the s&p and the nasdaq are both still lower. also watching the treasury market ten year is yielding 3.424%. the two year is a 3.81%. jobless claims below expectations, retail sales a little bit higher than expectation, but as barry says, retail sales are flat or worse than that when you consider inflation. more to come tomorrow. right now it's time for "squawk on the street. ♪ good thursday morning, welcome to "squawk on the street." i'm carl with jim. david faber is at one market in san francisco, his exclusive with disney's bob chapek is moments away we got this tentative agreement to avert a rail strike, lots of eco-data, signs that prices are falling, not rising, and a $20 billion software deal from adobe and that's where our road map will begin this morning, that design deal, adobe snapping

up figna we'll talk to sean in just a few moments. plus, as carl said, bob chapek, we've got an exclusive with the disney ceo. he opens up about his plans for espn, cost cutting and the future of hulu and improving consumer data while inflation concerns linger. wall street awaiting moves from the fed. carl >> we'll begin with a busy morning in the markets retail sales, of course, the labor deal on the railways that's a huge bullet dodged, would you say, jim >> look, we just got over, according to craig from costco, the big jam-up when it comes to cargo ships. it's over. they even have seven cargo ships they bought or they're releasing. they're don't really need them so, to get the cargo to the rest of the country right now, which is, by the way, when you stock holiday season, would have been a disaster it's a disaster averted. kudos to the labor secretary working on this deal it was announced at 5:05 a.m.,

and it's obvious that every one of these companies is integral 30% of our country's commerce goes through these companies, and this is integral we have enough problems with the slowdown in commerce as it is. we don't want to make a stoppage, because i do think, as barry said, i know we'll get to that, and jeff said, we have got a real slowdown, a lot of commerce, and e-commerce, everything so, we certainly did not need to see a rail strike. >> well, and that leads right to the ecodata today. retail sales, x auto and gas is a decline first inof the year. both empire and filling lower prices paid. >> we have to figure out if the cpi was an outlier it caused one of the worst declines we've seen in two years, but now, when you start putting the preponderance of the evidence, you begin to start thinking, why doesn't the fed do 0.75 and then wait

doesn't this take off the 1.0? was that just a red herring? the data can't necessarily undo what's with the cpi, but it does cause the fed to be able to say, you know what? we're going to do another triple then we're going to wait to see what happens, and i don't think the market will be as negative as it would be otherwise, given the fact that these are slower numbers. >> yeah. you mentioned stern. a lot of discussion this morning on squawk, adding to what cathy wood and jeff gundlach and elon musk are saying. the economy is breaking hard take a listen. >> now that inflation arrived, and actually is headed down, they are raising rates too aggressively this will be the fifth rate raise -- rate rise this year it's the steepest increase in rates in history >> a lot of people are thinking that, could this be 2007, 2008 the only real paradigm i'm

seeing is that the fed just kept moving back then, 15, 16 rate hikes and then you start saying, wait a second. let's look at the impact i think we're going to see some hard and fast earnings disappointments, and i think they're going to happen much faster than we think, because i think a lot of companies are going to say, wait a second, what happened to business? people are going to get scared by rate hike after rate hike after rate hike because they recognize what happened in 2007. now, barry sternlicht, by the way, he's a hawk i've known him for a long time he's a hawk, and he's an enjoyable hawk, but he's a hawk. it sent shudders through me that he said that, because most people i know who are in his position, say, we need 100 if he's saying, i'm seeing differently, that's a 0.75 in weight, not 100 and keep going >> yeah. jpmorgan today says, you know, gdp and even core pce is tracking below the fed estimate, which means in their view, it's going to be hard to get the

median much above 4. >> well, i just think, obviously, we have wage inflation. david is at the core when you talk about, like, look at disney, how many thousands of employees they have, i mean, can they keep them notice the union pacific, by the way, was about healthcare. it was about mental health it was not about money david, it is great to see you. i know that disney, like many companies in the entertainment business, seemed very challenged, but from what i have heard already about what you're going to say, it's kind of positive >> it was an interesting conversation with bob chapek obviously, it came after his appearance at the communicopia event not far from here where any number of both tech and media ceos were speaking or at least questioned you know, guys, we haven't had a chance to catch up with mr. chapek since dan loeb's letter of a number of weeks ago where he outlined a number of different things he felt the company would be smart to take a look at. the thing that jumped out at me was the idea of cost cutting,

and so that's kind of where some of our discussion went when i asked him how that letter resonated. >> we welcome the input from all of our shareholders, and i think all the things that were in that letter are things that we either have talked about, are talking about, or even engaging more in the future there's, you know, whether it's the integration of hulu, which we would love to do tomorrow if we could obviously, takes a willing partner on the other side, at least before '24, but that's imminent anyway. whether it's espn, which we just talked about whether it's, you know, share buybacks or dividends, those types of things. we've already said that -- >> what about sg&a i have to admit, i follow the company closely for years but that was one area i thought, hm, you know and i look more closely into it. your sg&a costs were about

$3.25 billion. the only company significantly higher is warner brothers discovery. your annualized sg&a for disney across the businesses that grown from $13.5 billion in calendar second quarter 19. your cfo recently said, we're very, very focused on sg&a is there an opportunity there? >> there's absolutely an opportunity there, an opportunity that's been under way for several months as we've now come out of the pandemic, because remember, disney was one of the companies that was probably the hardest hit by the pandemic and restarting the business was the focal point, but now that the business is restarting, restarted so strongly with the strength not only of streaming but of parks as well, we are now focused on the maintenance and running of our business and we're asking ourselves a lot of hard questions what does this world have to look like in the modern era? so, christine and i are, as i

said, in the conference, arms locked on going and making big progress against that. >> jim, he wouldn't give me targets, per se, but it's interesting to hear disney's ceo talk enthusiastically, almost, about the opportunity that he sees in terms of potentially cutting costs. and something that investors may want to keep in mind there was a lot in that loeb letter but that's kind of at least what i thought was interesting and when i looked at the numbers, yeah, you know what there is a lot there we talked, obviously, about a lot of other things, including what they spend on content and espn and hulu, which we'll bring you as the morning goes along. >> that's a great report, david. one of the things i'm worried about, and obviously came up with your great interview is, the balance sheet really is bad here this is disney someone wrecked the balance sheet. and i think that that's got to be addressed this company wrused to be a blu chip company maybe some cost cuts can do it again, but where's the dividend?

what happened here, david? >> the dividend is not something that they're focused on, it doesn't seem, jim, in terms of really reinstating a significant dividend because of what you just cited and also because of the focus on what right now is a business that consumes a great deal of cash, direct to consumer i mean, you know that. they're looking at, obviously, '24 in terms of the big turn we're talking about this ad tier that is coming and will be significant, and chapek says, said in the conference, we talked about it as well, at the very least, margin neutral but listen, you're right lot of debt taken on there, and not to mention, and we'll get to hulu, you know, if in fact you were and when you are going to buy that out, that's not going to be cheap either so, certainly some reasonable questions there that you're asking

