy. hey, eunice. >> hi, guys. jim, you and i have spoken about this a bit. one of the big reasons you don't see the chinese government going in and trying to sort things out is because of the cost involved. so i think there are a lot of people who say this could be trillions of dollars or that there isn't a lot of transparency on how big a cost this would be to the chinese government. so that's one huge hurdle that the government has. and then in addition to that, you guys were suggesting this.

it's the political issue. if you saw drastic action on the part of the government, that would hurt a lot of average people which would be unsettling to the leadership, the communist party. you're not even talking about average chinese people, but also some of the bigger vested interests. the state-owned enterprises or the big banks there. it's just that level of uncertainty is quite unsettling for a communist party that wants to be in power for avery long time. also, increasely -- jim, you were suggesting this about the one-man rule, but wanting to present themselves to the chinese public as infallible. if you're infallible and you're creating all these issues and people are starting to see it, it becomes a political issue for the communist party. >> eunice, the thing that i wonder about is how the heck does moodies know anything?

mood december decided we've read a lot of bad articles, so we better put it under review. >> i would guess they're looking at the same things we're looking at. they do have an office still in china. they've significantly downsized in 2022 where they don't have as many people who are looking closely at what's happening there. but they are citing the worries about these medium risks, medium-term risks. as you pointed out, the downsizing of the property sector. seems to be more a reflection of what a lot of investors are feeling that they do see these property issues kind of cropping up more and more and it might be inevitable that the government would have to in some way try to sort out issues on a local level. the government has already said that they are disappointed with moody difficults. they believe these concerns are unnecessary. in fact, they said -- they were

specific in a press briefing in china saying that the local finances and the real estate problems are yoltolerable. we don't know if there's going to be backlash. so far there isn't. it is something that the government is looking at right now. >> i've got to tell you, listening to the backlash -- backlash. what are they going to do? >> well, increasing -- it's hard to know because there's not a lot of official take on that. it's just that increasingly it's more difficult to be critical of the chinese government, of the actions -- not even especially, when it comes to the economy. remember that years and years ago one of the safe areas was always business news or talking about the economy, but increasingly because the

government feels sensitive about how things are going with the economy, if you do make a call the way that moody's is making, you take on some risk within the country. >> june nice, just real quickly, given we're going to talk to you again when you are back in china, are you able to say those kinds of things there that you're saying here? should we expect you have a more difficult job ahead for you? >> no. i speak the same way here as i -- there as i do here. i don't know whether or not we're being censured or not. i feel it's our obligation to say what we see and to speak freely. >> certainly the way we feel in this country, eunice. we're lucky to have you, lucky to have you in the building, eunice yoon at or headquarters. a bunch of stickers to get to

including j&j at the house, the new york stock exchae,ng autozone, starbucks, smuckers in a moment. icy hot. ice works fast. ♪♪ heat makes it last. feel the power of contrast therapy. ♪♪ so you can rise from pain. icy hot. 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

the power goes out and we still have wifi to do our homework. and that's a good thing? great in my book! who are you? no power? no problem. introducing storm-ready wifi. now you can stay reliably connected through power outages with unlimited cellular data and up to 4 hours of battery back-up to keep you online. only from xfinity. home of the xfinity 10g network. >> the longest such losing streak for the name since june of last year. people hunting for theories about this. is it china? >> people say it's china.

it's not china. he's considered in the last few weeks nothing, nothing wrong with china. u.s. is very strong. my trust owns it. we've been waiting for a level to buy it. i think it's here. laxman is doing a fantastic job. i think people are so jittery about anything. look at nike. it went down, down, down. foot locker said they had a good call. boom, they bought it back. i think china is so opaque away from moody's, after a great quarter that starbucks reported, it's come back down. you buy it. >> i'm just trying to understand. you don't think it's deserves, but it may still be the market was or investors were selling because of china, even though he's saying there's no real issues in china? >> yes. luck khan is a discount company,

it's not a starbucks. the experience is different. >> opening a new one -- how many new ones every day? >> they have to. >> it's incredible, the growth they have there. maybe it is a reflection of concerns about the chinese consumer. >> we can be concerned about it every day if we want to be. >> yes, yes. >> okay. i'm telling you that i have pretty good conviction and i think china is good. >> china is okay. and it was as of the last quarter. >> it was very good. >> maybe it's about potential share shifts. we mentioned mcdonald's yesterday, investor event this week. some of the new concepts starting to get notice. >> starbucks has great new concepts, too. >> i think starbucks is on its own. i think it's an experience that people like. i don't want to -- look, i think a lot of us like every kind of coffee. starbucks has -- i don't want to say it's a cult, but there are

people drinking the cold starbucks in the afternoon. it's a day park that people don't seem to realize is on fire. they've put through machinery that makes it so it goes faster. he's got a lot of things that make throughput better. that's what made chipotle great, good throughput. >> you wish you had some now. >> the generic stuff. >> the coffee that should not be named. coming up, countdown to the opening bell. take a look at the premarket here, adding to losses as oil bounced a little bit. got to a 72 handle this morning. more "squawk on the street" when we come back. d about what ai will do for business. introducing watsonx a platform designed to multiply output by training ai with your data. when you watsonx your business, you can build ai to help coders code faster, customer service respond quicker, and employees handle repetitive tasks in less time.

let's create ai that transforms business with watsonx. ibm. let's create. trading at schwab is now powered by ameritrade, unlocking the power of thinkorswim, the award-winning trading platforms. bring your trades into focus on thinkorswim desktop with robust charting and analysis tools, including over 400 technical studies. tailor the platforms to your unique needs with nearly endless customization. and track market trends with up-to-the-minute news and insights. trade brilliantly with schwab. this thing, it's making me get an ice bath again. what do you mean? these straps are mind-blowing! they collect hundreds of data points like hrv and rem sleep, so you know all you need for recovery. and you are? i'm an investor...in invesco qqq, a fund that gives me access to... nasdaq 100 innovations like... wearable training optimization tech. uh, how long are you... i'm done.

i'm okay. all right. 60 seconds to draw the perfect gift. what's it gonna be? a bottle of don julio, 1942, delivered. delivered with drizly. gifting without the guessing. drizly. you founded your kayak company because you love the ocean- not spreadsheets. you need to hire. i need indeed. indeed you do. indeed instant match instantly delivers quality candidates matching your job description. visit indeed.com/hire

let's get to a "mad dash" on this tuesday. about seven minutes before trading on the new york stock exchange. you want to talk a little lulu. >> we got a lulu downgrade yesterday, another one today from raymond james. thoughtful piece. strong buy to buy. they report thursday. david, this is one of those stocks that people just say, you know what? all the good news is in. that's a typical theme. all the good news is in. they've had good quarter after good quarter after good quarter. is it worrisome there have been two down grades on the eve? it's very hard to think they can top what's already happened. that said, it's a great company. i'm just saying i'm surprised to see two ahead of a great american company. typically the analysts, they just led it ride. is something going on? i don't know. i think the stock has had a great run. this piece says they could talk

about in line applied guidance for q4. we don't need that. we need rays, beaten rays. >> have they seated all the demand for their product? i have a few pairs of their pants. i don't need anymore. >> because you have enough, the country has enough? is that what you're saying. >> i'm saying anecdotally. >> the prosecution rests. i'm saying if they guide in line -- an in-line guide you get to buy it lower. >> or you're happy you sold right here. >> i think when you have two pieces in a row, people are going to say somebody knows something. >> which isn't necessarily the case. >> no. that's what people said. >> although you make an important point which is sometimes companies will whisper to analysts who will lower their numbers going into a quarter end quietly. >> listen, we're not going to be as boisterous as you'd like. >> you've got estimates that are lower that you can then beat.

