you can't buy great conversations or moments that matter, but you can invest in them. at t. rowe price our strategic investing approach can help you build the future you imagine. t. rowe price, invest with confidence. good morning. welcome to another hour of "squawk on the street." i'm sara eisen with mike santoli from post 9 of the new york stock exchange. td cowen president jeff solomon on why he thinks the fed should hike another 25 basis points next week. and torsten stock.

and the story we've been waiting for, swiftswiftnomics. a true reach of taylor's web and the billions it's generating. our first look at the market. the s&p 500 up almost three-quarters of 1%. a lot is alphabet and amazon getting a good lift. the dow is basically flat. the russell 2000 up about 0.50%. treasury yields, sara, kind of getting some traction here. and we've rallied a lot, 4.15 is where the ten-year is sitting. you were talking about the pretty benign jobless claims number that disturbed the system. and i think it's fair to ask if we're going to maybe hit a near-term floor in yields. i've seen a lot of work that says they're oversold. we'll see what the jobs number has for us tomorrow. >> i think the key would be weakening data could add fuel to

the treasury rally. and increasing talk that the fed is okay with looser financial conditions. which is what we got from powell. that helps fuel the rally as well. bank of america research this morning saying they looked at the last five cycles between the last hike and the first cut and showed there could be more legs to this treasury rally in terms of what you usually get as far as a drop in yields. >> yeah, look, in '06 i think they held the fed funds rate steady for a year. sometimes it's three months. it's not always apples to apples. but there's no doubt that usually stocks and bonds tend to do okay in that period when the fed is in between. >> the only other thing i'll mention, because we haven't mentioned it yet, there was some discussion out of japan overnight that from bank of japan members they are inching toward getting out of negative rates.

they have a meeting on december 19th. it's not as big of a factor for the treasury market but it has been a factor, this global move towards bonds. again, when it comes to things that could add more -- >> i did note the yen is rallying on that. the dollar is back off. i think firmness in the dollar has gotten the stock market's notice, wondering if that's appreciating again, another headwind for financial conditions. when it comes to what's ahead for the markets, our next guest wants the fed to raise rates next week, forecasting a harder than expected landing and finding value in select opportunities across tech, health care, industrials and staples. joining us at post 9 is td cowen president jeff solomon. you're the only one that comes on and says, i want the fed to keep hiking rates. >> just one more. one and done. they keep talking a good game.

i always say do what you say you're going to do. i looked at the conversations i've had over the course of the past year. at the beginning of the year we talked about it was going to be higher for longer and the fed would continue to do what it's been doing and the market will eventually get the message. i don't think they'll add another quarter point. but if they did and said we're good to go and now let's see how things play out, i think it would send a strong message that we're not going to let inflation creep back in. >> do you see evidence that inflation is creeping back in? >> i want to see the data you just mentioned. i want to continue to see that data go. i would like to see jobless claims move higher. i would like to see unemployment actually move. i would like to see there be wage pressures decreasing. >> that's all happening, it's just not happening to a large extent. >> right. let's see that play out. when you put out a fire, don't

you want to see the embers stop, see the smoke stop? you can't pour enough water on the fire to keep the fire out. >> that's almost literally saying the fed should not accept a soft landing. if you want to see unemployment go up more, you're having them say that we think, you know, no matter what it is doing right now, that's what it's going to take. >> these are blunt force instruments. i'm not rooting for this, i just want to be clear. probablealisticly, a soft landing has never been engineered before. when the market is looking -- >> are you going to have me talk about 1995 again? it was the perfectly engineered soft landing. they can cut and trimmed back -- >> the pain that was exacted in 1994 sort of made the way for that. people paid a lot for that in 1994. >> the bond market. >> in the bond market, right. and i would say that every age is different.