>> now, something that could be augmenting that i think's exciting, i look at gambling, and i look at what people are doing with, really incredible stuff when it comes to fantasy, fantasy on sundays and then i hear that they might be doing gambling. but gambling is a very ad-supportive business for disney would they really want to be subscription and gambling beyond what they do now with espn >> no. no i'm going to leave you to listen to -- we had a good conversation around espn, and i think that, again, they're not sharing a lot of their details in terms of why they believe there's a new growth trajectory for that business, but he did give me a much better idea and i think our viewers will get a better idea of what they're thinking, jim. it's not necessarily what you just outlined. jim, while we have, just to come back to you on the market, because i listen closely to things, obviously, that you say. you were talking with carl just now about the prospect of

earnings warnings, right in light of what sternlicht was talking about and the fed. but i mean, when we were here -- when we were watching the market melt down on tuesday, you were -- was it tuesday or monday you were -- you were saying, listen, i like a lot of stocks here, not to worry about that, so i'm trying to -- i want to juxtapose those two comments because i'm trying to understand them from you and how you're viewing things right now >> sure. i think that e-commerce, the analyst are calling for a slowdown i was at amazon web services i didn't see it. but i'm trying to use that example of the truth versus the perception, and what happens when people decide, david, you know what? i'm negative i'm getting scared i don't want to do things. i want to save money so, i am sanguine about -- i got a big travel trust, we're talking about it today at 12:00 in my conference

i think you can build a portfolio away from things that are directly involved with industrial america, but david, look, i just -- i listen to very smart people i'm not changing my mind from when i spoke to you. i just say, wait a second. if you keep raising and raising, then i think you do change the mindset of the country barry sternlicht is a very serious observer i was quite surprised when he said, not gun l'adlach. i like that. i just think that's a very good way to look at it, david, but i still see plenty to buy. but i listen to very smart people who say, don't be so excited about a double or a triple rate hike, because that is going to hurt earnings. carl >> don't know. we'll find out next week obviously, a lot going on as people place some of their bets. when we come back this morning, we'll talk some donadobe. plus some quarterly results and

guidance that came out a little bit earlier than expected. we'll talk about it with shantanu narayen we'll get to calls today, atv i, upgrades of calls, casinos, tesla, nordstrom and a lot more. don't go anywhere.

adobe is announcing it will acquire a design software firm

out with quarterly results and guidance the shares are falling in premarket trading and the stock used to be at 700 so you're looking at a stock that's come down a great deal. has the value come down or just the stock price? we've got adobe chairman and ceo, shantanu narayen, long being a person who knows about the web and commerce and this is quite a treat. shantanu, this is a gigantic deal i don't want it to overshadow what i think is some pretty darn good numbers but can you tell us why you're spending this much money? you know what? i'm going to hold off for a moment with shantanu you're so much better at this than i am, carl. >> i'll tell you, sometimes the shot goes. but jim, to your point that you were going to ask about valuation. because this is, some would argue, a rich price. >> one of the things that i look at is that there was a story that we saw in bloomberg that the country, which is paying $20 million for, was worth $10 billion about a year ago and i think that one of the things we're seeing is that

about a year -- you saw that this stock fell, adobe fell from $700 to $320 i'm very conscious that people who own adobe are saying, wait a second what i was hoping would be a massive buyback, i don't want them to be issuing stock i think this company is such a good company but a lot of these companies, carl, went up such a great deal and people were too enthusiastic, and is now we're looking at them and saying, you know, down here, they're issuing stock? i mean, don't we want them to stand there and buy? this is a company that peaked in november of last year, like a lot of tech companies. >> right we look forward to asking him about the deal, about some of the guidance on recurring revenue, a little interesting. bespoke does say this would be the second worst gap down on adobe in the last 20 years but obviously the deal makes it a one-off. >> the worst one was when they switched their model and that was the greatest time to buy so, i don't know maybe that's a clarion call.

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carl, let's try it again let's bring in adobe chairman and ceo, shantanu narayen. i want to get right at it because you've got earnings that are should, but you've got a deal that is going to, i think, transform the company because once again, you care about creativity you care about wonderment, the mind, how people can change. let's talk fi "gma and why it's

worth $20 billion. >> it's always great to be on your show and this is a really exciting and transformative day for adobe. when you think about what's happening in the world of collaborative creativity, it's very clear that every single person has a story to tell, and when you think about the entire world of anybody who's trying to create a mobile app, trying to create an interactive web experience, trying to do things that are exciting in terms of how they collaborate and ideate, we believe the combination of adobe and figma is going to be one of these unique combinations that completely ushers in a new area of collaborative creativity >> now, i know, as you know, you're passionate about your stock, and earlier, right when the fed started getting tight, your stock was at $700 it's dropped now probably to look like $330 this company that you're buying was valued at $10 billion in june of last year. now you're paying $20 billion.

can you rationalize what's happening in the stock market versus what's happening at adobe? >> let's talk about adobe, jim figma is actually one of these rare companies that has achieved incredible escape velocity they have a fabulous product that appeals to millions of people they have escape velocity as it relates to the financial performance. and a profitable company, which is very rare, as you know, in software as a service companies. and while they are a rare company, the ability to put together that as well as a company like adobe is even rarer in terms of how we can both harness as well as accelerate that business. so, you know, from our perspective, when you think about it from the perspective of shareholders, which was your question, we really believe that the combination, whether it's creating this new world of creativity and productivity, it's what we can do as it relates to accelerating creativity on the web, inspiring an entire new generation of designers and developers and

stakeholders, it is going to be a great value for their shareholders as well as adobe's shareholders >> i know tremendous retention along with your company, but i guess what i'm trying to get at, you know -- you know internet commerce better than anyone i speak to and when i look at how your stock's trading, it's almost as if you were internet commerce part of the bubble that came from covid when people worked at home and now somehow, internet commerce must be slowing or your stock wouldn't be going down isn't that completely untrue >> you're right. when you look at our quarterly results as well, and if you look at it even relative to what we said at the beginning of the year, the company is really executing. we had strong q3 results when you look at our creative business, the creative business grew 16% we've exceeded over $13 billion in arr, you know, which is a record the document business and everything associated with acrobat grew north of 20% and

powering digital businesses, which is enabling any business anywhere in the world, as you said, to engage in commerce, engage with their digital customers, is also growing double digits. so, you put them all together, and we clearly are in rarefied atmosphere as it relates to the stock market, i think if you look at all of tech, certainly all of tech has, perhaps, been impacted a little bit by the macroeconomic environment, but you know, we're focused on the next few decades, and we continue to believe that adobe is great value, our best days are ahead of us, and you know, it's up to us to go demonstrate how we can drive both topline growth as well as profitability on the bottom line >> shantanu, you mentioned the macro, and the street did look at the q4 digital media net new annual recurring revenue, a little bit below expectations. i mean, is it fair to say that customers are scrutinizing deals, at least at the large end right now? >> carl, actually, our enterprise both in q3 as well as

in q4, we expect to have the seasonally strong quarter, and if you put it in perspective, at the beginning of the year, we guided to about $1.9 billion in creative and digital media arr and if you think about it with our q1, q2, and q3 outperformance and what our initial targets are for q4, that's approximately $1.88 billion, and in these 12 months, as you know, the macroeconomic situation has changed, so while we may have expected at the beginning of the year with our targets to exceed it, these are extremely strong results, and $1.8 billion, we're adding, you know, the size of many, many companies every single quarter >> david, back to the deal itself i mean, you bought back down this quarter, 5.1 million shares but now you're going to be issuing a lot of shares to pay for this deal. i think it's as much as half in stock. give your shareholders an idea

of why that's the composition of this deal. why not, you know, all cash, particularly if you think your stock is cheap froze again, guys. yeah >> okay. >> maybe this is not a good advertisement for zoom today, i don't know >> well, but david does raise a good point and this is something i talked about during the break, which is that adobe stock has come down from $700 to $320, and what you would like to have is $20 billion buyback, not a $10 billion issuance of stock and $10 billion put into the brand. at the same time, david, you got to admit, there has been a divorcing in terms of where tech was in november versus when russel -- where it is now. it's my least favorite segment versus everybody and i think it's because people have decided this group got too high, let's look at everything else, and do

you see that looking at disney, i want to buy. adobe, while i just was told basically they're selling, so there is this disparity among companies, don't you think >> i do. and you know, if we get shantanu unfrozen, perhaps he can answer that question. i also think, listen, the long-term value that he's created for his shareholders, they're not tiplyypically going question his judgment, jim, i would assume, when it comes to a strategic acquisition, even for one they seem to be paying a very large premium over the last private market value for this company. >> this is a great company, and it's a company that anybody in fifth, sixth, seventh, eighth grade knows as the company that is creativity, and it's how to tell the story so, i like it. david, you take a look at this company that he's buying is worth a year ago and you look at the other valuations of what's happened in a venture capital, are you surprised this one has doubled since june >> yeah. you know what?