it's not really a beat. >> you described what people are paid bill euns of dollars to do. >> we've been seeing that game for 25 years. >> opening bell five minutes from now. don't forget, please always remember you can catch us any time and anywhere by listening e re" eng llwing the "squawk on thstetopinbe podcast.

when someone tells you who they are, believe them.

stealing their basic supplies.

we're going out of a strong 2023 in which we have raise guidance three times. when we think about 2024, we see a continuation of those trends with robust, competitive growth of 5% to 6%. importantly, this is the beginning of a cycle of growth with growth which will be top tier in the second half of the decade of 5% to 7%. this is all based on the strength of our portfolio. >> that's j&j's chief earlier this morning.

>> to me the greatest thing is they give you the roadmap to the next decade. they're doing it because they have ten new drugs that can do $5 billion each. 15 can do 1 to 5 billion. that's a very strong product -- the pipeline here is solid. i will tell you this, there was -- there's still the overhang of talk. >> you said it many time, the continued litigation. you look at a five-year on the stock, it's not great. >> no. it's caused by litigation. right now i know they said that they -- one of the things that's so hard about j&j, they strongly hope to fix the problem, carl, but that's not up to them. it's up to the plaintiff's bar whether they want to appeal or not. because the court system and where they are in the third

circuit favors the plaintiffs, not the defendant, johnson & johnson. >> j&j hanging on to gains in the premarket. let's get to the cnbc realtime exchange. it is johnson & johnson and evolve, a canadian et provider. soothing comments from bofa today about december. the best month of the year. >> basically remind you that it's not a myth, the santa claus rally. you have to block chop here in order to get to there. i think that that piece was extraordinarily good. i'll tell you what was really great today, katy huberty's charts that caught her eye. >> i knew you were going to go to katy. >> i don't know if you are aware of her eye and what it catches. >> she is the director of

research at morgan stanley. >> she's bigger than that david. >> much bigger. >> we know she knows phones. we know she knows apple. david, global smart phones poised to recovery. i don't know a soul who think a smart phone is poised for recovery, not one, except for katy huberty. i would say i'd take her over all the people that know. >> that has apple shares up 1%. >> we did get some networking equipment news in your absence yesterday, david. >> ooh. >> thoughts on that? >> john stankey, the ceo of at&t, was speaking at the ubs conference this morning talking about their decision to spend $14 billion over the next five years with ericson and that to roll out -- a collaboration will that will seek to scale open radio access networks.

the plan is over a five-year period, to spend as much as what could be $14 billion. he said we had two very good suppliers. they both did good work for us. they both had really good equipment. we stepped back and said how can we get the most modernized network that gets the most amount of traffic across potentially open interfaces, and it was this path that we chose with ericson. to your point, carl, ericson's shares are a beneficiary of this increased spend from at&t with them, decrease perhaps with nokia. at&t responding positively overall to his comments at the conference as well. nokia, by the way, before this announcement, supplied a third of their equipment, ericson two-thirds of network combiment. nokia was not their largest employer. but they're getting bigger. >> nokia las been troubled for

quite a long time. it's one of the most popular names in my lightning round, "mad money." when was nokia's high? >> 2000. >> june of 2000. $62. a bit of a decline. wiped out a lot of people. second question. >> yes. >> how did they pick the name? >> that i don't know. the river? >> nokia is a river in fin llan. >> it's just accessing it. it's still in there. >> ikea has done better. >> there since 2,000. remember, there was of course the time nokia had eclipsed blackberry, just to take us back -- motorola, i should say, no nokia eclipsed motorola. >> you're thinking of nortel.

>> put out of business by the chinese, stole their ip. >> remember they lost the brazilian contract. >> lucent. >> lucent. that stock never recovered from the brazilian contract. >> i know. that was the heyday. >> that was the heyday. >> such a great time. >> what was the ceo of lucent's name? >> mcginn. >> wow, it's all in there. >> it was the most widely held stock for a period of time because so many people owned at&t, got lucent in the spin. it was a big equipment supplier. >> telco's spend was unbelievable. that's when verizon and at&t were kings. >> and worldcom was spending enormous amounts, too. >> he always tries to bring up his big docs.

a great documentary. >> the greatest scoop in history. >> do you see analogs between that buildout and the current cloud ai buildout we're doing right now? >> i do think there are a lot of people according to snowflake's ceo frank shoot man. they don't want to be left behind. he says if you're not sure, why not rent the cloud with this stuff and give it to you rather than own. i think it's the same kind of thing. it is kind of like real estate. should you rent if apartment prices are coming down? yeah. so if you want to sit there and throw money at nvidia. >> to carl's pount, the amount of capex being spent by the likes of meta, amazon, alphabet, tesla, microsoft and apple as well, but really on ai, is just

enormous. >> it's checkers and chess. >> costing hundreds of billions a year. >> because you can't do the kind of -- i use it every day. >> a lot of it ends up at the first company, as you know. >> if you read the piece today, i think chatgpt is fantastic. you can it stuff. it's just smarter than you. >> now we've got meta and ibm creating this coalition of ai companies who want an open source model unlike chat and unlike google. >> ibm stock has been a horse. i'm reluctant to say they zont something good. mark zuckerberg has done really well with ai. reelz is ai. >> they've done stuff to temer expectations. >> we're at a weird moment

because mark zuckerberg sold some stock people are worried. nvidia, some of the insiders sold stock in nvidia. are they out of their minds not to snell who runs around with a stock like that, where you're getting stock all the time -- of course you'd sell, just for estate planning purposes. if i were mark zuckerberg, i would go buy munis. >> no. >> if i were handling his finances, i would say you've got a ga silian dollars in meta, maybe you buy some of the 30-year -- >> yeah. diversify a little bit. that would be what you would advise. >> i'm not going to tell him to go buy j&j. i used to do that. my boss would say, jim, did you really recommend to someone who is a billionaire to buy j&j. >> he said you only need to get rich once. think about what happens if it

goes down. >> what about your friend jensen, would you advise him to diversify? >> no. i don't think there's anything wrong with jensen the way he's been selling. >> bezos has been doing a little bit of selling. >> there's a lot of guys who sell $7 million and buy a place in florida. it's always seven. what is that about? >> well, seven -- bezos doesn't -- it's hundreds of millions. >> i'm just saying -- >> $7 million won't get you anything, won't get you into palm beach. won't even get you the parking garage in the back. >> what's a yacht go for these days, 150-footer? >> half a bill, right? >> bezos can't even find a place to park his giant sailboat. >> what can i say? i'm saying rich people, they're not like you -- thank you. >> fitzgerald -- some of his