in '95 nobody saw the internet being the thing that would cause massive deflation. nobody called that. we couldn't call that. the massive deflationary push that occurred in the late' 90s is a function of productivity improvements and the growth of the internet, which is a massive macro tailwind that enabled the fed -- i don't think the fed engineered that. i just think they got lucky. >> i singled you out but there are those very prominent voices we've heard from, jamie dimon, larry fink, who have talked about more stubborn inflation and higher rates. i don't know where they are right now but that has been the theme. i do wonder if you think that will be an upset for next year. >> i do think it's been stubborn, but i think it's stubborn because there's been core inflation. like rising income levels and continued wage pressures. so, we talk to a lot of people in the middle market lending space and the direct lending space. we do a lot of business in that area. one of the things we've heard is

the middle market portfolio companies are doing okay because they've been able to pass along price increases. we haven't seen margin pressures. we're not seeing the squeeze maybe people thought would be happening in some smaller, middle market companies. okay. that's really good for the economy. it suggests to me that that means they've been able to pass along revenue -- price increases and revenue lines. we're not seeing margin qu squeezes. that means inflation isn't going away the way everybody wants it to go away. >> we got 5% productivity number in the last quarter and everyone thinks a.i. will revolutionize something. >> it could. i will tell you, when we look at the ways a.i. can operate inside our own organization and things a.i. can do, no question productivity goes through the roof. i don't know that we're losing jobs as a result of that. i think we'll be redeploying people in other areas to make them more productive and so i'm not yet at the a.i. replaces

people thing. i think a.i. enhances what people do and allows them to get to a higher order. >> walmart said the next few years we'll use generative a.i. your view into capital with the interest rate stabilization we've seen, what does that look like? >> i think you can see a lot more ipos next year. i said that last year. i was wrong about that. things i didn't see last year, i did not see the bank crisis the beginning of the year. >> nobody saw that. >> i didn't see the budget fight. i think you could see that. i think the wild card is the auction. what's going to happen there? there will be a ton of vitriol. i think we're in a crazy polarized time. a lot of people will be trying to figure out ultimately who will end up in the white house. the house races are tight. the senate race is tight. >> enough to keep businesses on the sideline from doing m&a or that sort of thing? >> i think people will do things

they have to do. strategically, if you look through that, the vitriol that goes on in politics, ultimately the policies take a long time to play out. the reality is peopletalk a good game. they may talk at the fringes but when you look at the movement in fiscal spend or how monetary policy plays out, it's in a tight monetary band. no one would have projected the trump administration would be the biggests spender to date. yet they were because they had to be because of what happened in covid. and so there's all these variables that come in that ultimately end up determining the next four years. during this year there will be tons of handicapping. my advice to corporates is if you have something you need to do to put your business on the track for the next five or ten years, you have to do that. there's some great opportunities out there and i think it's something people should consider. >> really good to talk to you always, get your perspective, jeff.

thank you. >> happy holidays, everybody. we'll see you at the beginning of the year. >> jeff solomon, td cowen president. a key focus for the fed is, of course, inflation that we've been discussing and some new data moving in the right direction when it comes to helping the case for an eventual rate cut. phil lebeau has the numbers. >> these are the numbers that come to us from cox automotive that runs the mannheim used auto index. for november it shows a decline once again. this was expected that in the second half of this year, we would see a decline in used vehicle prices. on the wholesale market, that's what they've seen. 5.8% decline compared to the same month last year, down 2.1% compared to october. take a look at the dealership stocks. used retail sales for the month of november, down about 2%, even though demand was relatively strong. when you look at the entire year, in terms of how '23 will finish compared to 2022, it's going to be down slightly. not a lot but slightly.

they believe at cox that you probably saw the worst in terms of inflation as well as the lack of supply in the second quarter. what we're seeing now is the more normalization of the used vehicle market. guys, back to you. >> that is definitely good news. also was a leading indicator. thank you, phil. up next, netflix lower in seven of the past trading sessions. evercore says don't worry about near-term debt. mark ma haney joins us. how economic weakness in china is impacting the u.s. treasury market. that's coming up next. o. uawk on the street" back in tw all right. 60 seconds to draw the perfect gift. what's it gonna be? a bottle of don julio, 1942, delivered.