i think we have shantanu back. i think you heard my question, shantanu, so i'd love the answer in terms of buying back stock and now obviously issuing a lot of it, how do you tell your shareholders how you view your own stock? >> well, david, certainly, as it relates to the issuance of new stock, you are right that the transaction is approximately half in cash and half in stock, and the deal is really all about the topline and accelerating topline, you know, we're an extremely profitable company, and what we have said is we have some aggressive goals in terms of being able to make this accretive in year three, which is rapid as well as driving topline growth so i think from the perspective of shareholders, what we have said is we will offset dilution while the transaction's under way, but we believe that it rapidly, actually, enables us to accelerate our bottom line eps as well. >> now, shantanu, i want to be sure no one has the pulse of how much

business is being done you've got it. you know what e-commerce looks like i've got to be sure about this is there any sort of e-commerce slowdown or pushback that you see right now? >> well, jim, i think the way you have to think about e-commerce is, first, what is directionally happening in the e-commerce business? and that's up and to the right i think as it relates to maybe the acceleration or the inflection that happened in e-commerce during the pandemic, certainly that's going to slow down and mute a little bit but we have said through the adobe digital index reports that actually when you think about it, month over month, we're still adding billions in e-commerce, so there's no question that directionally, it continues to be extremely strong maybe the rate of growth, given how large it's become, has been muted as it relates to the global e-commerce, but i don't think that changes the fundamental secular trend in that business. >> well, you're true north as far as i'm concerned and creating a lot of value, shantanu narayen, thank you so much for coming to "squawk on

the street" and sorry about the stop and start good to see you. >> thanks again for having me on your show, and i think this is the reason why we need a product like figma to enable online ideation and collaboration >> thanks, shantanu. opening bell here. realtime exchange, the big board, aig's retirement. celebrating an ipo, jim. >> yes, an ipo >> at the nasdaq, valkyrie investments. we'll keep an eye on the opening. as we were talking to shantanu, industrial production was a miss down 0.2, prior, up 0.5. >> i think we have a shift going on here. when i look at humana and how they're doing, i say to myself, okay, appropos of what david wa

saying, i do you like a different market no the part that is really problematic is the part that relates to industrial. we bought industrial stock two days ago for the investment club, which we have a meeting for at 12:00 today, and i was just gutted by it, which was -- doing quite well presentation doing very well this is the part that i would tell david if he were here i'm worried about stock, goes down five, even though it would make a great presentation. there are so many pockets where people have given up because of recession. take the other side. if there is a slowdown, we have created so many companies in this world that take advantage of a slowdown. you have to look toward them >> i know you're watching danah er today, up 2% this morning as they announce the environmental side of their business >> it was up 12, only up 5, makes no sense to me, but we need more clarity on the deal, and i think that's the issue

david, i want to bring you just on this idea that there -- we have a dichotomy going on. we have an industrial economy that people are giving up rather rapidly because of the fed then we have so many other companies that are doing quite well that we can't necessarily, let's say, pin the tail of the fed on them. you're out there you talk to companies that, frankly, i think, are just doing quite well would you give us a sense of who you're seeing that is not worried about the near term future >> who is not worried about the near term future >> i'm thinking, like, warner brothers-discovery >> you know what you're going to have to wait until tomorrow but i will give you a little preview bob from paramount was very adamant that people are too negative too negative about the ad market, too negative in general about recession and the economy. you know, i will leave it to

people to judge his comments, which we'll share with you tomorrow sorry to tease it so far ahead but there's one for you. obviously, paramount shares haven't done too much. they're down 26% for the year. as you point out, warner brothers-discovery is down over 46%. one c.o. i did speak to yesterday that we want to share a lot of the interview with you a bit later in the program, but a bit more now, is hans vestberg from verizon i've talked about this company a lot more recently because its market value was eclipsed by that of t-mobile and showing the longer term ramifications of decisions that are made over time, and management you know, he's still talking about growth and the fact that the company is growing, although yesterday, they did slightly take down their sub-ad numbers a bit to consumer. but you know, you do have to wonder how his investors feel. take a listen.

>> we have been growing. we have been growing our top line as well we are a little bit pressed this year we're going to grow this year, but it's more organic, but we're going to grow our service revenue. >> are you disappointed in the performance of the stock price, then is it a reflection of not what you're saying but what i'm saying >> i think the stock price is always hard for me i think what we are doing is really to make value that, of course, very focused on cash generation, which we're invested in market and that's why we're really trying to think about how we allocate that capital in the best way and then start growing our business again so, many things are actually coming together for us this year >> it was a longer-ranging interview that we're going to share most of in the 10:00, carl, but obviously, verizon shares, got a 6.3% yield on that stock right now. obviously, part a reflection of it being down. the 20% this year is not that far off from the s&p's decline of 17.5% but over the last ten years, this stock is not up at

all. and has -- and has underperformed not just the s&p but the group of which it's a part as well >> interesting too, david, to hear him defend his decision to raise prices, which is interesting. we're here at the desk talking about how important it is that prices come down, but at disney and at verizon, i mean, the idea is at least the last 24 hours, prices aren't high enough. >> yeah. it is interesting. for verizon in particular, it's sort of, you know, how do you defend those cash flows, right well, you do it by not being overly promotional, but you've got t-mobile that is at a lower price. at&t is being fairly promotional as well. it's when you're able to really add more subscribers but at the same time as you heard vestberg talk about, they want to have quality cash flows, which comes from not raising price so -- excuse me, not being promotional. so that's a key balance to have to strike. but, yeah. i know prices are going up for a lot of things, although a lot of these

streaming services are now goin to have an ad tier that's going to be cheaper. >> when i went to buy my apple phone this weekend, because i had misplaced it, of course they have a new one coming out this week, i got to speak to a lot of people at the store. a lot of people were excited about the fact there's an e-sim automatic. they said, you can get off verizon really easy and go to t-mobile i'm like, wow. doesn't that make it so verizon has to give me an even better deal with my apple phone than i'm currently getting? >> yeah, they may. i mean, listen, verizon, and again, i don't want to -- we're going to share a lot of these questions that were asked and answered by vestberg, but they have relied on the quality of the network at verizon for years. that has been their selling point. certainly in 4g, there was no doubt about it, carl but in 5g, there are more questions in terms of whether they are fully superior when it comes to reliability, when it comes to coverage, when it comes to speed over t-mobile and so, you're right, jim. that becomes more of a question.