stuff was hacked. not everything fitzgerald wrote is great. have you read middle march? jeff goldberg in the atlantic refers to middle march. >> have you read tch the mrik" recently? are you referring to the latest issue? >> i read it every day. i think jeff is unbelievably good. things to read. >> a bunch of bank ceos presenting today. solomon at their own conference. charlie scharf. brian moynihan, key. >> i think charley scharf is doing an unbelievable job. i saw tim sloan suing the bank. i understand that. he didn't get the bonus. >> tim sloan was the former ceo who got wrapped up in a lot of the scandals that were not of his own making. >> that's why i think -- i know tim. it seemed wrong to me, but at

the same time wells fargo -- charley scharf, he inarted a bank i don't think he had any idea the things that were wrong, and he's been playing defense until this year. now he's playing offense. i really like what he's got going. >> he did say at the goldman conference, they still feel very good about their commercial real estate portfolio, borrowing office loans. remember, commercial is data centers. it's a lot of other things. warehouses. but office loans are not good. also said we expect to see losses in office loans in the fourth quarter. continued slow credit deterioration but no inflection point. it goes on to say we're cautious and careful and tightening credit on consumer products -- consumer lines. >> there you go. i think that -- if people want to read into the cautious comments of the banks, that's

what they say now. there isn't anyone that isn't cautious. >> moynihan has a headline basically arguing to watch for -- watch for a fight against an overshoot on inflation. by the way, mentioning property, sl green and simon both had 52-week highs. >> they're just horses. sl green -- remember in mid tow they were saying does anybody even know what we do? we have midtown next to grand central that's doing great. i was listening to them and saying, wow, what a good story. david, simon properties is a fabulous company, fabulous. i've been recommending that for ages. >> yes, you have. >> it's such a good company. it's high-end malls. they're a malls. it's b and c malls you have to worry about. >> we've been talking about that

for many years. many of them, there's been stories about mooupts that want to get rid of the walls. hanging on at 40% occupancy, falling apart but you can't quite get rid of them because they would like to repurpose the land for something else. >> well, maybe so, my travel trust owns it. everyone has decided it's the end of the world. i have to do some more work. it doesn't seem like the end of the world. >> people are listening to katy huberty today, apple adding -- >> it's katy huberty. global smart phones poised for recovery. >> does she give an explanation as to why she believes that to be the case? >> future edge ai, david. >> edge ai is going to spur a new upgrade cycle? >> yes. super smart phones. >> the other great chart in her work today is that europe may get to target by summer.

>> i thought that was incredible. this is very bullish. u.s. banks, it's time to buy them. china economics, not that great. i mentioned it to tim cook when i spoke to him last. what you've got to do with ai, have affinity group text. let's say i'm playing fantasy football. the football players have difficult names to spell. it should be able to detect what i'm doing. he liked it. he liked the idea. i called my wife, hey, tim cook liked my idea. he liked my idea. you know? >> that's great. >> well, it's tim cook. >> i know. he's a very important man. >> couldn't sell disney on the new mexico park, but you got this. >> it senses that you like bali. how about mozart? how about -- he liked it took me weeks to come up with it. >> i'm glad you're spending a

lot of time on that. it's not like you have a shortage of time. >> well, i just think fantasy -- 50 million people played fantasy. this morning, tryou've got to kw this stuff. it would be able to tell you. >> a lot of chatter about the trailer for gta 6? >> did you look at it? >> we've been watching all morning. >> great trades by who? >> nvidia. >> thank you. it's so realistic and fabulous. some people hoping it would come out earlier. >> it's always been for '25. >> it's always been for '25. people are trying to jump the gun. this thing is electric. david, a lot of the buildings are for sale. that's a $7 million boat right there. >> they don't want the condos even in the virtual world.

>> miami is doing well. >> take 2 is a very interesting stock here. i think sal nick has done a great job and you should buy it, not sell it. >> mary barra with the comments yesterday about their 2035 all-electric target and how that might change if the consumer doesn't follow. >> i think that's really the important thing. you've got to have fast charging. i like that she mentioned that. i do think -- i'm not saying people have turned on it. they need a sense of newness. i keep waiting for the new tesla, not the cyber truck which i think is a lab ginny. >> you mean a new model? >> yes. i think it's going to matter. it's the best-selling carin the country. that's incredible. >> period. >> number one. >> that is true. >> proctor is down three now. >> bitcoin keeps surging.

i don't really talk about it much, but wow. 42,650. >> it's ban horse. >> it's been a horse. oil is down i think. ten-year is below 4.2. >> these are all positives. proctor sees $2 billion charge for restructuring. proctor had an $800 million hit in currency. commodity is going down, but currency is going the wrong way. now the currency is going the right way. that's why i felt we should buy more proctor for the travel trust. i'm not factoring in this unexpected $2 billion charge for gillette acquisition. it's not great. i'll just say it. it's not great. >> certainly not helping the dow. we are getting a batch of data here in the next 15 minutes. we just got some services bmi. let's get to rick santelli. >> yes, carl, s&p 500 global

services, november final reepdz replacing mid-month reads and they remain the same. on the services side, 50.8 remain it is best since july and is the 11th consecutive month. if you look at composite pmi at 50.7, the second month in a row at 50.7. those months are the best, also, since july, and also on the composite side, 11 consecutive and expansion mode above 50. we still have our october jolths coming up at the top of the hour along with ism services pmis as we continue to monitor the service sector even though it seems to be slowing not at its best levels, it still remains in expansion territory. "squawk on the street" will return after a short break.

what do you see on the horizon? uncertainty? or opportunity. whatever you see, at pgim we can help you rise to the challenges of today, when active investing and disciplined risk management are needed most. drawing on deep expertise across the world's public and private markets in pursuit of long-term returns... pgim. our investments shape tomorrow today. your shipping manager left to “find themself.” leaving you lost. you need to hire.

i need indeed. indeed you do. indeed instant match instantly delivers quality candidates matching your job description. visit indeed.com/hire all right, sheila, are you throwing a dress like a dad party, a birthday brunch, or a vow renewal for your dogs? yes! the right drinks delivered for any party. drizly.

bf

♪ start tomorrow night, cnbc launches its new cross platform franchise called "cities of success" a new series that explores american cities that have transformed themselves into business power centers changing pretty much the entire u.s. economy. cities of success will feature a different city every quarter and our first tomorrow night is music city nashville. tomorrow night 10:00 p.m. stn men bc. back the a minute.

all right, tandy, what's it gonna be, the drink made from whatever was laying around, or the one made with your drizzly haul? drizly! stock up today, sip well, tomorrow. drizly.

first time i connected with kim, she told me that stock up today, sip well, tomorrow. her husband had passed. and that he took care of all of the internet connected devices in the home. i told her, “i'm here to take care of you.” connecting with kim... made me reconnect with my mom. it's very important to keep loved ones close. we know that creating memories with loved ones

brings so much joy to your life. a family trip to the team usa training facility. i don't know how to thank you. i'm here to thank you. let's get to jim and stop trading. >> people have been wondering how come apple -- no. there was a statement from

foxconn saying that it generated the second highest november sales total in 2023, 18% year over year because they're apple assembler that apple has a lot of orders. that's contrary to everything you read. i tend to believe because there was availability doesn't mean it's the end of the world. they are very smart about inventory. double-edged sword. i'm going with foxconn and think this is apple. >> four month high on apple. >> i was going to go with smucker, which was -- mark was on this morning, saying that's the bottom and glp. a lot of interesting bottom callings, but i like this apple. you know that. i'm going to own it. don't trade it. not just because of my affinity plan. >> i understand. >> i still think it's -- >> like substantive, as opposed to my, what, my anecdotal. >> correct. >> that's -- yes.