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♪ ♪ ♪ ♪ ♪ ♪ bullish note from the desk of evercore calling netflix an unchallenged leader in streaming with survey results from the

firm's 1300-person survey showing 61% household penetration this quarter and a lead that's widening for netflix against every other paid streaming provider. price target up to $500 a share. 50 bucks up from here. with us now is the analyst behind the call, evercore's mark mahaney. run us through key results from the survey and how it informs the investor consensus on netflix, which seems on board about the ad-supported opportunity, paid share and things like that. >> i think actually what's underappreciated in the market is how incremental what i call the stay bot operation is, the cheap pergs of netflix with ads. i think people underappreciate how incremental that is. it's been slow to build. we're adding about 5 million viewers. as we did the survey in the u.s. and in international markets, with uk, france, germany, we

find a larger and larger percentage of users willing to consider signing up for it and, and maybe more importantly, those price sensitive and looking to churn and looking to actually consider going with the cheaper version than actually turning off. you're doing this all in the midst of netflix putting out another price increase, but this is the first time they've done a price increase with a lower price kind of safety net. so, i just think there's an underappreciation of how impactful this could be to net ads. i think the bigger kicker is likely to play out over the next 12 to 24 months. there's upside to the stock and to estimates because of that. that's why we like netflix here. >> we mentioned the bump higher by a percentage point in penetration. high satisfaction levels. yet even with that your survey shows 31% of people say they're very or extremely likely to churn out, to cancel the service.

who knows how much translates into action. is this the steady state where it's largely penetrated in developed markets and you have to keep people aboard any way you can? >> i think that's right, mike. i think this is an increasingly mature business in the largest markets. they haven't launched this option, they haven't started cracking down on password sharing, i don't think the stock would be or the earnings power would be where it is. by offering this lower price plan, it just takes time to build up and people have underappreciated the buildup. there's a snowball impact here. but as the -- by offering this lower price plan, you have expanded the total adjustable market. the number of people that will sign up for netflix, you've lowered it by 30%. competition from other media streaming companies peaked. it peaked when the ceo got fired. you've seen the other streamers

is cut their spend, cut marketing spend, promotion spend and they're licensing to netflix. the competitive dynamics have changed 180 degrees from a year and a half ago and you have this ad-supported rocket ship that can work with netflix. i think there's more than 10% upside. i think they can sustain this. i think it's a compounder. i think you could see 10% to 20% upside in the next 12 months. it's a good core asset and i think it's gotten stronger, not weaker over the last year. >> i'm just curious what your clients are saying about netflix, what the institutional clients are feeling sentiment wise. as part of the original faang but the big shiny object is a.i. and what's happening with google and some of the others. you don't think as netflix as an a.i. play so i wonder what support is like for the stock in sentiment. >> you're right. it's not considered an a.i.

play. it's considered maybe more pedestrian. you know, the range of earnings outcomes is considered a little more -- not so much downside or upside. you have a lot of visibility. there's some real pros here. i think the two things that really kind of move and are moving investor sentiment and blip the stock back up to 450 is just over the last couple of months has been this increasing realization there is a there there to the ad-supported plan and the competitive intensity has materially declined. you went through three years of ramping competitive intensity to limited netflix stock to some extent. i think that's abated because wall street has said, if you're not profitable, if you're not generating free cash flow you need to cut your business. all streamers have had to do that. one company, ironically, free cash flow, gaap earnings, all of it is netflix.

that's why i think the stock continues to work. >> mark, appreciate the insight. talk to you soon. still to come, the world wasn't ready for taylor swift this year. we'll look at the sectors that benefitted most from swiftnomics in 2023. cp3, revenue did come up and cut operating income, citing deeper losses. analyst concerned about the goal of becoming cash flow positive by 2025. e arisowalst2%.

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one of the biggest buzz words has been near shoring. one of the biggest beneficiaries has been mexico. the country surpasses china as the top trading partner of the u.s. several logistics and freight companies could see a big boost from that. frank holland is in mont t monterey with that story. >> compared to under 14% for china. of course, near shoring is a major factor. right now we're at a dhl complex in monterey, mexico area. they are expanding to give faster access into the u.s. market. mexican manufacturing is forecast to increase 33% in just the next five years. we've also visited a container shipping yard used by union pacific and other logistic

companies. once a container is here, it can arrive in the u.s. in as little as two days compared to about 20 days on average from china. telling us the shift is a major boost for business. >> the length of haul is longer than what you would typically see coming off east coast or west coast port. so, because the length of haul is longer, your revenue per load is going to be higher. and typically what you see is when your length of haul is longer, you're having a higher growth profit per shipment to each individual load. so, your top line would be higher as well as your bottom line being higher. >> so, analysts say rxo, union pacific, canadian pacific kansas city and prologis are to be primary beneficiaries of this near shoring trend. and on the trucking side, old dominion and saia are to see an