do you need to be more promotional? >> david mentions, of course, netflix, and there was "the journal" piece yesterday peeking into their projections for ad, at least, exposure, maybe 40 million subs in a year not huge relative to their overall base but would make them a major destination and then ever court today with the upgrade. >> i think a lot of people are just always itching to upgrade network quality. netflix. one of the reasons they are, we have this f.a.n.g. nostalgia f.a.n.g.'s been hit so hard, it's been de-fanged. i mean, yeah, those of us that are listening to chapek and the interview by david, we question, why do we want hulu? can i get hulu without ads, carl >> yes >> jeff, bear. geez, back, corner all right, but i'm just saying,

you know, david, ads -- you know why i like netflix, david? because when i met reed hey st hastings i was so excited they didn't have ads. >> it may become a significant positive there are those who believe it will lower churn you're going to be paying a lesser price that cohort that's willing to pay less but get ads may be happier and -- at the price point and therefore churn less that is one thought. 40 million may not seem like that much when you have as many subscribers as they do but it's not insignificant. "the journal" cited the memos they were aware of this is a big deal for netflix and disney as well >> that's a good point >> the lower price point, obviously, chapek says, listen, we priced disney plus originally at what he called yesterday a pretty absurd price in terms of how low it was, given the value

proposition, which obviously he argues has only gone up and therefore allows them to go to $10.99 on the main service without ads and i think it's going to be 6.99 or $7.99 on the th ad-supported the other area people have questions about, as you know, espn certainly, jim has asked plenty of important questions there in terms of what is the future for that, given they said, no, we're not interested in separating it from the company, through a sale, perhaps a spin, whatever it might be, chapek has made it very clear, we want to keep espn, and so i did ask him, you know, well, give us a little more here in terms of why you want to keep it and what you believe you can do to create a different growth trajectory than the one it clearly is on as a cable network. >> i like to look at almost every one of our businesses through the eyes of the ultimate consumer, because i believe if you do that, then you can't go wrong, and i think that's the

way we're looking at espn. take those sports fans, what do they want? one of the things they want is the ability to have a frictionless sports betting potential with not having to have four screens in front of you. we, as espn, have the ability to do that. now, we're going to need a partner to do that, because we're never going to be a book that's never in the cards for the walt disney company, but at the same time, to be able to partner with a well-respected third party that can do that for us, that can have the advantage of, you know, creating a seamless integration of the experience with our guests without having to necessarily go out and go to another device i think would be seen as a benefit. >> all right, so, sports betting, certainly one idea or one area that it would seem gives you a new growth trajectory for this business is there something else? when are you going to fill us in

here in terms of what you're thinking about >> we're hard at work in our offices, both on the east coast and the west coast, figuring out how we make it more friction-free sports environment for our viewers. and obviously, some of these things take the cooperation of a lot of the people in the ecosystem, whether they be the leagues, whether they be other broadcast partners, but we foresee a world where espn, even more than ever, is the pinnacle of all your broadcast needs and we're excited to continue working on that and at some point, when we're all fully baked, we'll come -- >> when do you think that will be, at some point? how long do you wait until we have a real sense for what the plan is? >> well, quewe don't have an ext timetable right now because it depends how fast these things evolve but we're really pleased with some of the conversations we have had throughout the industry in terms of what's the future of sports and how do we have a step function in the consumer experience so that it's not just sort of your father's

old sports experience, but something that's bigger and greater. we talk about next gen storytelling we talk about sports betting, things like peyton and eli, those curated, customized ways to experience sports, and it's all about, how do you use technology, not for technology's sake, but to advance the storytelling, advance the integration so instead of it being a lean-back experience, it's a lean-forward experience where you're integrated and involved in the way that you want to be, whether it's got to do with fantasy sports, sports betting or whatever else is on the horizon. >> right, so, i mean, maybe we're in the metaverse somehow with, i don't know, in the middle of a football game? >> well, that, essentially, is what we're referring to when we talk next gen storytelling we don't use the metaverse name for it because we believe we've got a unique take on it as the walt disney company but that is exactly what it is it's that seamless integration of being able to not only

consume the game but actually impact your version of the game, whatever that is >> you feel confident that these ideas, which are not fully formed as yet, but you're clearly working on, will sort of create a new growth trajectory for a great cash flow-producing asset but one, of course, well, you said, it's part of the melting ice cube that's cable. >> and we certainly know the tailwinds that we have with these new ideas. we feel confident in them. we also know there's headwinds in terms of that melting ice cube of the cable universe, and we believe that, you know, espn can become something as great as it's ever been and more than we ever conceived of. >> so, jim, there it is. more than we ever conceived of >> well, look, he's right. i don't know if he plays fantasy, but what you do is you go to their app -- i don't have to give the whole plan, i don't mean to. i'm not making money off this. go to the app, 55 million people, you make it so that when you see a player you like in the

metaverse, you can bet on that pli player in a prop bet obviously, you have fantasy right in your machine. why can't you just bet, go, instead of having to go to draft kings, just go right to one site and you can use teams to do it when i get to disney, i will solve this i think i can solve it by the super bowl, all right? >> they're counting on you, jim. >> i have my theme park. >> they're listening closely, and now they've figured it out thanks to you. >> i just gave it to them. charge them for schefter david, how about buying new mexico, theme park where are they on that >> they're not really interested from what i understand no offense to you, though. >> a theme park in the permian think of the possibilities >> so beautiful there. >> you really shot that one down, huh? >> look at the ratings on the u.s. open for espn, and by the way, you see federer retiring a

few moments ago. >> what a class act. >> what a career >> but i have to tell you that this one is such an easy one because we're all on espn's fantasy, and we all want to bet, but we have to then port over to draft kings. and i don't want to do that anymore. i want to watch schefter for two hours before monday night, i want to be able to place my prop bets on players, i want to be able to place my bet and i don't care, place my bet on my hand held through draft kings, one machine, and it's money. but i got to talk to bob, huh, dave >> jim, you mentioned humana earlier, and about a three-week high here on this investor day what's so important for, certainly, your club members to take note of >> well, i think that humana is something that mr. brousard said on "mad money," the flu is worse than covid money they thought they would have to spend on covid can go to other things i just got the humana plan

i have someone who looks at my plans, my cfo, my president, ceo, but not my wife, and that's someone else what i have learned is that this humana has the best deal now, last year at this time, it did not. they have changed the focus of their deals. i urge people who just plan to plan challenge, you find out that humana is now the cheapest and the best this was not the case a year ago. >> that's the s&p top gainer at the moment, followed by a bunch of travel, cruise lines, we got some upgrades of wynn today, that's up there as well. even, jim, i'll tell you what, the energy complex is your biggest loser today. nat gas down, diesel down. is that a rail >> yeah, you go coal you don't have to switch to natural gas. coal is all shipped by train i want to announce, julie whalen, a terrific ceo, moving to expedia i just interviewed expedia the other day. i will say that laura has a

terrific bench she had an amazing quarter at williams sonoma but i think expedia is a very interesting travel company >> we have the southwest guidance on the current quarter. they don't see any real hiccups barring unforeseen events. they did note maybe a little bit less business travel activity. >> that's true and expedia would confirm that too. this is part of the economy that i like, which is the service economy, the go somewhere economy, the extremely full flight, no more overhead economy. nine wedding a year economies. this is where the money is going. i think i keep going back to what you said. the fed has got to start looking at some of these weaker numbers. they can't just say, cpi bad, let's keep ratcheting. they have go to go back to 2018 game plan where he realized, wow. maybe i got to wait. i really kind of botched things. so i know he listens to the show, and i just say, fed chief,

you can do what you want with this one, but then maybe wait a little and get rid of that hollywood squares game that he plays with the different reporters. they're all just trying to play gotcha enough with the, "when did you stop beating your wife" let's move on. >> the bond market is stubborn here by the way, jim, and the cnbc club, are going to hold their monthly meeting today, noon easterntime. you can find out a lot more by scanning the qr code on the screen we already teased some of what you're going to talk about before we go to break, the bond report, as we said, yields continue to climb, even as we got a mixed bag today. claims were a little better than expected, but philly fed lower than expected, empire, the same. and industrial production. don't go anywhere.

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of crude jim did work last night looking at the possibility of running into the 90s next month. >> yes up and down. >> and then -- >> there's not enough people in it it's no longer long. it's very important. >> we are seeing some declines in nat gas and diesel. we'll get stock trading with jim in a minute.