>> bad, empirical good. >> better. >> we're on the mag 7, bernstein, top pick idea amazon for '24. >> i thought that was a fantastic piece and amazon is doing well. sig net, i have signet on tonight where david does, you know, most -- no? i think they're doing great stuff. this is jared, kiss begins with k, high-end stuff that i've bought and it's up almost $3. doing a fantastic job on high-end, on low-end. i salute her. this is a turnaround. >> engagements. we need the guys to put a ring on it. >> put a ring on it. >> as she would say. >> david. almost 19 years with lisa. >> wow! >> although not all of them married. >> i didn't get to kay. i didn't get to kay on time. 10 years. it's okay. >> we need another wedding celebration. >> don't worry. we may do the best seventh best

day ever. look out. >> number seven. >> you may get the invite. >> i hope i get it if there is one. >> you'll get it. my wife loves you two guys. by the way -- >> he didn't say i love you. >> she does. that's enough. >> yeah. >> i love you too. >> oh. thanks, jim. we'll see you at 6:00. "mad money," 6:00 p.m. eastern time. exclusive with bofa brian moynahan presenting at the conference. coming up ism and jolts. trading at schwab is now powered by ameritrade, giving traders even more ways to sharpen their skills with tailored education. get an expanding library filled with new online videos, webcasts, articles, courses, and more - all crafted just for traders. and with guided learning paths stacked with content

curated to fit your unique goals, you can spend less time searching and more time learning. trade brilliantly with schwab.

welcome to another hour of "squawk on the street." i'm sara eisen here with david faber live from post nine of the new york stock exchange. carl is off on assignment heading to nashville ahead of the launch of cnbc's cross platform franchise "cities of success" that explores cities that have transformed into business power centers that debuts tomorrow at 10:00 p.m. eastern and will join us from nashville tomorrow. turning to the markets and treasuries right now. little changed. nasdaq is higher. strength in technology that could be, perhaps, explained by

what's happening in treasuries where we continue to see a rally with low yields. there's the 10-year. 4.165. so continues to move south. you wonder what resistance is on the downside after we've come way down from the above 5% level where we were. we're 30 minutes into the trading session, some movers we're watching, shares of jm smucker, maker of twipg kis and jiff peanut butter topping expectations. apple is another top performer on the s&p adding to big gains and shares rallied 15% off the late october lows. bank of america and ubs out with bullish noetsz on the same this morning. starbucks, the stock on pace for its 12th straight down day, since going public in 1992, wiping out around $12 billion of starbucks market cap in the time. investors are worried about weakening sales trends at the coffee giant.

>> who keeps track of those things? like baseball where they have these statistics, you know -- >> we have a data team at cnbc. >> 11 straight days, 12 straight. it's amazing that we can go back -- >> we have the superlatives at our fingertips. >> amazing we can do these. let's get to economic data that just crossed the tape. for that we get to rick santelli. rick? >> yes, david. watch yields go down and watch equities move up a bit, as job openings and labor turnover known as jolts for october is much less, huge miss, versus expectations. looking for a number around 9, 300,000. the number 8, 733,000. that is the weakest since march of 2021 and there was even a subtle revision lower to last month from 9, 555,000. a big police there. let's look towards november ism

services index. 52.3 expected. 52.7. that's the best since september. on the prices paid, at 58.3. that is the weakest since july, which is a good thing in the instance of prices paid. on the employment index, 50.7. a big miss there. however, however, even though it's a big miss, it's still the best number since september. it's just that we were looking for a number closer to 51.5. finally, on the new orders front, we were looking for 54.9. a 55.5 the best since august. we're going to be looking towards tomorrow's adp and friday's jobs report to see if some of these above 50 expansionary service sector numbers will hold their water. sara, david, back to you. >> do you have the quit rate for us by any chance at your fingertips? >> no. don't see that crossing the wires. my apologies.

>> all good. >> but just asking on the miss in job openings because, obviously, this is an important read for the fed and for investors on the tightness of the labor market and what rick reported 8.7, the big miss, and lower than we got last month, shows that demand for labor is weakening. those openings are coming down to more i would say normal levels prepandemic. doesn't necessarily signal any stress or recession type of thing, but the reason i asked about quits is because we get that number, too, and that shows a trend. this is from -- it's messy because it's from the st. louis fed database but what it shows you is that when workers feel confident there's a tight labor market and they can get a new job they quit more. the rate went high in 2022 and you can see a peak at almost a record high during that year, and it has been coming down steadily. that's all you need to see in the last few months, which shows, among other pieces of evidence that we continue to

get, that the labor market is softening. there's not as much demand. we've seen that in continuing claims, 2 million people filing continuing unemployment claims we got last week showing there's not as much movement in the labor market to get these people off the sidelines and to get jobs filled, which is what was supposed to happen after all -- >> it is. the reaction from the fed to this data is happy? >> we're happy. we don't have to -- maybe we don't have to hike more. feeling good about where we are, feeling good about a soft landing because there's not signs of stress in the job market yet, but signs it is cooling off and they did want to see that, and it took a little longer than a lot of people thought it would, given 525 bob pisani -- 525 basis points of tightening. >> we'll see what we get from the monthly jobs report on friday. it's cooled off, but it's still higher than normal on wages, and the fed wants to see it cool off

to more normal levels. it's a good thing if americans are getting wages, but it could spark inflation. it's come down from the rates we were seeing at the end of 2022 where we were seeing sizable wage gains. if you see fewer openings like rick reported theoretically you should see slower wage growth. businesses don't have to pay as much. >> sara, worth mentioning, the dynamic we saw yesterday reversed a bit. the mag seven, mega cap tech names we follow so closely for obvious reasons have gone positive this morning. led by apple, sara mentioned that at the open of the show, which in part was buoyed by precision sort of putting out some numbers or talking about the fact that they had a strong current period but take a look there, maybe also to the declining yields in the 10-year this morning -- >> there was firmness yesterday i think. >> you had a significant selloff

in many of the same names. they've all gone positive and quite so just over the last few minutes. >> tesla is up there and nvidia doing well. the bank of america stat this morning that we knew last month was a good month for stocks and bonds, best month for 60-40 since 1991, the 60-40 portfolio. >> after a terrible year in 2022. >> they think that the gains can continue into november, a seasonally strong month. commentary as we track what's going on with the consumer and the economy. signet jewelers, jenna is going to be on with jim on "mad money," trends through black friday weakened according to the retailer, including sequential improvement in engagement trends performing in line with guidance expectations for the fourth quarter as we enter the holiday season. jewelry remains a top of mind gifting category for consumers in a value conscious shopping environment. value conscious is the word more than recessionary or, you know, significantly weakening overall

consumer environment, although engagements are back up. they track 45 data points to show everything from people moving in together to googling and that continues to inflect higher according. >> that's a good sign. >> that's a good sign for them. >> auto zone, auto parts, retailers, big rhodes saying our domestic sales were solid while our international business continues to deliver exceptionally strong sales growth. bottom line, things are okay. and they're fine. which is how we've touchdown to describe the holiday sales period as well. softening, but nothing in terms of a marked deterioration in some of these consumer names. we'll continue to follow that and also got smucker results as well and talk about goldman sachs hosting its u.s. financial services conference getting headlines out of that. charlie scharf the wells fargo ceo says soft landing remains the base case.

