perspective on all of this, and look forward to talking to you again very, very soon. let's take a quick final check on the markets we are in the green ahead of the market open. 15 seconds until we hand it off at 9:00 and half hour before the market's set to open join us tomorrow "squawk on the street" begins right now. ♪ good monday morning, welcome to sq"squawk on the street," i' carl quintanilla with jim cramer and david faber. futures with some solid gains as the pace of earnings accelerates this week. meantime, the bulls get tail wind from lower yields, softer empire, and this market call from morgan stanley. road map begins with the tailwind for the bulls >> plus, bank of america shares are going to be up, at least that appears to be the case. the bank did top quarterly

estimates and had better-than-expected bond trading and benefitted from higher interest rates. and fox and news corp. back together again rupert murdoch is trying to put his media companies together once again we'll give you the details, the likelihood, oh, and a lot of back story as well >> let's get to the markets here, poised for a stronger open we'll get to this morgan stanley note, but essentially, mike wilson argues that the rally that began on thursday may have some legs. >> i have to tell you, he's the only person, i would say, in the firm at this moment who can have this kind of impact, because when the other guy is really right, come out and say there's a short-term rally by the way, the short-term rally is actually looking for much higher prices, which is rather shocking it would make you feel that you shouldn't sell the opening but i'm not changed. i have no enthusiasm for this market and the reason i don't have enthusiasm is because if we give up this game, if we gave tup thi

gain, then, david, i met a lot of investors over the weekend, and people are very resigned to the idea that stocks just don't have it anymore. as long as the fed is tightening, let's just stay away >> and you apparently agree with them >> i tend to believe that you can have a rally, but that, yeah, because when you have bullard say three quarters, three quarters, and bullard has been very reasonable, then you can only imagine what the people who are really afraid of inflation are thinking so, we had a rally and then do some selling >> okay. all right. if you say so. >> i do say so let it rally, and then do some selling. you don't have to sell today >> there's bullard, of course. >> you don't have to sell today. >> you were just referring to that >> look at that. >> being quite hawkish >> but remember, he's kind of represents the -- a consensus view >> yeah.

>> and when you talk to brian moynihan's team, they think things can slow but not appreciably, but they're the best in terms of how they feel things are going to go, and as it is, jamie dimon was okay bullish. i was quite impressed with how bullish bullish charlie scharf is. moynihan is saying, it's good. the numbers are false. bank of america -- i think people are starting to realize that brian moynihan, they're going to hate this one, that brian moynihan is the smartest guy in the game. >> where >> in this game. >> really? >> the bank -- no, next lie. yes, really. >> smarter than your -- than charlie scharf smarter than james gorman, jamie dimon? really you sure you want to go with that >> i am going with that. let me tell you why i'm going with it. this past -- this is -- the

technology they're putting fintech to shame. the asset gathering. the amount of bad loans and whoever they're loaning to is just perfect the amount of money their clients still have, all those measures, brian moynihan's done the best, and i really respect charlie scharf and wells, my travel trust owns it i wish i owned this bank today >> not a lot of hair on the print or the call today. no trading day losses in the quarter. delinquencies, well below pre-covid. asset quality and loans, pretty g good shape leveraged loan losses lower this quarter than in the prior quarter. >> none of their numbers are supposed to be that short-term -- their trading business, up 13%, david. i mean, they're taking -- the number of people who come in that have averages that say 60,000, robin hood has 3,000, in case you're mr. fintech, i know

you're not, i don't mean to denigrate your work because it's solid. >> just solid? >> the amount of work you're doing with erica and zelle, you're probably not familiar with those women david, i'm not going to -- $400,000 in the checking account. david, i can't listen to what they're doing and think, you know what? they're slouches >> it's hard to listen to what they're doing and think we're in the midst of a recession either. >> you want to say that we are -- that if powell does it, you would say, he's winning because 12% growth goes down to 10%. wage growth, not keeping up with inflation. >> right although, average deposits, also still hanging in there above a trillion dollars >> very strong >> that's somewhat surprising because we start to see runoff towards actual yield, whereas you keep it in the bank, you're not making any money >> let's go over it. jane fraser at citi, good, but i still don't understand that you could have your tangible book be

twice what your bank is. no one's been able to explain that to me charlie scharf dead a great job with the hand he's dealt, and i don't know what jpmorgan's about right now. i don't know what they're about. i don't know what the narrative is jpmorgan is it positive is it negative do they like how things are? do they dislike? when we had ms. lake, cfo, i always got a good view about what was happening now, i have no-no view. i listened -- and i'm not saying it was like listening to itw talk about banking, but it was -- jamie is both sides >> both sides of what? >> good and bad. good and bad no, look, david is from the world where jamie is king. okay, okay, where you respect jamie tremendously i respect jamie tremendously, but carl, i finished the -- >> he's been running this bank

for a really long time i don't know if you would put myself in that world i have sat here and said, listen, that board is stenthrald with him and has been for years, and as i've said, he's been his own successor, but i've made the argument that you don't know when you don't know when you've been a ceo for as long as he has. >> secretary rumsfeld, i appreciate that, unknown knowns. i'm going to back up i thought the quarter was really good, and then i listened to the call, and i say, wow, i'm way too bullish. i'm misjudging this one. i got to pull back now, that is -- >> what i have heard this morning, though, is more than that it's, brian moynihan's better than jamie dimon and i like bank of america more than -- >> look at the numbers look at the consistency. >> i'm just saying, just want to make a point of it jim cramer, the headline is, out with jamie, in with brian. >> i don't mind that headline. i don't mind that headline >> all right >> out with the mets, in with

the phillies what do you want me to say >> i'm leaving >> i was way out of line with that not the moynihan stuff moynihan is now much more of a senior statesman he had a tremendous interest in technology, and that's what -- >> you believe that actually is really working for them in a way that it may not be for some of the other banks? >> yes >> pretty interesting, added 5,000 employees in the quarter, lot of advisors in risk and controls >> 260 is going down >> it gives us a moment to talk about this "journal" story about goldman. we'll find out more tomorrow, maybe, you think >> one of the great parts of jamie's call was that he said, listen, there's going to be this real consolidation in fintech. fintech has no clothes did you see that one division, david, where they dumped all the fintech into >> no. >> well, that -- that's one of the things they dumped the --

they dumped the fintech into one. >> we're back to jpmorgan now? >> no. you're talking goldman-sachs >> i'm saying that goldman has this group where it's fintech, the green skies, and it just seems like they're really -- they're trying to get away from the thing that -- the expensive retail business that they all told us wasn't as expensive, and you didn't have to worry about it well, it was expensive and you had to worry about it. >> okay. i just want more specifics i read the same story you have i'm relying on the "journal's" reporting. >> david, they just -- let me turn to carl because obviously you're in a bad mood >> the point is, goldman has been frustrated for some time, and it feels as though it hasn't gotten a multiple that's appropriate to the actual stability of its business. >> so what are they doing? >> if you talk to any senior kpechs at goldman, for years

now, they says, we have a blackstone buried inside goldman now. for a while, that was even more effective, but even so, their point is that we have a lot of different levers that we can pull now they seem to be embarking on a possibility of making things a bit simpler in terms of combining some of the operating units and putting trading investment banking together. we'll see if that helps address -- >> and putting private wealth. >> -- this ongoing discount -- >> there was no real reason for that to separate >> no, why would that be separate >> have a lot of high-price people running things. carl, when i look at this thing, i say to myself, well, lloyd, you did okay it's my bank now i want to get out of these businesses, don't make a lot of money. i'm setting up, so i can get rid of them if i have to everything i just said will be denied by everybody. i used to work there, and like in "the fugitive," i don't care.