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let's get to jim and stock trading. >> one thing i think is unfair is initially we understand the consumer protection bureau is taking a look at it affirm was down big. affirm was the biggest in fx and the leader in doing the right thing. the fact that stock gets hit is a shame. >> we'll find out. block actually took it on the chin a bit this morning as well. >> i know. i looked at affirm, that should be the leader. that's the gold standard. >> david, a lot more coming up in the next hour, right? >> without a doubt more from chapek and our interview. we'll talk about future of hulu because also some comments as well from our parent company, ceo brian roberts at the same conference yesterday involving that asset we talked about that and then we'll have a lot more

from the interview with hans vestberg, the future of 5g they've been talking about a long time and his answers on when it's going to deliver yeah, without a doubt, people want to stay tuned for those two. >> all right >> that's great. >> jim, tonight? >> i had some criticism about a company called figus. they want to come to and tell me how i'm wrong. >> did you see kanye terminating his deal with gap, saying they didn't open as many promised stores. >> well, gap is -- i don't -- they are nice people >> at least we got the upgrade, i think it was the nordstrom. >> can you see that? the rack is going to make a comeback that would be something because rack was all of. by the way, downgraded kohl's. another group of nice people david, nice people everywhere. >> thankfully, a lot of nice

people >> theme park, david think theme park, david. >> new mexico. get right on that, jim we're all going to just love it. >> i don't think david brought that up, but maybe we'll find out. >> i'm going to buy that 300,000 acres i put aside. nice to see you, carl. >> you'll be april very wealthy man. >> jim, we'll see you tonight. 6:00 p.m. eastern time and, of course, david has hey lot more in the next hour. we're hanging onto 3950 as financials doing okay. even in the face of energy weakness don't go away. the pursuit is on. the pursuit of outperformance at pgim. with deep expertise to outthink across multiple asset classes,

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unless of course it's highly recommended. the delta skymiles® american express card. if you travel, you know. welcome back to "squawk on the street." cme hq live news there's been a litany of breaking news today. this particular batch is, of course, our business inventories. month of july, so it's a bit in arrears. expecting up 0.6 it delivered, up 0.6 exactly and do keep in mind, inventories are a good thing we went through supply chain woes what exact inventories do we have is certain sectors have too much

of one thing and not enough of another. this an important number two months ago we were 2.4% change month over month. these numbers are strong but easing welcome back. this is the lightest business inventory change going all the way back to april of last year carl >> thank you very much busy morning for rick. good thursday morning. welcome to another hour of "squawk on the street. i'm carl quintanilla with leslie picker dave is bringing us disney chief bob chapek along with verizon's hans vestberg. a little buying, 3960 almost on the s&p will take you above yesterday's intraday high. as we said, a lot of data, got blockbuster m&a, the rail strike averted. >> plenty of positive news we're 30 minutes into the

trading session. here are three things we're watching starting with rail operators csx naming former ford president jim heinrichs as ceo we will have more on that in a moment shares of csx down 1.7%. netflix getting upgraded to outperform at evercore citing the company's ad supported tier and password sharing netflix getting a boost, up 5% adobe getting crushed after falling short on revenue outlook for the current quarter and announcing it has acquired a design platform figma for $20 million. >> the deal is really all about the top line and accelerating top line you know we're an extremely profitable company what we have said is we have some aggressive goals in terms of being able to make this a in

year three, which is -- as well as ro driving top line growth. what we said is we will offset dilution while the transaction is under way we believe that it rapidly actually enables us to accelerate our bottom line eps as well. >> still shareholders of adobe not too thrilled about today's news however, to your point, carl, earlier, it is kind of creating a sense of optimism potentially around the deal. $20 billion deal, the largest takeover of a private software company. you know, in this current environment where m&a has been few and far between, something like a $20 billion tech deal definitely is something that people are paying attention to. >> yeah, david, i wish you were on set today because it was louder than usual. multibillion dollar m&a and an ipo. almost a taste of yesterday. >> yeah, real activity for the investment banks

as you point out, ipos have been further and fewer between those than m&a, which at least has kept a beat. we talk often about it in broader context, of course, regulatory when you're talking about big companies and also trying to negotiate a price in the public markets right now is a very difficult thing to do when you've got the volatility and when you've got questions about potential recession coming so, that has also been a negating issue this is not a public company it's a private company leslie, by last accounts, at least, last private market value was far below what they're paying significant premium here obviously, the decision to use half cash, half stock for a company whose stock is down dramatically, who's been buying back 5.1 million shares last quarter. it will be interesting in terms of how they went about doing it, given they're going to be, as you heard him say, spending a lot of that stock, so to speak, to acquire this company.

and right now the market not reacting particularly well >> yeah, you asked that question, of course, about why use that as the currency given where the stock price is currently trading. but to your point, the valuation for this company, for figma more than doubled since june 2021 when they last raised. definitely a big win for the vcs participating in that round and those previously >> meantime, guys, we mentioned the rail strike that got averted. railroads and workers union reached that tentative agreement early in the morning narrowly avoiding a national strike ka kayla joins us as far as secretary walsh and what happens in terms of ratification. >> yeah, carl, a lot of questions still. after 20 hours of consecutive negotiations capping off nearly three years of bargaining between rail carriers and a dozen unions, two critical groups representing about half of all rail workers releasing a statement just this morning

detailing some of the terms of the deal k cumulative wage increases, annual bonuses of $1,000 each year and no increases to health care, co-pays or deductibles all of that had already been recommended by an independent arbitrator appointed by president biden. but most critically the deal includes more assigned days off and one additional paid day off as well as for the first time ever, the ability to take time away from work to attend to routine and preventive medical care as well as exemptions from attendance policies for hospitalizations and surgical procedures that, according to the two unions workers he had been outraged that due to layoffs, long haul trips and last-minute staffing, they could be fired for an unexpected doctor's appointment. this morning incoming csx ceo acknowledged this scheduling strategy had contributed to low morale

>> with this operating model that we have, to figure out how can we -- how can we move from here, how do we build from here, how do we use this operating model we have that delivers very strong results to better serve our customers and better serve our employees and let them be part of the discussion around how do we improve the business going forward. >> president biden after spretsing frustration at company's resistance to that time off hailed the deal as a win. we're expecting to hear more from the labor secretary later today. guys >> kayla, thanks so much an important story. meantime, markets are a bit tepid, although the dow is up 100 with the selloff tuesday offsetting this week's gains retail coming in better than expected our next indicator says key indicator will be mounting job losses joseph amoto it's great to have you back, joe. tell me about why you think the doves will reemerge and what's going to force that?

>> carl, as you saw on tuesday, inflation is looking very persistent here and worrisome. so, you know, aggregate demand continues to be quite strong we think for the fed to get to their targeted level of inflation, which is a long way from where we saw tuesday's number, you're going to have to really reduce aggregate demand i think that's going to ultimately affect the labor market, which as we've seen over the course of the last couple of labor market reports remains very, very strong. >> now, one of the points about the terminal rate out of jpmorgan this morning is that gdp, even core pce at this point are still trailing the fed's estimates. they say, look, estimates can always be revised. in their view it's going to be awfully hard to get the median dot above four did the market react on the cpi print?