leslie picker is with brian moynahan for a cnbc exclusive. good morning. >> good morning, sara. and brian, thank you so much for being here. really nice to sit down with you in person. i want to kick things off with rates because we've seen a pretty drastically different environment in recent weeks with the long end of the curve coming down quite significantly, concurrently, bank of america's stock price surged 17% in november besting most of its peers in the financial services industry in general in large part talking to investors and analysts who have a thesis on this, because of the $131 billion in unrealized losses, lower end of the curve coming down, would, you know, create some sort of a dent in that figure. so i'm curious how your plans for capital allocation change in a more benign rate environment? >> first, it's great to be here, leslie. we just here at the goldman conference all of us talking about the industry and the companies and i think, look, you got to get to normal and an

invert the rate curve is not normal. as the fed has raised it to fight inflation, as inflation is tipping over and coming down, as the future inflation is coming down, the job openings today being lower, unemployment rate going up a little bit, spending slowing down, we can talk about that, that's happening, the rate structure is settling in and that has an interesting impact. you know, if you have a lot of zero interest funds, the rates coming down don't help, but on the other hand, stabilization in rates means the economy will kick in and activity kick back up. investment banking activity slow this year because of the uncertainty, picking back up as people think there's certainty and will pick back up. these work out and balance each other out. we manage the company to be fairly balanced. our interest rate sensitivity is no different today than two years ago in the rise in rates across $3.3 trillion of balance sheet and work you're trying to he keep the interest rate sensitivity relatively the same so that you can then earn $14

billion in a quarter. >> but, you know, lower rates have been a tailwind, at least in november, because there is this perception that the underwater securities are, you know, impacting them. there's an opportunity cost associated with that. you're turning over about $11 billion each quarter as the securities mature and get paid down. how much longer do you think the balance sheet will be something that analysts and investors continue to talk about? >> i think when we talk to people in the stock they see the earnings power coming up. our n.i. projections which reflect the whole company are to basically come down, bounce long and grow next year. that's totally different than anybody else and part of that is the stability in the deposit franchise and part of it is rates fall, short rates, people only have their money shorts coming down, we have $500 billion in cash in short-term securities on top of the $500 billion and change on the other side. it's a balanced book. we don't get hit as hard because if you're short that's going to hurt. in there there's floating rate

loans, $3.3 trillion. the difference between us we see n.i. peaking up $5 billion higher than the trough a few years ago. we are now seeing it flatten out at this level and grow and that's different than others because that's the power of the whole franchise, not an individual part. >> is that true even if rates continue to go down? i know you had 57, you're on track to produce about $57 billion worth of nii this year. that's 33% higher than 2021. obviously, thanks in large large part to a higher interest rate cycle this year. so do you think that peak benefit is behind us? >> in the projections is rate cuts next year. as rates cut next year and the year after that, our team has the economy troughing tout like a half a percent growth beginning in the first part of next year through the middle and starts growing stronger. they have two rate cuts next year and four the next year, so the rate structure will be higher. in that rate structure it's very beneficial. our franchise, what you need to do is have loans and deposits

start to grow. when we were at this conference last year we had everybody talking about well, will the deposites go back to where they were prepandemic and we were trying to show people if you took the growth rate deposits, you were coming back to that level to be back on the trend growth rates. for us that's $1.5 trillion to $1.9 trillion. our deposits are growing again. and so when those deposits grow, at a cost of 150 basis points, that's still a nice profit margin we can get out of that and that's what we do. >> we've seen some -- you mentioned capital markets and the interplay in lower rates being beneficial for deal making activity. we've seen headlines as it pertains to ipos and m&a activity. do you expect to see a significant rebound in advisory and underwriting work and will it be enough to kind of offset some of the pressures of interest rates coming down? >> well the natural power of the franchise is things -- different things go differently different

times and it's all good. to be specific, you know, the industry pools are down 10 to 15% for this quarter so far. we told people our estimates for $1 billion in investment banking fees this quarter down low single digits. we're out performing the industry and gaining market share and our team continued to do that. on the trading side we said to people, we'll be up a little bit from last year and probably as best we can tell right now, the best fourth quarter we've had in the trading business. jimmy and the team have done a good job there. when you go to broader activity, the activity has been muted because of the volatility around the future. so people, it's hard to commit to buy a company if you're not sure what's going to happen. and that's -- as that becomes clearer and the cost to credit has gone up dramatically for companies, the cost of financing is up 5, 600 basis points relative which pushes up in the low double digit for the deals, that slows everybody down because it's going to take a lot more equity not to have to pay

that financing cost or less price and the sellers don't always want to sell that. all that equilibrium comes back as the rate structure settles in to any rate structure as long as people can depend on it and figure their way around it. what drives our company? the consumer business. we have a big wealth management business, one of the biggest in the world, biggest wealth management business, commercial banking business and investment banking and trading and so you got to think about the whole company and the rate structure and the activity levels has been strong in the company overall, solid, having slowed down from the post-pandemic recovery but pretty solid. >> i want to ask you about credit expectations and that charge offs. last quarter your ncos were below prepandemic levels although they have been increasing each sequential quarter. what's your outlook for credit quality as exemplified by the health of your lending book right now? we drive responsible growth. we show our lending book is more resilient to economic stress than any of the large peers. we feel comfortable with credit.