uptick once those items get across the border. >> i'm wondering what the capacity is in terms of road and rail capacity, border crossings, whether those networks can handle what might be coming or at least potentially coming from that direction. >> yeah, a number of companies have announced they expanded their operations. union pacific is a great example. they expanded operations across six border crossings between the u.s. and mexico. rxo is another company. they improved their facilities on the u.s. side of the border to handle bigger volumes coming across the border. we also spoke to u.p.s., putting an emphasis on helping their customers maximize this near-shoring trend. >> it certainly helped the mexican peso, up 10.5% year-to-date with all that money flowing in. time for a news update with bertha coombs. >> the human rights group has concluded it was an israeli shell which killed a reuters journalist on the lebanon border in october.

amnesty international released a statement today saying it came to the conclusion after verifying more than 100 videos and photographs analyzing weapons, fragments from the site and interviewing more than nine witnesses. the group also called the strikes a deliberate attack on civilians. israel refuted that point and said it does not target civilians. the house voted moments ago to censure representative jamaal bowman. he pleaded guilty for pulling a fire alarm in a congressional building while the chamber was in session in september to consider a government funding vote. he said it was an accident. others accused him of doing it on purpose to try to delay the vote. and jon rahm, the world's number three ranked golfer and reigning masters champ is reportedly set to leave the pga tour for saudi-backed liv tour.

"the wall street journal" reporting it is expected to come this week, ahead of a december 31st deadline to potentially push the two leagues together. they're supposed to finalize a deal and join forces by the end of the year. interestingly, sara, jon rahm, it was just a year ago he said, if they offered me $400 million, it wouldn't change our life. who knows how much they offered him to move. >> it's interesting they're still poaching players ahead of this supposed merger. maybe it just puts more pressure on them to get it done. >> that's what people assume. >> thank you, bertha. up next, apollo torsten slok the impact to the u.s. treasury market. stay with us. e wheel crafting)

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let's go post to post with bob pisani. >> dow has been flat. modest gains in the s&p 500 which is mega cap tech so that announcement from a&d has all the chip names moving. they're up 1%. all of the mega cap names, alphabet, meta trading to the upside as well. we also had comments on the airlines. jetblue raised its outlook so the airlines are moving. there's southwest right here. i would note, what they said is they're forecasting a 4% to 7% drop in fourth quarter sales. this is jetblue. they previously had a forecast of 6.5% to 10.5%. it's still down. toll brothers, i grew up in the home building business, my father was a home builder. it's always good to see them.

look what this stock has been doing. we're talking about an historic high. he had some remarkable -- doug had remarkable statistics on our air. historically about 10% of sales are existing home sales -- new home sales, excuse me. now it's closer to 30%. existing home sellers don't want to sell because of the mortgage, that 3% or 4% mortgage they have. they're the beneficiaries. again, $90, that is an historic high for toll brothers. lennar, dr horton moving to the upside as well. all those new homes need paint. this was a terrible performer for most of the year. sherwin-williams, new high for sherwin-williams. rates being a little lower in november. this stock was 240 or so, as i recall, at the end of october. look at it. it's almost $300. that's like a 25% move in four

and a half, five weeks. these builder stocks or home improvement stocks were pretty poor performers throughout the year. remarkable turn-around in some of these stocks. here's gamestop. remember, there's only three analysts who cover gamestop. there wasn't any guidance, no coverage call. moving modestly, but i think the key point is there was a lot of volume in options, call volume last week around $20 and $25 strike prices by obviously people who were betting the earnings were going to move the stock up. it's $15 right now. so, these strike prices, these particular options expire tomorrow. see if you can move it closer to that. obviously, not happening right now. sara, back to you. >> bob, thank you. there's a bit of buy underperformers of the year trend going on. walgreens at the top of the market, big laggards. >> it's been the theme for a couple of weeks. the indexes are moving on the