marshal sam gerard i don't care moynihan did the best. goldman is very confusing. jpmorgan, i liked it until jamie told me not to pretty interesting scharf told me it was great and scharf was right there's the banking panoply. >> we are working our way through the bank earnings. we mentioned the morgan stanley call that gives us a quick moment, jim, to talk about uk and whether or not this is going to result in some long-lasting benefits for equities or, i guess, bonds >> yeah. bonds are -- interest rates are down there's a lot of reasons why i continue to find london -- i hate to say this -- a massive side show. if germany were doing something, it might matter, but david, london, we have to talk about london because at one point, we had a special relationship with uk donald trump undid that. >> you're going to continue to insult our friends >> what, our american cousins?

>> special relationship. >> how was the play, mrs. lincoln >> come on it's still an important economy. it's got a lot of debt lot of bonds out there >> they overspent. someone told me this weekend that everyone's excited with brexit >> they came up with unfunded tax cuts and that didn't go over too well that's pretty simple >> they turned around because of the market kind of a big deal >> the market said, no no, no, no >> it's a big deal in the sense that they couldn't bring us down a lot of people were saying it was a lehman moment. people were scared scared a lot of people out of the market again thanks for nothing they missed today's wilson rally. okay >> price on wilson sorry. >> wilson. there's 14 points to this upgrade on the waterfront. there are 14 points. >> really? >> yeah. do you know that eva marie saint is still alive and acting? she's the only one left. >> take the price on wilson. >> now that angela lansbury is not with us. >> that was my night i could have been something. guys, can i end with bank of america here because -- >> we covered that

>> no. because on the call, mr. moynihan, your new hero -- >> oh, geez, david >> -- talked about spending, and i think it's important he said, analysts might wonder whether the talk of inflation, recession, and other factors could result in slower spending growth we just don't see that here at bank of america. year to date spending, $3.1 trillion through september is up 12% compared to last year, and as you look across the periods, you can see in the trend, year over year spending, we saw spending decline, quickly recover, and while still strong, september, 10% spending growth has slowed just a bit from 12% we're still doing pretty darn well that was me at the end >> i hate to be more granular and have, i would say, more current information, but -- >> what do you mean? this was just on the call. >> 12 goes to 10 >> that's what i just read >> no. >> quickly recover and then -- while still strong in september at 10%, spending growth -- >> you didn't say ten.

>> year to date -- earlier in the year is a fast year over year growth rate but it's still strong >> so you agree with me, obviously, on my moynihan call >> i am not passing judgment on moynihan, whether he's better or worse. he's been at that job a long time too >> how do you have $61 million in bad loans i once was -- had shares in a bank when i was allowed to >> i don't know. >> community bank. we had $63 million in bad loans and we had, like, loans from dry cleaners >> now that you love him, he's sure to disappoint us. >> i like his work for charity, what he's trying to do to make it so we're one nation, and if he ran for president, i think he would have a good shot >> now you want moynihan to run for president? >> no, there was a move to float jamie, howard, and i think dr. oz is losing, just in case you're asking. >> thanks for that >> some of those races have tightened. >> fetterman with the hoodie oz is an acquired taste.

he's also -- i used to go to my box, the eagles, and i thought he was a democrat. i thought he was like a real democrat i was quite wrong. go ahead, say it >> a closer look at apple today, morgan stanley names it a top pick, evercore with a tactical outperform on apple isth morning. futures up 430 on the dow. "squawk on the street" is back in a moment.

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apple's up in the premarket on a pretty good tape this morning. morgan stanley names it a top pick in i.t. hardware given what the firm says are greater insulations during a downturn. their sector view is not positive by any means. >> no, and you know, hp in particular, oh, my but the idea that -- look, i say, own it, don't trade apple but i would never say it's defensive. i would never say that in the end, it's tech. tech is not doing well david, there are some things going on in china that no one really understands there was a chinese company, semiconductor company, that apple was going to use, and they're not. and china remains just a tremendous sore point for everybody. i just don't know if there's any business going on in china do you know that the american executives, we're hearing, are -- you either have to choose to be a citizen or go? so, i think that apple -- i like

apple. it's fine. it's fine. and own it, don't trade it, but apple freezes plan to use china's ymtc i don't want to see -- you can't have apple lose china. >> no, it's, what, 13, 14% what's the percentage? around that, of revenues important market for apple and i think for a number of other companies here in the u.s. >> but the 14 pro is quite a great camera, great phone, just really terrific. but you know, own apple because it's a great american tech company. do not own apple for the quarter. that's just not -- that's not a great thing to do. don't play the quarter in this business because, boy, the tech companies are just awful >> the communist party of china's 20th national congress has begun. of course, expected to have mr. wm mr. xi appointed to another five-year term, which many feel

is new territory >> coronation. coronation >> the leaders have only served for two five-year terms. >> and over the weekend, warning against any interference on taiwan, not going to renounce the use of force they're going to delay their q3 ecodata because apparently there's reports that they don't want to embarrass him on this important week of the congress with data that we know is going to be no good. >> i think that -- >> because of the covid lockdowns. >> dr. bourla, in the interview -- i don't know if you guys caught the exxon interview, but he's had it twice. second time, bounces back very quickly, and you keep thinking, why don't they make a deal, don't steal the intellectual property and make it so, people get sick, they're back to work in six days. i don't get it >> the reason is because he has put his credibility on the line, saying that we are going to have zero covid, and he is the leader in all respects, and therefore, everything has to move to make sure that he is proved correct that's all that's what it's about

now, you have made -- you have posited that after this congress, they will start loosening up >> that's what my best sources indicate that you're going to see a loosening up, and you can only have, like you said, a horrible economy for so long. and i think that would be -- i wish he hadn't made the taiwan comment because that's just so us, but i do believe that, yes, there's going to be an improvement in their -- in their country. which is so necessary, because holy cow the chinese growth is behind so many countries in the world. and that's not good for the world. >> there you go. >> xi's not moynihan he's no moynihan >> no, he's no moynihan. >> that's not even put them in the same sentence. >> he's no daniel patrick moynihan either. >> he was amazing. >> i got an "a" in his class get away from me i got an "a" in his class.

i was in the top of that class >> benign neglect. >> i was number eight. >> we'll get cramer's "mad dash" and countdown to the opening bell a lot going on, on a busy monday, as we get nine fed speakers this week obviously, the pace of earnings is going to pick up too. we're back in a minute

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just some of the names reporting this week. goldman, hasbro, j&j, netflix, ual, tesla, ibm, all in the next several days getting off to a nice start with futures in the green opening bell in a couple minutes, and you can always catch us any time, anywhere by listening to and following the "squawk on the street" opening bell podcast don't go away.