and the key that people have to think about is that the charge offs we're moving to now, when you say they're prepandemic, prepandemic was like a 40-year low in the company history. this is very good credit times on a relative scale. so it will all be dictated by the path forward. if the economy does hit a soft landing and unemployment peaks in the low to mid 4s we built a reserve as if it got over 5, and if that happens we should have strong credit quality out there. we'll reflect the economy on the credit quality and better than other people by our own determination and by the objective facts of them running 30 companies through a screen and looking at it, but the reality is, it ebbs and flows. it's still in very good shape. office space is relatively modest part of the portfolio, 2%, not something that concerns us, but it's really going to ebb and flow with the economy and if you look at our general corporate book it's in very strong shape. >> the state of the consumer also in a good shape? there were some kind of differing perspectives on what to make of black friday, cyber monday in terms of the health of

the consumer? >> so if we start to get a baseline, from '21 to '22 across 60 million consumers, bank of america has the privilege of doing business with, $4.5 trillion goes out of their accoun accounts refer year. that was up 9%. towards the end of '22 and '23 started slowing down. this year to date and november is up 4% versus last year. you saw it cut in half. in the month of november. but in every case bigger than last year. so cyber monday, bigger than last year. black friday, bigger than last year. 3.5, 4% bigger. they're records, but at a much more modest gain. that spending growth rate is very consistent, 17, 18, 19, 2017, 2018, 2019 with a low growth economy. consumers have money in their accounts. if you look at the people took the money out of the camera banking system are the people who have discretionary funds

getting no interest rate rates during the pandemic who put it in the market. in the core checking accounts for people who had under $5,000 in average balances or 10,000, those are multiples of prepandemic. coming down a little bit, yeah, year over year down 4%. 1%between 2 and $5,000 average. very modestly. that's year to year statistics. overall, in very good shape. they have credit capacity. their homes are worth more. so for the prime american consumer, they're employed earning more money. is inflation tough on certain segments of the economy in absolutely. that's what you're seeing between how i feel versus what i do. how i feel is i feel inflation, i'm reading about everything more expensive. what i'm doing, i'm going to concerts and spending money on entertainment, 7% higher than last november. spending less money on goods because i bought that stuff in the pandemic and dochts need to buy it again. i'm doing entertainment, traveling more. so the way consumers are spending money is leveling out. all in all in decent shape.

>> normalization not necessarily deterioration. >> it's deterioration from where it was, but that was a false positive. in other words that was so positive it had to go back on credit and things. still in very good shape. >> brian moynahan, i know you will be speaking in front of the senate banking committee tomorrow, all sorts of topics at hand, including regulation. what that means to your business. we will be looking forward to that. see you in d.c. really appreciate your time today joining us on "squawk on the street." >> thank you, leslie. >> all right. sara, send it back over to you. >> thank you. brian moynahan, thank you as well. very good shape still on the economy. making the case for a soft landing, especially on the consumer. still seeing growth from last year, deceleration in the rate of growth, thought that was notable. >> key takeaway. >> he's been right, you know, on his sort of better improved outlook for the whole soft landing story than some of the other bankers, more focused on hurricanes, right? >> referring, of course, to

jamie dimon. he's downgraded it to a tropical storm. >> true. >> ceos of the big banks as leslie mentioned will be testifying on the senate -- to lawmakers on capitol hill tomorrow. coverage kicks off at 9:30 a.m. right here tomorrow morning. as we head to break, here's our road map for the hour, we're not done at goldman's financial conference. the head of boutique investment bank perlla wineberg partners. >> the largest drug store operator, cvs, what that could mean for your wallet and the stock in question. >> and the presidents of harvard and m.i.t. and u pen getting grilled on capitol hill over anti-semitism and college campuses. big show still ahead. 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 built-in security. chip? at&t business.

the power goes out and we still have wifi to do our homework. and that's a good thing? great in my book! who are you? no power? no problem. introducing storm-ready wifi.

now you can stay reliably connected through power outages with unlimited cellular data and up to 4 hours of battery back-up to keep you online. only from xfinity. home of the xfinity 10g network. welcome back to "squawk on the street." stocks coming off their worst day since november. the nasdaq is higher as david mentioned earlier we're seeing some strength right now this this morning in the magnificent seven, mega cap tech stocks led by nvidia and apple and tesla. here at 500 break down the road ahead, goldman sachs equity strategist david kostin has an s&p target of 4700 next year. not a ton of upside, but i like how you used taylor swift lyrics. all you have to do is stay. that's what you do in the market?

>> i think it's a good way of thinking about it. the baseline forecast is modest upside because valuations are pretty high, earnings are going to grow roughly 5%, but there's a tail scenario, if rates stay low and rates have dropped significantly, real 10-year bond yields 10.5% and now roughly %, it's a significant decline in a short period of time, stocks rallied 10% roughly in the last month and to the extent that rates continue to fall or stay at low levels that could support an s&p 500 level close to 5,000. >> unless falling because people are worried about recession. >> what's the reason they're falling, inflation coming down or the economy is weakening? we put the argument on the table inflation has been coming down, continue to fall and a positive story about why rates are falling and that's i would say largely a topic that's debated among the portfolio managers with whom i interact. >> 5% earnings growth, do we get revenue growth in an environment where you see inflation continuing to fall? >> all that earning growth is

stemming from revenue growth. most companies will generate revenue growth of around 5%, that's nominal gdp growth. real gdp growth around 2%. inflation is coming down, but probably average close to 3% next year so 2 plus 3 is 5. most companies show top line revenue growth around 5% and it's not going to be a margin expansion story. it's really a sales story which is pretty positive. not extraordinary, but a modest level of increase in profits. and valuation is a real challenge, and it's a challenge on the upside. if you were to have a story for higher valuation, would really require bond yields to fall, and they're already at a pretty low level. our assumption real 10-year bond yields closer and a little bit higher than we are now and supports 4,700 target, baseline forecast as i said there's a scenario you could have the market rising more closer to 5,000 if you had rates, you know, continuing to fall. >> you recently published your

hedge fund trend monitor and mutual fundamentals report. you talked to, you know, the 5 trillion hedge fund and mutual hedge fund managers who represent roughly $5 trillion. what did you find? >> there was a couple things that were interesting. one is the whole debate takes place around the big seven stocks. the hedge funds have tended to be overweight these mag negative santsz seven as they have come to call them, so that's sort of one big observation. the second is a huge continued concentration, the top ten positions, comprise roughly 70% of the long positions of the typical hedge fund. that's persistent across all the funds. that's been rising, david, over time, and that's another area, some risk in terms of performance, that these stocks, major stocks, continue to be the leading holders. on the other hand mutual funds tend to be under weight these positions that's led to a notable under performance

relative to the benchmarks, core managers, growth managers, only about 20%, 25% of them are actually beating the benchmark and that's largely been an issue around the positioning around these -- >> that is not pretty when you have only 31% of large mutual funds meeting their benchmarks. what about this market dynamic that we talk about so often? we mentioned even today things have turned and focus on the magnificent seven. do you expect it to continue and how are investors supposed to adjust? >> here's what we did that was original until our research, in my opinion. rather than think about the valuation for the index overall, we focused on fair value for the equal weighted index. what is the typical stock. how should the typical stock be valued? that's part one. and the index trades at 18, 19 times in an aggregate context skewed by the biggest stocks. the median stock equal weighted is 14, 15 times, in line, david, with the average for the last 30

years, so the typical stock is sort of average valued over the last several decades. that's part one. the second part is, well what kind of premium should the aggregate index trade relative to the equal weighted index. that's an important dynamic as well. the average stock, typical stock, trading fair value and right now the aggregate is around a 27% premium. put that, 14 times roughly, 18 times, 27% premium and that's also fair value in the context of the risk metrics that we look at. the message we have is the typical stock is fairly valued and the larger stocks are around the premium that they ought to be trading. those are looking at risks, metrics around risk premium on interest rates, inflation, et cetera. >> doesn't mean i should go out and buy the s&p because i did better than a hedge fund or mutual fund this year. >> there's a tail distribution. some did well. in general it's been a tough -- >> talking about the forecast wrong? you were bearish coming into this year.