big names. you figure the tax selling is done. >> alphabet and amd having a little a.i. run. china, mixed trade data coming in overnight despite a surprise beat as china's economy slows. the lower growth prompting moody's to downgrade the company's a-1 rating. china's holdings of u.s. bonds have dropped $300 billion since 2021 and demand will likely remain weak. joining us, apollo's chief economist torten slok. this has been going on for a while, where china is unloading treasuries. >> the back drop is what you've been saying, chinese exports have been slowing down. why have they been slowing down? partly because the u.s. has been slowing down and europe is

slowing down. if your exports slows down, that means china has fewer dollars to recycle into treasuries. if china has less exports that means they get less dollars in the hands to recycle it back into global markets. that does mean that, as we showed in the chart to the point that that is likely to continue to be less demand for u.s. treasuries from china from that front. >> so, do you think it's something that the market appreciates? do you think it's factored in? how does it move the treasury market on a day-to-day basis? when there was a big selloff a few months ago, you just added it to the list. china's unloading treasuries and not as much demand. now there's a rally and people aren't worried about it. >> this is very important. if you just back up and ask what's driving rates, it's very clear the economic data, expectations to the fed, everything that's going on on short rates is absolutely a key driver of long rates.

but exactly as you just mentioned, sara, we have had a number of other things continued to be lingering in the background. not only is china slowing down, and, therefore, exports slowing and less demand for treasuries from china, but we also have japan exiting yield curve control, japanese yields have been going up. japanese investors hold more than a thrill on. if japanese investors find their own yields in their own backyard more attractive, that's a risk for u.s. rates moving higher as japanese investors begin to take more money home. finally, the biggest risk really is the supply of treasuries and the supply from the fiscal deficit front that continues to be a lingering issue in the background. yes, you're right. so far the rally, we have seen in rates in the long end has been driven almost entirely by the idea that the fed may be done. i agree with that. therefore, maybe short rates should be going down. these other issues, again, remember, is not only more than a few weeks ago we had a 30-year auction that didn't go very well because we simply did not have

enough demand. we will have plenty of ten-year and 30-year auctions going into next year where the market will be revisiting exactly the issue, what are these other things implying for rates. the bottom line is, yes, so far so good. but the risk is still long rates will be having some upside pressures coming from these other sources, mainly china slowing, and significant supply of treasuries. >> i guess the question is, does the rally we've seen so far not somewhat dilute the idea this was mostly a supply shock? if you pull back, is there anything particularly strange about a 4% to 5% treasury yield given where nominal gdp growth is and where inflation still is? >> that's a very important point, mike. maybe we did go up too much when ten-year rates hit 5%. the big question is, where are we going on short rates? if short rates are going down to where the fed is predicting down

to 2.5%, maybe ten-year rates if you think the term premium or risk should be roughly a half. that means ten-year rates will go down to 3, 3.5. we have unwound a lot of increasing rates we had. you're right. so far, so good. it does look like it's made the expectations in the economy. let's see these other things. they definitely come and go. in particular, this issue of auctions, as you're saying even next week, we got to continue watching carefully what's happening with the bid to cover ratio and foreign bidding, how much the primary dealers have to take down. all those things will continue to intensify because we know one thing for sure, that is as supply issue for treasuries is not going to go away. it's just only going to continue to get bigger and bigger as we go through the coming months. >> so, we will watch. watch demand as always. torsten, thank you so much. apollo chief economist.

after the break, a sharp move higher for alphabet after yesterday's a.i. announcement. shares on pace for their best days since july. we'll break down why wall street is so bullish. never in our wildest dreams did we think a pop star would alter the economics of summer. we're talking swiftnomics.

"time's" person of the year. she's more than just a pop icon. she's a business powerhouse. julia boorstin at post 9 to break down some swiftnomics. something we've known for a while, but you looked into the numbers and they're pretty amazing. >> i'm so excited to be here to talk about this with you. you and i have been interested in the business implications of taylor swift for some time. $2.2 billion in north american ticket sales. her tour is estimated to have

generated $5 billion in consumer spending in the u.s. alone. then there's the concert film, which amc distributed grossing record $250 million at the global box office. next wednesday, her birthday, she's offering the movie for rent on a range of streaming platforms. when it comes to streaming music, she was spotify's top streamed artist of the year. reportedly earning her over $100 million in royalties and billboard and other platforms will near $200 million. that's partially driven by her rerecording her albums. now, swift's popularity also boost the economy in many ways she does not profit from. etsy tells us from april etsies have sold friendship bracelets and michael's says