>> we don't think so because, you know, that's why we've been defensive as it relates to risk assets because we think there's a long way to go to get to a terminal rate. w we think the fed needs to move to 4.25 this year later or early 2023 that's a couple hundred basis points than where we are now that's something the market will continue to react to and we worry that will create a bit of downside >> yeah, i'm curious what you think about the potential for downside with that terminal rate bridgewater writing in a li linkeden post that a rise in rates from where we are now to, say, 4.5% would produce 20% declines in equities do you agree with him? do you think that investors have been too complacent about long-term inflation? >> we think they've been a bit complacent as you look out farther, the

expectations for inflation are quite modest the work our team has done would suggest we're still going to be in the 3, 3.5 range as you get into 2024. that's above where the market's expectation is right now i think as it relates to equities, it really comes down to where earnings are. third quarter earnings are going to come in probably okay you know, the engagement we've had with lots of companies would suggest that the quarter is decent certainly the nominal growth of gdp is helping companies report decent earnings with he think as you get later in the year into the first half of 2023, earnings need to come down i think that's the kind of downside that ray is referencing. >> finally, joe, do you think the fed chair tips his hat at least to at least prices paid in some of these regional surveys, retail sales, ex-autos and gas, first drop of the year, industrial production going from up 0.5 to negative

how much credence do you think he gives that in his presser >> it's always hard to say i do think that there's lots of inputs that go into ultimately a $20 trillion economy and the inflation that results from that we've seen over the course of the summer, you had a very, you know, bad inflation number in june you had a better number in july that helped rally markets and the august print was pretty ugly i think it's demonstrating this inflection point we are in trying to reduce aggregate demand, weaken the labor market and not push the economy into a full-flujed recession. that's a very challenging tight rope to walk for the fed and certainly they're going to consider a lot of data that you reference, but i think that the labor market is the one they're most focused on. >> yep that's why claims today, unbelievably still, 213,000 down

five straight weeks. pretty remarkable. good to see you. as you we to break, let's look at a road map founder of patagonia donating $3 million company entirely to fight climatechange. after 864 days, tesla gets dethroned as wall street's top short bet. we'll tell you who took that number one spot. and we'll have a lot more from my sitdowns with disney's chief bob chapek as well as verizon's ceo hans vestberg talking 5g, the new iphone and a lagging stock price.

you can take a look at the verizon stock. it has not performed well over this period of time. obviously, it was the leader in 4g, always known with having the best network, but a lot of the promise of 5g, not for consumers but really in the enterprise, things talked about yesterday, mobile edge computing, gaming, has yet come to the fore that is where i started my conversation with hans vestberg, ceo of verizon, starting with, when is the promise of 5g going to be looked upon? >> if i loo, to my 5g business,

40% of my consumer base in pry premium segment have unlimited premium, which is 5g by year end we'll have 60% of all of our customers on 5g phone. that's far quicker than 4g going from metered plan to unlimited plan that's how we work both by creating growth but, of course, meeting consumer demand for newer services we top that by including new values but the app exclusive to us where you get the apple iphone 14 with all the services and then you get more value enhancement in that value chain. it's much more about segmentation in different buckets in our marketplace we are by far the largest consumer business when it comes to wireless all the way from the value segment with the lowest prepaid plan to the highest. we meet the consumers in every area of that, both for us to

grow and also to give the customers and consumers the right value proposition. >> you're not growing right now. in fact, i think when i look back when you had post paid rpo down 1.5% year over year you've lost market share in every quarter since the second quarter of 2020. what is going to get you back on a growth track >> so, we need to define what the market is. if i look at my wireless business -- business customers, i add 150,000 new phones every quarter, done that in four consecutive quarters our gain market share from government, large enterprises, small and medium premium segment for consumer in the second quarter, which we talked about, which we have addressed with a newell come plan, addressing that tier and as i said here at this event that we are seeing good traction, both in our stores the last two months. we have seen gross adds coming

in the last two months sequentially, month-to-month growth we see the things going to market is coming in and making a difference. >> i wonder how do you balance needing to be promotional and with your investors for free cash generation, for ebitda. >> if you look, this year we took down our guidance in the second quarter to be flat to minus 1.5% that still means we'll do between $47 to $48 billion, which is way higher than anybody in the industry, double some of the guys in the market we are thinking a lot about balance between getting new customers but at the same time, creating this cash flow that is so important for our capital, for our dividend we increased, 16 consecutive years we just increased it 2% again. we want to put our board in a

place where they can actually do that for our shareholders. i think we're really good model. there can be quarters where we lose a little on net adds in the consumer segment but we want to be disciplined, we want to be surgical and where we acquire new customers and see there is actually value created. >> we obviously had a long-running conversation you and i, and i with some of your predecessors, the value proposition you have relied on to some extent has been the network. 4g was clear it doesn't seem as clear moving into 5g. when i've looked at various surveys, t-mobile is ranking very high, even over verizon on 5g not overall. but when it comes to speed, coverage, reliability. what's the value proposition for the verizon customer >> there's root metrics which is the third-party measurement. as far as i know, we've won that for 15 consecutive years. >> you have. >> that's a very important

measurement. >> there are others, though. >> when you use the same phones on the same network. this is right now. on top of that we're building out our c-band we gave access at the beginning of the year. we have 150 million pops with c-band, midband for 5g. >> you spent a lot of money on that. >> a lot of money but it will make a big difference for our customers. what we see on the c-band are step-up rate is going up our customers are going up to higher plans so, we see definitely there's a correlation between our 5g and continued excelling in network performance and having the bet network. it's paying off. >> you don't look back and regret at all the reliance on 5g millimeter wave and sort of what you focused on there and how much it obviously cost you to buy the c-band >> no. and we have built the best assets in the market i wouldn't change a thing. the millimeter is the cheapest way to transport data you can find we take that in urban and dense areas to see that on the

spectrum it's the way to use capital in the most cost efficient way. we gather assets, acquired track phones so we have over 1 mm prepaid subscribers or value segment. we decided to divest in verizon media group. we're a clean company with the network supporting all of our customer groups. i have more to do but i feel confident with what we're doing and how it's actually paying off. >> yeah. but how do you communicate with your investors right now obviously, you just did here at the goldman sachs conference we're at the stock is flat for ten years. it hasn't outperformed the s&p it hasn't even outperformed the communications group it's lagged both you have a strong dividend yield but in part because the stock is down be so much. what do you tell frustrated shareholders who may hear you talk willing about potential growth in the future but have not seen it for quite a while. >> we have grown our data ever year up to last year i think we have been growing we have been growing our top line as well

we are a little pressed this year we're going to grow this year but it's more inorganic but we'll grow our -- >> are you disappointed in the performance of the stock price or is it a reflection of not what you're saying but what i'm saying >> i think the stock price is always hard togauge for me i think what we are doing is really to make value enhancement. of course, very focused on our cash generation, which we're best in the market and that's why rear trying to think how we allocate that capital in the best way and start growing our business again many things are actually coming together for us this year. we got the spectrum this year, track phone, we have a five-year outlook we are focused on to continue to grow we have more vectors to grow than anybody else. we have mobile edge compute, more mobility, and many things that we can grow on on the same network. >> the promise of 5g we talked about for years is still coming? and you are confident it's going to be -- >> it's not coming it's actually here many things i said in the beginning has actually happened.

60% of our customers have 5g. >> it's great. i can pick up my phone and it's quicker. we talked about the ancillary revenue streams the same as a result of the introduction of 4g. >> we have the enterprise segment and then we'll see it in the private networks to scale it, two to three years to scale it, enterprise solution is really big, but i see this happening. i've already seen it on the consumer side, unlimited premium, it's a five-year service and 40% of our customers already subscribe. >> you know, i pointed this out on tv. i don't know if it means anything to you or not t-mobile has a larger market cap than does verizon. does that bother you >> my job is to continue to develop ver sfwlon and see we are the most successful telecom carrier in the market. i'm going to continue to do that there's a lot of competition out there that is coming and going we have always been the leader we will continue to be the leader in all aspects. >> and just for our next

interview's purposes, what should i judge you on? what should i be focused on in terms of you delivering on the promises you're making >> i think what you said, look at us and see we're creative on our -- over time, and that will come with growth over time as well we'll continue to segment the market and see we're meeting our customer needs we have fixed wire access, a lot of different things coming into the market at the moment we're scaling. that i think you should judge me on. >> now we have a sense of what we should be talking to him about in the future. you know, carl and leslie, certainly wanted to get some sense from him of where he sees his company positioned right now. we talked a lot about the stock price. it's a longer term issue it's not about this year, given the market is down as much as verizon shares you clearly have to wonder in terms of their competitive position, he obviously explained how he views it and making sure he delivers as much ebitda from

every customer and the fact that he has a suite of offerings he believes will be best put together to deliver on that promise of ebitda growth or profitable growth, i guess i should say, leslie. >> well, david, as you challenged him on this idea of 5g and the ultimate endgame there, he really was tasked with making that the forefront of this company when he was brought in four years ago as ceo and as you pointed out, t-mobile ranking higher on 5g really what's going to be the value proposition given so much capex has been put into this. >> that's one of the key questions. this is a widely held stock. obviously, they raised the dividend just last week. i think the 16th year in a row that's an important component for many investors but it doesn't help when the stock is down, as you see 8% over the last ten years, carl by the way, the entire interview will be available on cnbc.com. same for our interview with bob

chapek, because he's 15, 18-minute interviews we're running much of them, but obviously those who want to see the entirety, feel free, please, go to cnbc.com we'll have more from chapek coming up as well. >> david, that's a lot appreciate that. as we go to break, watch gap today. kanye west says he's terminating the contract between the retailer and his yeezy brand he says they failed to distribute products on team and creating dedicated yeezy stores. the market not reacting. s&p has gone red don't go away.