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>> all right, let's get to a "mad dash" and then we got an opening bell about a minute and a half from now. splunk has been in the news a bit, the "wall street journal" reporting jeff smith has taken a significant position, starboard value. i can confirm that that is the case we'll see what comes of it but the stock is up on that. jim, you know the company well you've talked to the former ceo, the new ceo. >> gary steele i had the moment, i was in california, and here's what i was going to say, and i will say. this is an open-minded person. he recognized that splunk was a broken company, does know they have great technology, and my thinking is, you can help me or not on this, but he would welcome this input he's trying to turn it around. he knows those guys are smart. he is a thoughtful man and i bet you he thinks that, you know what, these guys are going to add to what i need to

do >> yeah. >> i don't think he wants to sell it. there are a lot of people who feel like he should sell it because it's so low, but there's been no consolidation. he did not mention there would be -- obviously, when i interviewed him, there would be starboard, but i know he's a person who would say, if you have any good ideas, please share them >> and that often can be the case smith can sometimes be adversarial. >> but this isn't the case, apparently >> they've had a pretty good track record when it comes to technology companies tomorrow is the active passive conference that i typically attend that is where smith will be presenting we do expect perhaps we'll hear more about splunk and we'll have an opportunity to talk to him as well >> he's fantastic. >> see what his thoughts are if, in fact, you know, splunk comes up, which i expect it will so, there's that coming tomorrow >> fantastic >> yeah. >> that will be a great interview. i find that he's -- that they are very, very thoughtful. >> all right let's get set for a busy week here first opening bell of the week, and the cnbc realtime exchange

at the big board today, the cybersecurity and infrastructure security agency. at the nasdaq, it's one hope united, a nonprofit providing child and family services. you know, jim, one of the points about the morgan stanley call was not just about the potential upside here but also how hard it is to bang a market below the 200 week, which, in mike wilson's words, and we'll talk to him later this morning, you needed a recession to do that. >> i've talked to enough billionaires in the last 48 hours, and they all believe that it can rally, but in the end, we're going to take out 3,000. and these are very smart guys, smarter than i am, and just point-blank just saying, listen, any time you get a rally, you must go. and i say, why and they say, because we fell behind in inflation, and now we have no choice, and to break inflation, it's 6.7. that's the number i keep hearing.

6% fed funds rate. and it's 6% fed funds rate, that's competition that the stock market can't handle. so these are billionaires. one of the things i know about billionaires, david, is once you're a billionaire, you don't really need to become a millionaire. you only need to get rich once, so you could argue that the billionaires are conservative. but these billionaires are very trading oriented and attuned to the market and are no doubt selling aggressively right now >> they are. >> yeah. >> what billionaires are we talking about? >> billionaires that i talk to >> oh, the ones you talk to. >> you know, see, like, david, let's say i said their names, okay then the next time i call them, you know how that goes, right? >> yeah. >> not well. >> no, it wouldn't go well are they like the billionaires i talk to? are they experts on all things, even if they have no expertise >> these are billionaires who do not even claim that they know anything about anything other than the market. >> i like those kind of billionaires, the ones who know they just got lucky.

>> my billionaires are still in the game carl, how are you billionaires >> your billionaires are still in the game? i got more billionaires than you do way more on a regular basis. i have them texting me every ten minutes. >> i'm thinking about one right now, harold hamm >> wow glad we mentioned it >> yes, harold hamm. >> he's buying the rest of his company. i think this is fascinating. he did not understand the propensity, the new way that people in the oil business were which is, don't drill, baby, don't drill, and i think he's had it he's saying, listen, oil's up huge, i'm going to take advantage of it. so interesting that when i metric moncrief, the leader of, let's not drill, let's run capital, and he has changed the paradigm and hamm wants the other paradigm >> let's tell people mr. hamm controls 83% of the stock of this company. but he wants to own the other

17%, and he's offered $74.28 a share in order to do that. so, that's a tender offer out there right now. and again, the hamm and the hamm family, again, controls about 83% of the outstanding shares. so, he completely controls the company as is, but wants to own every last bit of it >> well, i mean, david, can't someone say that he is giving too low an offer >> unclear whether that price will carry the day offer price, by the way, does include 28 cents in lieu of an anticipated david that would be paid in the third quarter of this year. >> i think that deal has more potential of going through than the albertson's/kroeg deal >> albertson's stock, by the way, has come down almost to the level it had prior to the announcement of the deal why are you dubious? is it antitrust? simple as that or the complexity of the albertson's deal, which included a six-plus dollar dividend being

paid by the way, that dividend, you need to be a domestic fund to actually have that dividend. otherwise, you run into tax issues if you're a foreign-based fund it may be because they wanted to pay cerberus more quickly, get cash into cerberus's hands, jim, but they're going to pay that in november then you've got the spin, obvof course, of stores or the sale if they don't sell them, they would spin them, of stores, they feel they need to divest in order to get through the antitrust. >> justice has written canter, who's the head of antitrust, has written and spoken repeatedly about how, no, we're not going to allow these spinoffs anymore. they fail too quickly. to some degree, referencing the classic safeway deal with albertson's where they spun off a bunch of stores, wasn't capitalized well, company went

bankrupt five months later, the stores reverted to safeway so, now, it is true that rodney mcmullen, the ceo of kroger, has thought about this, and they're going to well capitalize whatever company but if you go read what justice -- remember, not ftc, what justice say is there's just no money to ever do that, because there may be a lack of interest and there may be no scale, and so it fails too often. we're not going to allow it. but david, the interplay between ftc and justice, ftc prevails. >> yes we're going to have a guest in the next hour discuss the antitrust implications of the deal, former ftc commissioner will join us >> can you tell me who >> it's a mystery to everybody >> it's a deep tease, they call it, in television. >> and his name doesn't really matter it's the fact that, you know, of who he is. >> okay. that's good. >> but you're right, this is the key gating issue here is the antitrust implication. >> and they have had a very bad luck starting these new, from scratch, companies

>> in other words, are you starting -- remember, rite aid tried to pursue something and it didn't end well. >> if you think that kroger's jive talking >> no, i don't think they're jive talking i think it's a complex structure that, as i said, involves this dividend payment, which is already excluding a number of investors from getting involved in the deal. you've got the concern overall about antitrust. and it's going to take a long time to get this deal done >> i was reading jonathan canter's speech over the weekend where he said, we're not going to allow -- we're going to block these kinds of deals so, rodney -- they have to work with justice, but it's going ftc. it would be very unusual for the far-left person who runs the ftc to be to the right of kanter on this, so i think -- i'm putting this one in the hard to close file because of how much justice and ftc feel fooled by the creation of the new entity where there's overlap. >> jim, the banks are making a tear here. some semis this morning.