didn't you expect 4,000? >> our target for this year started with two variables. one, the earnings would be flat. totally accurate on the earnings being totally flat. unchanged. '22 versus '23. expectations we would have a sort of average stable multiple and that continued upside mostly because of the seven stocks that was really did fantastic. the seven companies are up 72% this year. >> but also they have top line growth far above some of the other names you're talking about and/or earnings as well. >> the expectation is they will probably outperform slightly in the year ahead. they're starting at a pretty good valuation. those stocks were down 40% last year. people think about what's happening this year. they were down 40% last year, up 70% this year. it's a two-year stack of how they do over a two-year period. as well as a long-term perspective. >> we will ask for their equal weight s&p targets. thank you, david. great to have you. david kostin of goldman sachs.

still to come cvs meeting investors and announcing a big overhaul around drug prices. we've got the details after the break. a quick programming note, an exclusive you do not want to miss tomorrow. the ceo of walmart, doug mcmillon talking about expectations for the holiday season and how consumers are holding up. an important interview. dow down 115 points withhe t nasdaq positive. we'll be right back.

they're waiting for you. hey, do you have a second? they're all expecting more. more efficiency. more benefits. more growth. when you realize you can give your people everything, and more. thank you very much. [applause] ask, "now what?" here's what. you go with prudential to protect, empower and grow. with everything you need to deliver, you guessed it... more. one more thing... who's your rock? learn more at prudential.com

cvs the second biggest gainer in the s&p 500 today. this as the company has an investor day that is getting under way. let's get over to bertha coombs and she can give us the headlines this morning so far. bertha? >> hi, david. yes, cvs reaffirming its guidance for 2023 and establishing revenue guidance for 2024 above consensus at $366 billion for next year. they're outlining how they're going to integrate some of their acquisitions, particularly oak street health. this is a primary care company that they acquired for over $10.5 billion, and they are starting to open up new clinics within cvs, the first one down in houston.

they expect to have some 50 clinics over the next year. this is one of the ways that they're going to integrate that primary care with medicare advantage plans that will help them, they say, to really create value-based care. the thing that's really getting a big splash this morning is that cvs is announcing a new model for their pharmacy benefits business. they're calling it cost vantage and true cost. they say they're going to offer employers plans that make for transparent benefit pricing starting in 2025. now, interestingly, in 2025, blue shield of california has left cvs' pbm plan for mark cuban's cost plus, in order to get that kind of price transparency. cvs ceo karen lynch, during the break, told me it's time to change the model. they are hearing from their

clients and their patients that they want to get lower prices and they think that this can help. now i did talk to one critic who thinks this is probably not going to be as straightforward as mark cuban's cost plus in terms of the fee that they charge. he calls it a gimmick. nonetheless, definitely they are shaking up the model. back to you guys. >> the stock is rising on some of the guidance, perhaps, and the dividend increase. thank you very much. coverage of cvs all day. still ahead, we will head back to goldman sachs' financial services conference in downtown new york, ahead of boutique investment bank perella weinberg joins us for his forecast for m&a in 2024. s&p 500 is little changed. nasdaq is up. technology, consumer discretionary and communication services are the three sto that are higher right now.

(sfx: stone wheel crafting) ♪ the biggest ideas inspire new ones. 30 years ago, state street created an etf that inspired the world to invest differently. it still does. what can you do with spy? ♪

i'm kate rooney.

israeli forces are pounding targets across the gaza strip as the war in hamas is expanding. he said israel is moving into the second stage now that will be, quote, difficult militarily, but he didn't say exactly what that means or what an expansion would look like. the intense assault is fueling concerns for civilians in southern gaza. leaders of three elite universities will testify in front of a house committee today about their responses to alleged anti-semmic incidents on campus as they accuse harvard, univer university of pennsylvania and m.i.t. and say they are not doing enough to protect jewish students. panera bread caffeinated charged lemonade is blamed for a second death. the lawsuit filed this week claims a florida man drank three of those lemonades in october and died from cardiac arrest on his way home. panera says its investigation showed the man's passing was not caused by the company's products. david, back over to you. >> kate, thank you. goldman sachs as we've told

you earlier hosting its u.s. financial services conference, plenty of headlines coming from various ceos. back to leslie picker. she has another special guest for us. leslie? >> hey, david, thank you so much. yes, i am here with andrew bednar of perella weinberg, the ceo there. thank you so much for joining us. >> thank you. >> you focus, obviously, on m&a, global m&a total $2.4 trillion in the first ten months of the year. down about 20% from a year ago to the lowest amount since 2013. at what point do executives just stop waiting for the perfect environment and start doing some of these deals that we say there's all this pent up demand to do deals out there, at what point do they start actually doing them? >> i think we've already crossed that point. we saw in the second quarter a real inflection in the dialog and i think there's a real divergence between the data and the dialog. the data is very clear. the m&a markets are down theis year and with 26 days left in the year that statement will

still be true at the end of the year. the dialog really changed in our markets back in the second quarter. that's been a steady progression. i think that at that point executives and boards declared the waiting game is over in m&a, and we've seen a nice progression in dialog and think that's a very good leading indicator for future announced m&a activity. >> in terms of the some of the key hindrances, interest rates, geopolitical uncertainty, do executives need those to attenuate to officially consummate these deals, or at this point are they saying things are going to stay uncertain, we don't know what's going to happen with rates, we don't know what's going to happen abroad, we need tooz to do this now? >> i think executives and boards have accepted we're in a market of uncertainty. it goes without saying. it's a quite overused term. it's the natural state of the world that there is uncertainty. i think what executives and boards have done is they've

adjusted to uncertainty and they've been looking at the range of uncertainties and moving in the face of those uncertainties rather than waiting. i think waiting at some point does become a decision and that decision is proving to be more costly as people wait for better conditions and instead of waiting they're moving ahead in the face of those risks that you mentioned and there's always going to be headwinds around the transactions markets whether around m&a or financing or liability management or structuring markets, but you have to move in the face of headwinds always. i think executives are charged with growing their companies and building value. they'll continue to manage through uncertainty i'm convinced without hesitation. >> what about the regulatory uncertainty, though? i sat down last week with jonathan cantor's deputy doughhan mec ki at doj and she talked about the administration's bias towards action even if that means occasionally losing in court. what effect is that having in the board room in terms of

deterrence? >> the regulatory bark has been loud and it's meaningful, and it has i think affected behavior for sure, but bite has been quite manageable and i think quite minimal. if you look at the number of transactions that have gone ahead and that have announced and closed, it is significantly higher than transactions that have been challenged by regulators. even significantly more that have closed versus those that have been blocked by regulators. so the posture that's been taken by regulators is very real and it is affecting board room decisions. some of the decisions will they have see the light of day so we're not able to observe and measure the transactions that aren't coming to market, but those that do come to market, again, the bite is manageable. it's taking more time. i think that transaction participants need to be more thoughtful and careful about how they present their case to regulators, but overall, i think that's time and money and more thought. it's not completely killing the