we lost about everything trying to pay for prescriptions. we spent our whole pension but couldn't keep up. so my husband just stopped taking his medicine. and then he had a stroke. i can't get back what i lost, but thanks to aarp, a new law will protect seniors with a cap on their prescription costs. that could have changed everything for us. i'm just grateful that no one will have to face the terrible choices that we did

welcome back the tech spyder ticker xlk losing a quarter of its value. apple is the largest holding and touting tesla the biggest short for the first time since april 2020, according to s3 partners this week short interest in apple touched 18 billion compared with 17 billion for tesla. if you look at year-to-date performance, they're almost identical. each down a little more than 13%

year-to-date when you look at a different metric, which is often cited as -- in terms of short interest as a percentage of float, for apple that's 0.7% in 2022. tesla, 2.2%. so, stills a percentage of float, tesla takes the cake but in terms of absolute short interest, there is a new company crown, that is apple for the first time in about 2 1/2 years, david. >> interesting they are both down almost the same amount for the year >> i know. >> look at that. within basis points. wow. all right. i'm easily entertained. after the break, more from my sitdown with disney ceo bob chapek we talked about direct to consumer and streaming, ad-supported tier, company culture, hulu. a lot of stuff stay with us

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your cnbc news update. president putin and chinese president xi are in uzbekistan putin acknowledged china has questions about the russian invasion of ukraine. this is the first indication we've seen china offer anything other than support for russia over the conflict. in london, mourners waiting to see the queen's coffin are in a line that's grown more than four miles the bbc reports some have already spent eight hours to pay their respects king charles is expected to have a quiet day today before flying to wales tomorrow. in california, governor gavin newsom has signed a law to help homeless people get more mental care quickly. here's our exclusive. >> address what's happening on our streets and sidewalks, particularly with the most

vexing issue, mental health. people are out there, we see every single day people with bipolar disorder, schizoph schizophrenia, paranoia self-medicating with drug or alcohol addictions and we see this in california more than any other state. it's not unique to california, it's just worse here. >> we'll see the first counties rolling out those programs next october, david >> thank you well, we are back here in california, in fact. yesterday had a chance to sit down late in the day with bob chapek, ceo of disney, right after he presented at the conference, goldman's annual conference they combined media telecom and technology companies all under one roof obviously, a lot of focus son what is the ad tier on disney plus $7.99 will be the price there. relatively small ad load, maybe

four minutes we started off part of our conversation talking about how much they spend on content for direct to consumer at disney and whether they're getting their money's worth. >> we don't know what you guys spent specifically on content for dtc but some estimate it could be as much as $16 billion. is that a number that sounds right? >> you're in the ballpark. >> okay. well, you you're generating about $20 billion of annual revenue from direct to consumer. netflix is at $30 billion. it's not apples to apples because you can monetize these titles. >> right, right. >> am i seeing something that's an opportunity still for the company? >> as you recall, when we first launched disney plus, we way underestimated how much fuel the beast was going to need in order to, you know, be what it can be. you know, we're very thrilled with where we're at less than three years into this. but the learnings are that it's going to take more content the good news is now theatrical

business, at least for blockbuster returning, which is where the bulk of our business comes from and linear networks doing fairly well right now, that we've got lots of ways to ammorties that we know some will go to theatrical and live a life there, maybe shorter window than we've had before, and being able to strike while the iron's hot in the streaming business at the same time with the very same content. although some content will go straight to the streaming services some content that was in linear distribution in the channel world, like ""dancing with the stars"" is coming over to streaming. and so what we're doing is moving the chess pieces around, trying to figure out what's the best intings for all the distribution channels knowing ultimately the kingpin is our streaming business. >> investors are concerned as this world is maturing, what's the return going to be

what's the ultimate content span what are you getting in terms of natural return we still don't seem to fully understand it yet. >> i think what you know is that back in 2020 in december, we said that we would achieve profitability within 2024. we've reaffirmed that guidance over and over and over again so, despite the dramatic increases in content expenditure, which is the fuel for all of our business for the entire walt disney company, we're still committed to that. it's not that far off. we have a firm vision for how we're going to get there and when we're going to get there. >> is the new ad tier going to help with that you talked about it being at the very least, i think, margin neutral. and you obviously talked about the original price of disney plus being pretty absurd in terms of the value proposition >> everyone is focused on the big price increase we took both on espn plus and disney plus but i think if you look at it from a relative standpoint,

which is what i'm suggesting, we're still priced well below where our competitors are, even though our content is arguably the best in the business in terms of things that people really, really want to watch we've made this huge content investment on arguably, you know, low price relative to value we established the value keeps going up the prices trailed and i think we have the opportunity as identified by the step function increase in price to, you know, now monetize that price-value relationship and the tremendous affinity people have for our platform. >> what do you think the ad tier will look like in terms of sub there was a report netflix thinks they might have $40 million on thr ad tier. >> we aren't going to give any guidance in terms of the percent we should see but the assurance it should be margin neutral at the worst, we're pretty confident, if anything, it gives us some upside. >> the more there is, the better

potentially. >> that's right. >> you mentioned hulu. i thought it was interesting because you did say -- you just said as well, you'd love to get to that point earlier even than 2024 in terms of full control. it would let you, for example, create the hard bundle you talked about, frictionless any chance -- brian roberts is not far from here. i don't know if you want to figure something out any chance you can get there with them and have you perhaps started to think about talking or talking >> i think as '24 becomes more and more imminent, probably the chances of a hail mary pass coming in that, you know, enables all of us to kind of come to an earlier resolution of this is probably less and less i would like nothing more than to come up with that solution for an early agreement, but, you know, that takes two parties to come up with something that's mutually agreeable and i hope, and i'm an optimist. who knows. >> you never know. the deal requires like a third-party basically to come up

with a value that would be a value if hulu were sold, right there's going to be a control premium in that overall value? >> yeah. and there's a floor price, too, which wasn't even relevant in the 18 months ago when there was still frothiness in the streaming business but now that things have kind of calmed down a lot, that floor value looks a lot more - >> it does, but that would be saying hulu should be valued the same way netflix is but in a sale process you get a different number. >> certainly it's a relative data point, how about that >> okay. but you seem to be prepared to potentially pay up if you had to >> you know, i'm not going to let you put those words in my mouth. at the same time, we're reasonable people. >> got it. bob, i did want to come back to sort of what you've learned as a ceo now. and you said recently, disney is a place that unified people. i think it was one of the

interviews you gave. the experience you had in florida, the spat with the governor there where you were acting in part, it would seem, on the view point of your employees and trying to please them how do you navigate this world with the culture wars going on right now and maintain disney as a place that unifies people while trying to please your own employees or make sure they're happy? >> as you know, we have 100 years histories of storytelling. that's the at the center of everything we do when we tell stories, we like to reflect the viewpoints of people, the lives of people, the viewpoints and lives of our fans, but also the viewpoints and lives of our cast members and our creators, who actually make the content and everyone gets to celebrate. we certainly don't want to alienate everybody but we to want bring them together i think there's a world where disney can be the great unifier. >> you do? was there anything you learned from that experience, anything you took away from that? because a lot of ceos in the current world we live in try and