>> well, the semis are a little, you know, look, they're way oversold they would fit into wilson's bounce i would lighten up into that i would not lighten up into the banks. i think the banks are the new leadership, and i even think we have someone, david, who will be a leader of the new sector >> and i think i know who that person is. >> people tune in later, not everybody tunes in -- >> that is not true. everybody starts right away at 9:00 with us >> west coast people are on their peloton -- they're on something. >> if they missed it, you were extremely complimentary of mr. moynihan >> and i didn't even go into the charity -- >> you're acting as though he's a new ceo. he's been ceo of that bank for a really long time >> i think he's the dean now >> we might want to start talking about succession there too. >> well, i mean, is there going to be a next season

o of "succession"? that was the segue i just gave you a pitch that was even fatter than -- >> it was. i don't think we're -- you went there again? >> you've ridiculed me twice in the show, i have to ridicule you right back >> by coming after my mets we end up with philadelphia and the padres really philadelphia and the padres. >> go ahead. i just did it. take the floor fox -- two great companies >> good luck to you. you want to do the faber report? >> i'm sorry are you mad? >> mad about what? >> me. >> no, i'm sad because my mets should be in there and your phillies should be long gone >> i was so out of line, carl. i will never mention -- no, i'm not. it hurts so much i've been there. >> it hurts. >> i know, i know. >> it hurts.

>> played a great game, just so you know >> well, we'll have to get to him after. >> unfortunately, fox is the -- one of the big losers, down 6 of%. >> apple is up 3 morgan stanley, they have liked apple. there's nothing revelatory now they got a new posture they like it during a recession. i mean, you know, i like it. it's like ham and eggs, what is it dr. seuss. i like it when it rains. i like green -- >> if katie huberty would have been as negative as wood ring is >> they changed analysts >> i miss katie huberty tremendously she did a fantastic job and she does a great job now in a larger role >> you want to talk fox news corps? >> >> i'm going to do it. roll tape. >> it's the faber report >> that means i get to talk for a little while in case you are just joining us,

obvious, late friday, number of reports, we eventually got there as well, fox and news corp. are considering getting back together is the headline essentially, this was a result of a letter that was sent from the trust that controls the voting shares in both stocks of course, the murdoch family trust, and the trust is run by one rupert murdoch and a letter was received by both companies saying, hey, i'd like you to consider getting together as you're essentially control shareholder, and please form special committees and do that and that's it. that's kind of where we stand. special committees are being formed because this deal, which would be an all-stock transaction, would require a majority of the minority shareholders to vote in favor and so you have a special committee that will negotiate with each other on both sides, news corp. and fox i'm told lawyers have been hired, but they're still out there looking for who's going to represent them on the banking side and then they will move forward

for negotiation that probably will take, let's call it, i don't know, six weeks, eight weeks. anybody's guess. maybe we end up sometime in december with some sort of potential transaction here why? why now? why are they doing it? well, listen, i mean, when you talk to people close to the situation, they'll simply say to you s you, it's a result of the world we live in right now scale is of the essence. fox is a very much pared down fox. this is not the fox that people may still remember with the studio and the cable networks. it's a sports and news company with a broadcast network and a a number of o&os fox news channel, which is by far the largest single generator of cash flow fox sports and that's what you got. you put it together with news corp., you've got dow jones, owner of the "wall street journal," owner of other key

properties put them together, get more scale in the advertising business, get more scale in terms of presenting news and potentially set yourself up better as well for the future of sports betting and the opportunities that may arise there. that, at least, is part of the argument another may be that, hey, you know, rupert murdoch, 91 years old, in great health still, but he controls this trust upon his death, it goes down to the four oldest children nothing says they would all agree on doing anything. and so, it might be a lot more difficult after he's gone to get anything done, so if he wanted something done, now's the time to do it as you take a look at him with his now former wife, again, i think there's a look at james. there's rupert nice pictures. oh, yeah, with former president trump. so, it would be an all-stock deal, lockland likely to run it. by the way, i'm hearing they might go with the news corp. name for the overall company

once again kind of bring it back to what it was before mr. murdoch split it. some, you know, questions about it this morning, including a note from credit suisse, downgrades fox and says kind of the following. the merger would not resolve fox's need for greater video streaming scale, and the pivot seems a tacit admission of challenges for fox, even if this merger does not ultimately come to fruition, the investment backdrop for fox has been altered. obvious, it was ten years ago that the company announced its intent to split up they all used to be together and by the way, you can make arguments as to perfect of really having print and digital or even though "journal" has done a great job of moving to digital, dow jones has video will it work we'll see. i did sit down with rupert murdoch ten years ago, though, when he announced his plan to split the companies, and this is what he had to say at that time. >> i finally can't do it

i'd considered, you know, a lot of the pros and cons over the years, bankers have been telling me, some colleagues. other colleagues have been saying, no people who have been with the company all their lives. lot of emotion involved. and then sometime ago, couple of months, several weeks ago, i finally reached a conclusion that it was the right thing to do, and the more i go into it and the more i study it, the more enthusiastic i am about it. >> all right, so, that was me sitting down with rupert ten-plus years ago, and he is behind this as well. unclear whether there will be another interview in my future i don't remember the last time we sat down for an on-air interview. don't know the exchange ratio at this point you can see news is responding positively fox, negatively. it's two-thirds, one-third when you look at the market caps respectively, but this is all negotiations yet to come, jim, between the special committees of the two respective companies.