m&a markets. the idea that m&a would die at the hands of regulators is just not true. we don't see any evidence of that. we just see a different regulatory posture. i think our clients are managing through that quite well. >> speaking of a regulatory posture, private credit has definitely come into the forefront of just the public consciousn consciousness this year. in terms of people talking about it, it's a huge growth area. so far very minimal regulation in this world. do you see that changing any time soon? i know it's frequently used to finance a lot of buyout activity you're advising on. i'm curious kind of your perspective on just the private credit market, and its potential for regulation? >> we're very active in the private credit market. we have a debt advisory team and a business where we help our corporate clients and our private equity clients and family offices access credit markets and private credit is a very important avenue and pathway for those clients and so we're very happy with the advent

and the significant development of the private credit markets. it is a stunning development in the financing markets, so when you look back at this business as you correctly point out, it's really been around for a long time. the idea of direct lending has been in the marketplace literally for decades, and probably took a few decades to actually get to 500 plus billion of aum and less than five years get to a trillion of aum and less than three years to get to $1.5 trillion of aum and you will be at $2 trillion private credit market into the next year or so, and so it really offers choice to our issuer clients and gives issuers an opportunity to evaluate different pathways for accessing credit. it is a regulated business, and these credit funds are regulated through the sec. they are a registered investment adviser. the idea that they're not regulated is not the case.

the idea that they're nonbanks is also a very important point because they're not regulated by banking regulators and so they're specifically not banking institutions. you know when you make your money from cnbc for your excellent reporting and then you deposit your money in a bank, there are certain safeguards that come with that. there's fdic insurance, tier 1 capital, that all sounds safe and secure, but in the end, when you're a depositor in a bank, you really have no idea where they're putting your money. you have some concept that they're investing it to earn revenue and produce earnings, but really, depositors have no idea where that money is going. >> right. >> in the world of direct lending and private credit, these sophisticated investors know where they want those assets to go. they know it's into credit. the idea of regulating that is going to be a bit of a policy challenge. i personally don't see what policy objective would be and i thinkit's a pretty tricky area

of regulatory world. >> andrew bednar, thank you so much for joining us today. ceo of perella weinberg. really appreciate it. sara, i'll send it back to you. >> thank you for bringing us that interview. as we head to break, video game maker take two, one of the biggest losers on the s&p this morning. find out why and what a leaked trailer has to do with it. don't go anywhere. .

shares of video game maker take two outperformer on the year by far, up over 48%, but under pressure today. this is after there was a leak of the trailer for the company's new grand theft auto game. that was earlier online. steve covac joins us now. what happened here, steve? >> yeah. well that trailer for grand

theft auto vi came out last night early following a leak on x. it was supposed to come out today at 9:00 a.m. it doesn't matter now. it's the next installment of the biggest entertainment property ever, everyone's talking about, it's about how much money gta makes for its studio, rock star games, and parent company, take-t take-two interactive. those shares are down. look, let's put some context here. in 2013 gta v, the current title, racked up $800 million sales in the first 24 hours and $1 billion in sales in its first three days. the biggest debut for entertainment property ever. and a decade later, it's still making money from online players and routinely contributes the most to take-two's overall sales. expectations for gta vi are just as massive. even with little detail about

what the game will be like beyond the footage we saw last night. it adds over 70 million views on youtube so far. put that in context, that beyonce trailer for her new movie only has 1.2 million views. gta vi will wind up being nearly a decade in the making by the time it comes out, from a studio that has a near perfect track record. it's also the first time a gta game will have a female protagonist. as for sales expectations, take-two has given bullish guidance for fiscal year 2025. expecting about $8 billion in bookings and expects momentum to last into 2026. this game will be a sales driver for take-two for the next decade. over to you. >> i like there's a female protagonist for the first time. i heard it was a little bonnie and clyde. thanks, steve kovach. we have to wait until 2025. >> you get the trariler now. the presidents of harvard,

m.i.t. and upen getting grilled on the hill over their school's anti-semitism on campus.

first time i connected with kim, she told me that her husband had passed. and that he took care of all of the internet connected devices in the home. i told her, “i'm here to take care of you.”

connecting with kim... made me reconnect with my mom. it's very important to keep loved ones close. we know that creating memories with loved ones brings so much joy to your life. a family trip to the team usa training facility. i don't know how to thank you. i'm here to thank you.

welcome back to "squawk on the street." the battle over free speech and anti-semitism on campus coming to capitol hill as the presidents of harvard, mmp.i.t. and university of pennsylvania testifying before lawmakers. emily has been listening in and joins us with the headlines and the dynamic here. >> the hearing has basically just kicked off. we are just beginning lawmaker questions. that's where we expect things to get heat. we did hear testimony from the presidents of harvard, m.i.t. and the university of pennsylvania. harvard president gray spoke a little bit about what harvard is trying to do, but she said, you know, it's not just anti-semitism she has to address, it is also islamaphobia on campus. listen to what she told lawmakers just minutes ago. >> during these difficult days i have felt the bonds of our community strain. in response, i have sought to confront hate while preserving

free expression. this is difficult work. and i know that i have not always gotten it right. >> lawmakers began the hearing with a bit of combative tone. chairwoman virginia fox really calling out these universities for the protests, showing videos and indicating there were students who are in the hearing room right now who have been impacted by some of these palestinian protests and some of the hate speech that has been seen around campus. certainly i think this huge question as to exactly what will result from this committee hearing, but definitely a lot of concerns from lawmakers. >> i thought bill ackman set the stage here when he tweeted. he's been a leading voice, and clearly has done his homework and talking to -- on harvard specifically where he's an alum, talking to faculty about their dei program. his tweet, discrimination at harvard is not just illegal, but

it is extremely damaging to our nation's competitiveness, which is critically important in a world with growing geopolitical conflict and turmoil. david, he found all sorts of instances. you can see what's at stake here. he found all sorts of instances from faculty members themselves about discrimination and practices like hiring, specifically against white people and asian people, and also, you know, fueling this argument that it's a welcome place for anti-semitism because harvard's had these anti-white policies, according to some of the anecdotes he got and posted. >> i'll have to take a look. >> illuminating. >> yeah, it is. a quick programming note as we close out the hour. we'll have exxonmobil ceo darren woods join us on thursday. 9:00 a.m. fresh off corporate and capital update from the company. we got a lot more "squawk on the street" for you straight ahead.

they're waiting for you. hey, do you have a second?

they're all expecting more. more efficiency. more benefits. more growth. when you realize you can give your people everything, and more. thank you very much. [applause] ask, "now what?" here's what. you go with prudential to protect, empower and grow. with everything you need to deliver, you guessed it... more. one more thing... who's your rock? learn more at prudential.com why are we the only birds heading this way? who's your rock? ♪ ♪ what is that? duck à l'orange. what's duck à l'orange? it's you, with l'orange on top. good tuesday morning. welcome to another hour of "squawk on the street." i'm sara eisen with mike santoli live from the floor of the new york stock exchange. the street debates the pause in the rally and the timing of the firs