understand when do i speak up and when am i better off not speaking up? >> it's certainly tough for any ceo to weigh that balance of when you speak up and when you don't speak up i think when it's a brand like disney, which not only has the greatest equity in the world but probably the greatest click-through rate in terms of being newsworthy, not only for us but for different interest groups that want to use disney to get attention, i think the stakes are even higher you know, we love our brand. our consumers love our brand our employees love our employment proposition and it's a high-class problem to have a great brand like disney. >> as the guy has already been in the job a couple of years and signed a new three-year deal, is it what you expected are there things about it that you're like, i did not anticipate this? >> well, certainly covid i didn't expect within a week or two of getting the job we would have to shut down the walt

disney company like we did i ran parks for about seven or eight years. a shutdown meant closing a park for one day because of the threat of a hurricane or redirecting a cruise ship. that was the worst case scenario in our minds there's a lot of things i did not anticipate i will tell you the energy, the enthusiasm for the future and this company as we turn 100, looking at the great wealth of content we had at d23, the enthusiasm of our employees, our cast members, our content creators leads me to believe the next 100 years is going to be just as great if not greater than the first 100. >> carl, interesting, of course, we should point out our parent company, comcast, 33% owner of hulu brian robertses was at the same conference later yesterday he did sort of bring up this idea that comcast might want to own hulu as well that doesn't seem to be a part of mr. chapek's thinking at all at this point.

it's simply, when are we going to be able to gain full control of the asset. >> that was interesting, the comments on hulu and the auction. bernstein today says, presumably in the wake of the buyback announcement at comcast this week, david, allocating more capital to buybacks precludes comcast from performing any large-scale m&a in the medium term. >> it would be a big price tag regardless as i pointed out and he concurred, it's not -- you know, it's not just looking at the market value of other direct-to-consumer companies and saying, okay, let's put that multiple on hulu it's hulu and a sales process which includes a control premium which might make it more expensive. certainly something we'll be watching as this year ends and, again, it's 2024, which is not that far away, that they do have that option. >> yeah. well, we talked for a long time about how they managed to broaden the umbrella more adult, so to speak, content beyond the disney brand. that would be one way to do it

fascinating. the florida story continues to be a big one for the company. coming up after the break, we'll talk some patagonia as the founder donates the company to fight climate change pretty remarkable story. otherwise, some chop here on thursday s&p, 3933. we're back in a few. ♪♪ do you want some more? wait till you see me on the downhill. see you at home. enjoy it. with the advanced safety features of a lexus es.

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the founder of patagonia has donated the entire company worth $3 billion in an effort to combat climate change. robert frank has more. i see patagonia tweeting, instead of going public, you could say we're going purpose. i know how an ipo works. i don't know how a going purpose works. >> yeah. in is so interesting patagonia founder yvon cho chouinard, donating all the voting stock into a new trust called the patagonia purpose trust. that trust will make sure

patagonia sticks to its values as a socially responsible company. then all of the nonvoting stock, that's about 98% of the total stock, that's going to be donated to a new nonprofit called the hold fast collective. hold fast will receive all the company's profits and direct them to, quote, fight the environmental crisis patagonia itself is going to remain a private for-profit company valued at around $3 billion. revenues of about $1 billion a year profits of about $100 million a year ryan gelhart will remain the ceo and. the voting shares are going to be taxed since they're going into a trust the nonvoting donation may be eligible for a tax break -- actually, should not be eligible for a tax break since they're going into a 501 c 4 that can made unlimited political contribution you don't get that charitable deduction, therefore, it's not deductible fascinating, guy, chouinard,

fascinating life, and what a way to end his role and his family's role in the company. >> yeah. it really is a fascinating idea here i'm curious, robert, how liquid is the stock that they're putting into this trust in terms of being able to move quickly to donate to various causes causest fit what they have described as going purpose? >> so the value of this company going into the 501 c-4 the roughly $100 million in profits that come in ef year that goes directly to whatever causes, whatever grant ores they are going to make. so that's going to be the money engine behind this new not-for-profit then the non-voting shares go into the trust they won't generate much profit at all so all of the profits now will go to this not-for-profit which then goes to causes. >> fascinating robert, thanks robert frank on the patagonia story. in the next hour on

"techcheck," one of the biggest laggards for the s&p of the year but one of the gig exist gainers today, ever core, upgrading netflix to outperform and protections on ad revenue and viewership is now the time to get in that's at the top of the hour. don't go away.

. adoeb is in on this deal to acquire a large competitor $20 billion deal some companies that warned this week, new core we hit an air pocket s&p now down almost a percent or so as oil is below 85 on some 'rs veors. wee back in two. lth mode? yeah. [cricket sounds] shh! shh! [light switch clicks] don't pta meetings end at nine? -it ran... late. -oh got lost. the lexus rx built for modern families. ♪ ♪ as a main street bank, the lexus rx built for modern families. pnc has helped over 7 million kids develop their passion for learning. and now we're providing 88 billion dollars to support underserved communities... ...helping us all move forward financially. pnc bank: see how we can make a difference for you.

>> welcome back. the chamber of commerce aviation summit taking place in washington, d.c., today. as airlines ceos and leaders address on going staffing issues phil lebeau has nmore on that story. >> we will hear from a number of airline ceos today and i think the topic of airline staffing will come up because that's the one part of the puzzle in terms of bringing the airlines all the way back from before the pandemic to where they are now that's one part. puzzle that needs to be filled in to give you a sense of how many jobs have been taking or added to the industry during the pandemic and then coming out of the pandemic, take a look at these numbers from the

department of transportation the most recent numbers that we have for july up to 760,000 which is more than before the pandemic, but the important part to understand is that the key jobs we are talking about pilots, flight attendants, mechanics, so many of those involve training and moving up to different level of aircraft some of those there is a shortage there the airlines as we are heading into the fall travel season, as we expected, cutting back their capacity for september relative to what they were planning on flying earlier this year american, united and delta bringing down their schedules as they planned on doing after labor day. now they are going to ramp up heading into the holidays. you take a look at airline stocks keep in mind as they add more staff, they will be better prepared to add more flights for thanksgiving and then into christmas and new year's, and they expect it to be smoother operations now, whether or not they are completely smooth or if we have a repeat of some of the problems from the summer, remains to be

seen look at southwest airlines company out with updated guidance for the third quarter narrowing its expectations in terms of revenue the floor they were expecting increase of 8% now a minimum of 9% in q3 revenue also an improvement in corporate travel after labor day it slowed down a little bit in august but it's improved after labor day. those are encouraging words even though shares of southwest down more than 2% today back to you. >> a lot of the jobs that you are describing here have to be specialized, pilots, a lot of training goes into that, flight attendants how easy to actually ramp up and get the staffing requirements that they need >> time consuming. and the problem is a lot of people say we have a staffing issue with the airlines right now. they don't have enough jobs filled yes, that's part of it a bigger issue is the training component. it takes time to put pilots in particular through the training

to be bumped up and at amt time you have to have the right number of captains and the, you know, the other people within the planes ready to go that's not always the easiest thing to do. so it's a training issue, leslie >> yeah, you definitely don't want to get an an airplane with a pilot who doesn't know what they are doing that does it for "squawk on the street." "techcheck" starts right now good morning welcome to "techcheck" i'm carl quintan quintanilla. early results in a new $20 billion deal sending adobe plunging today we will talk about that. is a deal making renaissance coming something to debate. and netflix a rare outperforming today. where evercore says buy now as shares top more than 5% although the nasdaq down about 1.3% as yields today remain stubbornly high starting with the deal of the day, adobe shares plunging after releasing earnings ahead of schedule, the top line missed, bottom