>> media, david, when i did my list of the performers in the third quarter, media and semis, so horrible. >> horrible, yeah. >> what -- >> fox, a lot less horrible than the others fox, only down 20%, versus disney, down 37% paramount, warner brothers, discovery, netflix, down for the year our parent company, down 39% in the ten years since that -- the split, a news corp. and fox have actually performed better, and you can't look at the charts because of the disney deal and the value that was given to fox shareholders, but they performed better than many others. >> that's true >> rupert murdoch knows how to do a deal. >> yes >> and he proved that with disney as well >> did he get the better of the disney -- >> i think he did very well there. >> well, that's a good way -- very polite way to put it. no problems there. >> i mean, it took some stock, but yeah disney stock but he did quite well for his

shareholders at fox. >> that's good very good. >> in that decision. >> now -- what >> no, i just want the rest -- i want the cable stocks to find a way to stop going down >> well, comcast, our parent company, is up 2% today, so we got that going for us, carl. >> that has bounced off 122 from last week. >> i think meta -- i saw the memo and i question -- there's just -- there's a lot of leaking about meta, and it makes me think there's a lot of disgruntled people, but i reiterate, and i have been wrong this year, i've been wrong but i reiterate that i don't think things are as bad -- and i went over the language of that last quarter where the worst is yet to come, that zuckerberg said and i'm interpreting it, perhaps he meant macro, and not his own company. because while i do belief that reels is okay, doing better, maybe taking some share, meta's not only actual omniverse. it's not yet on the web.

that's to come so, i don't want to judge the company as is perceived now. i want to judge the company as it will be perceived six, seven months from now, and i don't think it will be as bad as people think i really don't >> we'll see for the time being, dow's up 580. all stocks are in the green, led by some mega cap tech. let's get to bob pisani. >> this is quite a powerful rally, carl. better than 20 to 1 advancing the declining stocks and only a few s&p stocks that are in the red right now. take a look at the sectors again, you want to look on risk on, risk off, the ones that i look for, risk on. transports cathie wood's ark fund metal stocks, semiconductors all of these are generally doing a little bit better than the market in general, except for the transport, so definitely could call this a risk-on day and jim's right about the big cap tech stocks. nice move up, semiconductors the leadership here. nvidia, micron, the biggest leaders. google is doing well

alphabet, also strong. that's a good risk-on day and it's pleasing to see the banks because they have turned around opinions about earnings season overall. bank of america, up nicely jpmorgan, look -- jpmorgan was 109 on thursday at the close and you can see, 114 here. that's a 4% gain since earnings came out wells fargo, also on the upside. so, a good start to earnings where are we so far? it's early there's 36, 37 companies, so it's hard to make a lot of broad conclusions, but so far, there's a couple things that kind of stand out. so, i'm calling this a contraction, not a collapse in earnings pull up that full screen today, the earnings are definitely lower we're up 3.6% for the third quarter. on july 1st, we're expected to be up 11, so the earnings have come down dramatically and one of the things that's happened is the profits of the energy companies are enormous energy is 121% increase in earnings that is amazing. think about that if you take out energy, earnings for the s&p are actually down.

so, what we have here is the oil profits are concealing substantial cuts in earnings that have already taken place. look at technology we have seen substantial reductions in technology july 1st, tech sector is supposed to be up nearly 6%. today, it's down 4%. that's at 10% swing. that is a very big move in earnings, and you have the same thing going on for the fourth quarter. similar cut. so, where are we so far? i'm calling this a contraction, not a collapse so far. and remember the pain trade, guys the pain trade is, what would cause the greatest discomfort to the greatest number of people? it would be earnings coming in close to expectations and not an imminent earnings apocalypse if they came in close to expectations, you're likely going to see some kind of relief rally similar to what we saw in july and august. so, where are we look, carl, you want to see $36.69 that was the thursday close. that would establish at least some upward momentum, even despite what's going on, what happened on friday, and we are above that level right now >> all right, bob, thank you so

much bob pisani as we go to break, let's take a look at the bond report. busy week for macro. this week alone we'll get industrial production, housing starts, beige book claims, lei, empire was softer. for the time being, 4.42 and the ten-year below 3.94. go. go lights. go big city lights. go spotlights. go stadium lights. emerson software helps clean energy become reliable electricity. go “good night.” go boldly. emerson. - oh, the stock market is doing that fun thing again. news from the future: you're going to live through that about 10 more times! (laughs) no stress.

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jim, what's on "mad" tonight? >> the book is "shut up and keep talking by bob it has surprises about individual stocks and i can't wait to talk to my old friend bob. this book is worth reading for anyone thinking, do i buy a stock or do etf? i think the answer is surprising. >> not to mention the color he gives about working here.

>> yes with art cashin, which is my favorite chapter. >> that's great. we'll see you tonight. "mad money" 6:00 p.m. eastern time. when we come back, morgan stanley, the aforementioned u.s. equity strategy mike wilson on his note today don't go anywhere. - oh, the stock market is doing that fun thing again. news from the future: you're going to live through that about 10 more times! (laughs) no stress. i just discovered yieldstreet.

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good monday morning. welcome to another hour of "squawk on the street. i'm carl quintanilla with david faber live at the new york stock exchange bulls get a head start this week on a number of tailwinds uk policy, yield's down, dollar's down. morgan stanley calling for a rip in the medium term we'll get to all of it we are 30 minutes into the trading session. let's give you a look at some of the movers we're watching. let's start with apple they are getting a boost morgan stanley named it as a top pick citing the company's ability to withstand an economic downturn. couldn't negligence resources. chairman and his family want to acquire the chairs of continental they don't already own. they've offered $74.28 a share

not contingent on any financing. they say they can close before the end of the year. the family owns 83% of continental so is tendering for the 17% they don't own. credit suisse, mentioned this downgrade earlier on my faber report, downgrading fox to neutral to outperform. saying the combination of fox and news corp. is an admission of challenges ahead for fox businesses, such as streaming, of course, and others. meantime, b of a with results before the bell. leslie picker has more on their results. >> good morning. the market likes what they see with regard to earnings shares of bank of america, higher today, pulling up large banking peers. they notched a beat on the top and bottom line. on the analyst call this morning, chairman and ceo brian moynihan talked about the strength of the u.s. consumer with slower spending level and

higher deposit amounts >> on customer liquidity, the level of customer liquidity remains strong high relative to a year ago. these bounces still multiples of the pre-pandemic periods and largely unchanged at the elevated amounts for the month of september these deposit levels suggest continued capacity at extended levels. >> they showed a chart in their earnings presentation, just the multiples regardless of income level that they're seeing with regard to deposits relative to pre-pandemic levels. l delinquents are low, more than half the level they were in the third quart of 2019. again, before the pandemic bank of america did build reserves during the loan quarter due to loan growth and weaker macro outlook. net interest income, a

profitability metric that's been boosted by higher interest rates because of more lucrative loan-making was up 24% during the quarter. cfo said he believes the firm will continue to grow nii next year due to a lag on the impact of rising rates, continued growth on the loan side and turnover on the balance sheets so, that's pretty critical because a lot of investors are wondering when this big boost to nii, when that party ends. basically bank of america does not see that ending for another few quarters, guys. >> interesting good setup, thank you. we'll stick with the banks and bring in ubs's eric najarian has a buy rating thank you for the time good morning. >> good morning. as leslie was just saying, is the runway on net interest income long enough to get long some of these names? >> look, at the end of the day the bank stocks have been the epicenter of recession worries

what they're essentially showing, and i'll get to the nii question in a second, is their resilience and preparedness nor a coming recession so, to answer your question, carl, i think if you combine loan growth with continued deposit repricing that is lagging the increase in loan pricing. i think you'll get at least another three-quarters of runway in terms of net interest income growth now growth will naturally slow if the fed stops raising rates as the fed funds futures implies. yes, i still see another three-quarters of pretty decent runway for nii for the banks >> you got buys on most of your universe, citi and ubs are the exceptions here on neutral what do you see that leads you to not give them a buy as well >> with citigroup, all of their issues are clearly reflected in their super discounted valuation, but we just think that it's not the time to go

long a stock that still is in the throes of regulatory remediation. we think they're behind wells fargo, for example, and considered more liability-sensitive than their peers, which means their liabilities reprice faster than their assets not a great thing in climbing interest rate environment. for usb, it's simple they're a great company but we don't like to be long a stock in its first year of merger integration and conversion >> back to bank of america for a moment i'm sort of curious, get a little deeper into the report. was there anything that concerned you? is it overall -- how would you grade it >> that was pretty much an a-plus quarter i expected an a-minus/a quarter and i would say it was an a-plus quarter. a couple of things happened and i want to drive this point home.