jewelry-making kits surged 40% since april when the friendship-making trend took off. in cities where she was on tour they saw spikes in bead sales at michael's. they estimate the total economic impact, including spending by others who did not themselves attend a show, topped $10 billion. we haven't even talked yet about the 2 million new viewers she is credited with drawing to the nfl thanks to her relationship with travis kelce. >> it is mind-boggling. i feel like she gets -- she obviously gets a lot of credit for being a phenomenon and a pop icon and writing her own music and having songs that people can all relate to. i don't think she gets enough credit for being such an innovator with some business

decisions. rerecording the album, doing a three-hour tour for heiress and making all the right decisions about where to take that, extending it for another year. some of these things that actually ceos and other leaders we talk to could probably learn from. >> also the decision to release her concert tour as a movie and this idea of how to expand the audience as much as possible and give her fans multiple touchpoints, where a lot of people who paid a lot of money to go see the concert and to get all dolled up to see the concert are then also paying money to see it in theaters and also, i'm sure, will rent it at home. >> as an underwriter of a field trip for my teenage daughters to see it, i feel it. presumably she's not going to do another tour -- >> she's doing europe, internationally. >> so it's international. you heard about people opening up, the number of people who opened a credit card account for

the purpose of buying tickets. she has a relationship with capital one. so it moved the needle -- >> a number of people who are planning summer vacations around a stop to see her in an international city. >> it is amazing. >> you're part of that $10 billion. >> i'm a big part. i just looked up the hotel bill, by the way. >> yeah, i mean i think it's definitely -- i think it's something the fed has mentioned before in terms of the beige book. >> julia, thank you, for the story we all wanted. cnbc is accepting nominations for the disrupter list of private venture backed companies. go to cnbc.com/disrupters. shares of alphabet now up 5%. that was a delayed reaction to their launch of the a.i. model gemini yesterday. deirdre bosa talked about it

yesterday with more in today's "techcheck." >> i've been trying to figure out how i was going to follow swiftnomics, but hear me out here. gemini is mind-boggling as well. yesterday the announcement did fly under the radar, in part because it was subdued virtual presentation versus an in-person launch. it will roll out in phases. it's really hard to get across just how incredible this technology is. the breakthrough is an award. you'll hear this more often, multimodal, meaning the new a.i. system understands audio, photos, video, and we have the advantage of showing our audience and investors new capabilities as presented by google in a demo. have a look. >> i know what you're doing. you're playing rock, paper, scissors. >> what do you see now? >> the fingers are spread out to look like the wings of a butterfly. >> what's this? >> big ear and barking mouth, a dog.

>> now, here's another example. >> what movie are they acting out here? >> i think they are acting out the famous scene from "the matrix". >> i don't know if i could guess that as quickly as gemini did, but i highly recommend the entire six-minute video. other examples include gemini understanding colors, 3d objects, creating games, even cracking jokes. the version demo won't be available until next year. what it all represents is a new, more powerful phase of generative a.i. chatgpt was first here in terms of going beyond text and incorporating sound and video. gemini is google answering back. as part of cnbc's work summit, i talked to sixth street partners vice chairman. he's been studying a.i. since the late '80s and says there's never been a more exciting time. >> we're well into the second half of the chess board and computers just keep getting faster and there's more and more data. the data has been labeled.

the internet has helped do that. all of these things have come together with more theoretical breakthroughs. everything i see is twice as impressive as i saw three months before. >> i think that's how google's made a lot of folks feel once they got a chance to watch it, and so that reaction was a little delayed. today the stock is surging up more than 5%. and google has perhaps just regained an edge in the ai arms race that is still well under way. and, you know, yesterday, guys, i was thinking maybe the ai halo effect has lost some of its gleam because the stock wasn't moving much, but today is sort of evidence we can still get wowed here and many more of those moments will come. >> it's interesting, dee, also a reminder if you go back far enough and talk about how microsoft was approaching this world before we had chatgpt really in place, they feared that google would have a huge advantage just because they have all the data and all the history