bank of america increased its net income to $19 billion, had good loan growth and outperformed sales expectations while growing capital. that is a very, very hard trifecta to hit given banks earn revenue off their balance sheet, right? so, their ability to grow capital essentially reduced risk by mitigating their risk-weighted assets and still hitting -- or outperforming those revenue bands, i think that's a stellar performance like you guys mentioned earlier, it also outperformed in terms of both their expense print in the third quarter and what they're looking for for the rest of the year and what they were alluding to for 2023. >> how would you compare it then to jpmorgan as we were doing with jim cramer at the top of our first hour which would you rather own at this point >> so, look, jpmorgan is jpmorgan, right? they have been for a decade the

best in class in terms of revenue generation and really outperforming their peers. i do think it is time for b of a to shine at this point and i do think while both banks and both stocks are well positioned in a rising rate environment, and certainly well prepared for recession, i do think b of a will take the mantel from jpmorgan as potentially the sector leader. and i think the simple reason i think that is b of a has to hold less capital than jpmorgan therefore, it's easier for them to earn a higher roe on a comparable basis now versus jpmorgan that doesn't mean jpmorgan isn't a good stock from here i just think the rate of change and the perception of b of a is going to change and they're going to take that mantel as the sector leader. >> finally, there's been a lot of macro analysis of what we come to call excess saving, covid saving, and looking at the

runoff we recently got revised data one point of view shows that rolls off, tires out by the middle of next year. is it reasonable to expect by next summer we start to talk about a really troubled consumer base or not? >> so, there's a difference between rolling off of excess liquidity in a troubled consumer base i think we all heard jamie dimon say on the call on friday for jpmorgan that he expects excess consumer liquidity to drain up by the middle of next year, which, carl, hits your timing point. that being said, what's going to happen with the unemployment rate, right? obviously the consumer is still coming in with pretty decent liquidity and they're very -- there's very variable ranges of prediction in terms of where unemployment climbs to next year i think at the end of the day, though, as it pertains to bank stocks, the banks are very prepared for the unemployment scenario to deteriorate. in fact, the reserves today,

let's talk about b of a and jpmorgan, is contemplating a 5% to 5.5% unemployment rate for 2023, which means the impact to earnings, if we do climb in terms of the unemployment rate is going to need a much more minimal than what the stocks are pricing in this year. >> pretty fascinating. great color on the macro and some of these individual names thanks so much see you soon >> thank you bye. let's turn back to the broader market and get to our next guest because he may be responsible for some of that move he sees the s&p testing a serious floor of support at its 200-week moving average, which he says could lead to a technical recovery, at least in the short term joining us is morgan stanley's chief u.s. equities strategist and chief investment officer mike wilson. good to have you, particularly on a morning like this one where nour call may be responsible for at least part of this rally. but looking deeper into your

piece from this morning, i am stopped when you say crystal clear, a tradeable bear market rally began last thursday. however, we also believe the 200-week-moving average will eventually give way, like it typically does when earnings forecasts fall by more than 20%. you're still not long-term bullish? >> well, by the way, thank you for having me. you know, we're long-term bullish but that is in the eye of the beholder. one thing i'll start out by saying is we've been more bearish than most this whole year we're starting to get to a point where our intermediate term view is probably more constructive. let me spend a minute on that and i'll explain some of the reason for this call we do want think this is a 1970s, we do not think this is a cost/pull inflation. it's demand/pull inflation we called for that in 2020 it played out in a positive play

initially with earnings being the beneficiary of that. stocks also benefiting from that now we're in a bust. that bust has not fully played out. yes, we think the earnings recession and economic recession at some point will play through. that's not fully priced. however, the room has gotten crowded. we don't tend to krad against our core view frequently but we thought this was a good chance to do that we've had a bearish year all year we think the 200-week moving average is an important technical level people don't talk about we felt that would be touched maybe in june. we didn't get there, which is one of the reasons we didn't turn bullish for that rally, which turned out to be powerful. this is the same idea. the bear market is not over, but you can have major moves off these technical support levels we've been in technical versus fundamentals we can't get too dogmatic in our views. we've been bearish all year. it's time for some relief. >> but again, to make it clear,

your view of overall earnings and the resultant discount or perhaps i should say the discount as a result of that remains, correct >> that's right. we haven't seen the things we need to see to call the end to this bear market, which is fundamentally driven we overheated. the fed reacted to that. financial conditions are tightening and now we'll feel the effects on growth. mostly next year the market is discounted, i would say, almost 100% of what the fed has done at this point and discounted very little of the earnings impact that's going to be felt next year in the middle of that transition you can have these periods where stocks can drain hey, maybe we aren't going to get that growth effect and rates start coming down for text cal reasons and fundamental reasons. the uk situation which was probably responsible for the last 50 basis points of this move is probably turning the

other direction. you have rate support potentially if you get into stock prices in the short term before it becomes crystal clear that our call for earnings plays out. that may take until the january/february reporting season. >> your point is interesting lnz put out a chart of the view. your house view of cpe returning to six-month annualized basis. will we have fund funds above inflation and how do you keep the bulls from rocketing higher than your call says? >> that's right, carl. i think the market will feel pretty good about that when it's happening. let's make no mistake about it last week's inflationary numbers are still way too high that decline they are looking for is not going to happen in the next three months. however, markets are forward thinking like they are in the equity market. we think that could start to get into the rates market. we're not calling for a rates to

fall down. but maybe they just stop going up that could be enough for, once again, equity markets to get excited. unfortunately, i don't think we can avoid this earnings recession that's coming next year because at this point the fed's already done enough to create that. in addition to the natural ebbing and flowing of the earning cycle on its own >> your point about earnings i wondered -- i think it was a note from last week, just talking about corporate america's -- i think it was goldman who said, usually finds a way to miraculously defend margins, which arguably skews in the favor of the bulls do you think there's the possibility that it cfos surprise us with their ability to navigate this environment >> i mean, some will look, the reason why the s&p 500 is such a, you know, unique asset class is because it consists of extremely, you know, well-run, high-quality, efficient companies. and, you know, one of the things

that -- one of the positive features of u.s. equity markets versus an international market historically is that companies have done a terrific job over the last 30 years cutting costs where they need to i think they'll be able to do it again this time. the problem is this cycle has gone so fast that there hasn't been time to react one of the reasons the market went up so much last year, earnings recovered so much is because it recovered so quickly, the v-shaped recovery we called for. companies didn't have time to add costs. so, it all fell to the bottom line now we're just on the other side of that, you know, relationship. costs are now increasing fashion and revenues it will take probably two, three, four quarters for companies to get around on that. we're optimistic they will ultimately it's a timing question so, we have high conviction that our call on earnings, which is mostly margin driven, to your point, will play out, unfortunately, on the downside for the next two or three quarters >> mike, anybody who has a bond portfolio or held for any time has also realized, you can lose

a lot of money in that market as well i noted in your note you talk about the bond market looked at the end of last year like it was the most mispriced market in the world. and now you say you think the bond market is making the same mistake this time around explain what you mean. >> we talked about this in the last couple of notes we wrote. the markets tend to be very addictive to what i call higher power of guidance. in the bond market case it's the federal reserve. in stock market it's company management teams at the end of last year, as you recall, the fed was guiding towards basically two rate hikes in 2022. that seemed, you know, really off base to us at the time but the bond market took it. it was 160 on ten-year last year which seemed totally out of bounds now, of course, the fed is talking about rate hikes forever. and the bond market is taking that, too, that hook i don't think it's nearly as mispriced now in that direction as it was last year and the other way, but i do think we've

priced a lot that's why a fire and ice narrative, which we've been using all year s so apropos. the fire is probably cooling, but, unfortunately, it will end up with bigger slowdown. the bigger risk is stocks, because the bigger risk is growth deflation. >> finally, to end on that note, to the extent pes, while dropped 30% this year, don't fully reflect the earnings picture you're talking about where in your estimation are we going to end in terms of the multiple >> yeah, that's always a bit of an art more than a science, but we think around 13 times trough multiple around 13 times. when we're about a third of the way done with the earnings cut we think we're only 10% of the way there. by the way, it won't happen all at once for every stock at the same time. 13 times is a reasonable multiple that will account for the higher rates we're in we think rates may be lower at that point then you get a reasonable equity

risk premium the reason we're saying the market hasn't discounted the slowdown because the premium is 270 basis points, which is way below average, at the time when risk is elevated that has to resolve itself we think it will probably in the next three, four months could be as early as next month. we think by the time you get through the first quarter earnings season, we'll be in a much better position where risk premium is more attractive and make a more sustainable bull market call. >> one last one, mike. everyone's talking about your track record this year i went back and pulled your note from, i think it was may 2nd, where you said minimum downside to 3800 in the near term that was a great call. you said possibly as low as 3460, then the 200-week moving average. does that number remain your downside case? >> well, i mean, that number is written exactly as you said it at that time the 200-week moving average was actually lower than where it is today. we didn't actually get there

so, you know, that was a classic bear market trap where i got trapped, and we didn't reverse for that rally this time we did get the 200-week we're not going to get trapped again this time. i want to make it clear, carl, we don't think the 200-week moving average will hold if we're right about the earnings degradation we see and the potential for a recession still has to get priced in here. i want to leave you on a positive note. we think this is a cyclical bear market it will be severe if we get to those levels investors need to remember that we think we're in a boom/bust environment. we had a boom and we're in the middle of a bust right now there's another boom on the other side don't be premature and try to trade that ahead of time we'll let people know when we think it is. maybe it's now or we think it's coming later. >> all right mike, thank you. appreciate your time >> thank you, guys as we head to a break right

here, let's give you a road map for the rest of the hour that includes chinese president xi jinping delivering a two-hour speech over the weekend, warning of dangerous storms facing his country. we'll get a live report from beijing. we'll talk regulatory concerns for the supermarket merger between kroger and albertsons and the uk u-turn, the new finance minister, jeremy hunt, scrapping almost all of those planned tax cuts in a bid to appease the markets. dow's holding on to 600 points t upside. "squawk on the street" is back in a moment. through that about 10 more times! (laughs) no stress. i just discovered yieldstreet. they vet investments that don't ride the stock market rollercoaster. - [narrator] yieldstreet: private market investing.

- oh, the stock market is doing that fun thing again. news from the future: you're going to live through that about 10 more times! (laughs) no stress. i just discovered yieldstreet. they vet investments that don't ride the stock market rollercoaster. - [narrator] yieldstreet: private market investing.

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china's president xi jinping warning of dangerous storms, in his words, of global challenges. eunice yoon joining us. >> reporter: president xi said despite the international storms, china will realize what he described as its central task to make china great again. in his two-hour speech at the opening ceremony for the congress on sunday, he said that the country's natural rejuvenation would be underpinned by chinese style modernization for the at least the next five years. that would continue to prioritize national security by that president xi means self-reliance, tech supremacy and military power that is, quote, normalized. president xi also suggested that growth is going to take a backseat with the main

principles being common prosperity, so that is narrowing the wealth gap with what he described as a standardizing mechanism of wealth accumulation, high-quality development, which many investors are taking to mean green investment is going to go up, and a continuation of zero covid. he fiercely defended that policy, saying that it protects people's lives and also the economy. of course, that's despite a lot of evidence and anecdotes to the contrary now, hsbc, as well as other research firms, say they believe policy support is going to be under way for a lot of these tech firms as well as global s.t.e.m. talent, despite a concern within it is tech industry here about president biden's export controls, potentially undercutting the chip ambitions of china. the investors, though, here in the stock market also embraced that line of thinking, especially buying up education

stocks that have a lot of work in vocational training as well as chip stocks now, one other development that was quite interesting is that amid all of the celebrations for the congress, the q3 gdp data as well as september economic data was pulled unexpectedly from the government schedule. they were set for tuesday. this also comes after, david, trade data was delayed on friday no word on why but expectation is no one wants to embarrass president xi. >> eunice, thank you we are going to await that gdp data, later than typical eunice yoon in beijing. let's turn to eamon javers, looking at a rare warning from u.s. intelligence that a threat that beijing represents for american business. >> that's right. with that news out of beijing over the weekend, leading intelligence officials and

business analysts are focused on the threat now, the possibility of a chinese invasion of taiwan, given what xi jinping said about the island over the weekend and what it means for the u.s. economy. i spoke to michael orlando, top counterintelligence official in the office of national intelligence he gave us a rare warning from the u.s. intelligence community directly to corporate america. >> i think the one issue that causes me concern and others is semiconductors, given how much is produced there and how hard it is to reshore that, the amount of money it takes and the time it takes. that's why i think it's important we start thinking about those contingency plans now because it would be tough for both economies >> so i asked him if companies should start canceling their contracts in taiwan. >> contracts in taiwan, but working with ourallies to figure out where else we can go in case we lose that capacity. again, it goes back to basic risk management which is you have to diversify. if you have too many eggs in one

basket, that's probably not good. >> cyber security dmitry says he sees a much more immediate impact. >> if there's a war over taiwan, that means the end of all business in china. american ceos need to start planning for that possibility. i think it's not a certainty but the likelihood is very high. those making ten-year plans in china may have a rude awake being. >> it's time for companies to think through their chinese divestiture strategies right now because there's the possibility of an event that would lead to a shock to the system. >> thank you appreciate the detail on the concerning story. meantime as we go to break, arka energy, bp will buy the company, $26 a share shares up more than 52% as the dow is hanging on 550 points we're back in two.