in their search business. so this maybe is an affirmation they do have those resources. i guess the other question is, look, microsoft stock is not down today. i don't think the market is necessarily viewing it as, oh, here is a killer app, that all of a sudden will be a winner take most solution. >> and i think that's right. i think the question is starting to be asked will these chatbots, is the technology that requires so much money in terms of compute power, is that eventually going to be commoditized? i had a conversation recently here in silicon valley about what apple is doing. they're not mentioned in this race. it's sort of a race between microsoft and openai, google and amazon. you don't talk about apple, but few people doubt apple is thinking about this. they tend to wait a little bit. maybe when this is commoditized they can swoop in and do something interesting. we are in the early stages. right now at least investors, developers, they're looking for the kind of thing that google

put out yesterday with gemini. more and more capabilities. we still don't know what apps will be created from that, though. >> not at all. moving pretty fast, dee. thanks very much. up next, why value investors at the oakmart fund say corteva has been left behind. we'll trade that name and more just ahead. 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.

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let's close out the hour with some stock picks. our next guest is still finding cheap quality names despite the market trading at high multiples right now, new ideas heading into 2024, including phillips 66

in energy and corteva in agriculture. joining us now mike nicholas for the oakmart fund. you look company by company, stock by stock. don't necessarily make market calls. what's taking you in the direction of, let's say, a phillips 66 right now? >> well, mike, first, thanks for having me. we're continuing to find really attractive opportunities in traditional value stocks, some out of favor businesses. when there's as much dispersion as there is in the market right now, it provides a lot of opportunities to find this price securities. phillips and 66 both look really attractive, very statistically cheap businesses, strong competitive positions. at least as fast as the market over time. >> a name like corteva is the old business of dupont.

is it one of these that is now priced for an economic downturn? is it undiscovered? what's causing the discount? >> corteva is a leading provider of seeds and crop protection chemicals to the agriculture community. both end markets require a tremendous amount of innovation. farmers expect seed yield improvement every year and crop protection chemicals over time, and as a result, the skilled players in this industry have tremendous advantage. and against that backdrop, we think corteva is well positioned. they have a very promising r&d pipeline. but the shares have been pressured this year. i think it's a combination of channel destocking and weak crop prices. and, to us, we view those both as transitory, and it's really afforded us the opportunity to invest in a high-quality defensible business at a big discount to the market, its own

historical trading multiple, and certainly private market values. >> phillips 66, of course, had activist interest or is a billion dollar investment by elliott in there advocating for management and strategic changes. is that part of the idea in terms of your long holding there? >> ours is a little different. phillips 66 is the largest mid and downstream energy company in america, and phillips was a part of conoco until it spun off. our view on phillips 66 is that while it's typically perceived as a pure play refiner, the vast majority of its business value resides in its nonrefining assets based on our analysis, and that includes things like the big collection of pipelines and storage terminals, chemical manufacturing facilities, retail fueling stations. the parts analysis suggest these

assets alone justify today's enterprise value, getting the refining operations for free. we think there's a tremendous amount of upside potential here, and on our estimate of normal earnings, the stock is trading at just a single digit multiple and well below intrinsic value. for a collection of mission critical infrastructure oriented assets, it would be difficult to re-create. we think today's value is a bargain. >> see if it can get unlocked one way or another, that value. mike, thank you. mike nicholas of oakmart. we're having a pretty broad rally. most sectors are up except for health care right now. the s&p is up three-quarters of a percent so a real lift from names like amd and alphabet on new ai announcements. >> amazon bouncing higher on comments last night from andy

jassy. >> there has been a pause on treasuries. >> it feels like under 4.25 on the ten year. we close within half a percent on the s&p for 12 or 13 days in a row, there's a chance we get above it here. >> we have a jobs report tomorrow. >> we do. >> i think it feels like a weak number with the rally in treasuries. but that's it for us for now. we'll see you tomorrow. scott and "the halftime report" up now. all right, sara. thanks so much. welcome to "the halftime report." i'm scott wapner. front and center this hour, the ai wars. alphabet firing its latest salvo. that stock surging as we come on the air. we'll discuss and debate with the investment committee what all of it means to your money. bryn talkington, josh brown, bill beruch. a bounce of 53 points. the nasdaq, 1.25%. you heard sara talking about that, 4.12, the yield on the te