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it's been a rough few weeks for software names, despite today's move higher. the igv is down 18% just over the last two months of trading top three holdings in that etf, microsoft, salesforce and adobe have all underperformed the s&p during that same period. another name in the group to watch is splunk. those shares are up 5.7% sources close to the situation tell me starboard value has taken a large stake in the company. we'll see what, if anything, they are going to push for of course, it's an activist fund as you see the shares are responding positively to a report originally in "the wall street journal." by the way, tomorrow morning, don't miss it, exclusive with starboard's jeff smith that will be live from this year's active/passive investment summit. meantime, let's get a news update with contessa brewer. >> hi, carl. we're getting reports of a new wave of drone attacks on ukraine today. russia is increasing the use of

the iranian-made weapons five of the so-called kamikaze drones hit the city, killing at least four people when they hit a residential building missile and drone attacks on civilian targets have spiked in the last few weeks because russia is retaliating for the bridge explosion in crimea. the justice department is requesting a six-month sentence for former trump adviser steve bannon a jury found bannon guilty in july of two counts of contempt after he ignored subpoenas from the house january 6th committee. prosecutors insist bannon deserves severe punishment for ignoring the committee bannon is scheduled to be sentenced friday. all seven members of the k-pop group bts are being called up for military service in their home dunt. under south korean law all able-bodied men are expected to serve 18 to 21 months in the military the music label says, they're hoping they can get back together as a group again about 2025, after they have gone ahead

and fulfilled their service commitment so, pop stars turn military men. carl. >> contessa, thanks. we're going to stay on top of this market rally this morning. dow back above 30k s&p with a gain of 2.72 periods. nasdaq up 3% ckn o.p sectors are green. ba itw this thing, it's making me get an ice bath again. what do you mean? these straps are mind-blowing! they collect hundreds of data points like hrv and rem sleep, so you know all you need for recovery. and you are? i'm an investor...in invesco qqq, a fund that gives me access to... nasdaq 100 innovations like... wearable training optimization tech. uh, how long are you... i'm done. i'm okay. - oh, the stock market is doing that fun thing again. news from the future: you're going to live through that

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welcome back to "squawk on the street." a little past an hour into trading. mondays are starting the market on a strong note you see the dow up 2% on broadbased gains all sectors in the s&p are in the green. joining us on set is adam packer it's great to have you back, adam. >> thanks for having me. >> before we get to today, last week's roller coaster ride, this intraday, these reversals, 2%, 3%, 5% in a single day what do you think that's telling

us >> i was reared to believe that volatility wasn't great, right i thought maybe we'll get 5%, 6% per year returns from the s&p 500 if i hold it for the next ten years and don't do anything. now i'm getting half a year's returns in 30 minutes. i'm losing half a year so generally that volatility means something uncertain is going on and isn't necessarily a good leading indicator of the all-clear signal sure, you can get positioning and sentiment rallies like we're having here, but i don't think it means rainbows and lollipops and unicorns are headed our way. >> you think either thursday or today, one of these rally days is pivotal >> you know, i just -- i've been hearing a lot of convoluted calls from people on cnbc and clients. hey, i think there's a long-term capital management coming, but i still want to buy equities before that. >> isn't that long-term capital management. >> on your channel -

>> i guess with the stuff in the uk, there are concerns. >> these are people incredibly successful i'm just saying, it just points out there's tension. like we know something is going on in the bond market with financial conditions, but nasdaq is down 33%, maybe i'll get my shot if i have a long-term investment mentality my point is, i think there's a lot of tension and uncertainty i think things are clear earnings are coming way down inventory is kpi for this quarter and it's a bigger problem than people think. and i've been writing a lot and talking to clients about, could this not be a v-shaped thing like we had in -- could it be a slow decline from a high nominal gdp where maybe 2024 earnings are not above 2023 we're all underwriting, yeah, things are bad but it will get better maybe it will be a slow bleed from hey high nominal bleed -- >> that sounds horrible. nobody wants hat. >> i don't think it will be great. so, i'm kind of entertaining, what i'm working on right now,

what clients are asking me, what can i own that i believe 2023 numbers will really be above where they were in '19 adjust for rates, adjust for the dmi, adjust for oil. is amazon going to earn a lot more next year yeah revenue probably 2x in 2023 what it was in '19. maybe i can find some things just taking the pig all the way through the snake or however you want to phrase what happened here so, i think you can find long ideas. in general, i don't think it's an all-clear signal in in way to say equities look great. >> we had mike wilson on - >> he replaced me at morgan stanley. >> not doing nearly as good a job as you did. >> i love mike we have a different view of the world. you'll never hear me use the phrase moving average on your channel. >> why not >> because we do research and it's nerdy, right? mike's got a huge network at the biggest firm, financial adviser

network. we're quant geeks. you saw our note, we're writing about available alpha and why it's tough stock selection because a lot of people i talk to don't do energy and utility and insurance because they don't have the expertise in those areas. and what's left over is tough for them to pick long-term spreads. >> understood. but he's talking about a 13 multiple. >> i taught him everything he knows. just not very much of what i know he'll definitely be texting me in the next five minutes on that i hear you i think, you know, he's probably got -- i don't think cpi is going to go down as fast as their house view does. i think it's going to be stup born because of the owner equivalent portion of rent my guess is the fed stays super hawkish. maybe inflation has peaked maybe that's the case. one of the things you have to think about is we all want the price to earnings ratio for the ma, to go up we need that for equities to go up

is that going to happen the same time earnings go down and multiplying a pe and not off to the races 4200 and if you really parse through, i was listening upstairs, if you really parse through, if you think the market is going to 13 times earnings and you think earnings is going to be 220 or so, the market's way lower the price target is 2700 or something like that. i don't know how to think about the short-term call on the technicals, which is not really my expertise i defer to guys like mike and others thinking through where we're going to be q1, q2 of 2023, market anticipatory, i think we're going to be lower because earnings will be impaired. you won't see a big recovery i know for me, and my clients, hey, you know what, bond yields look attractive. i buy the two-year yield in my pa that looks better to me than equities for the first time in, i don't know, 20 years >> we talked to mike about potential degradation in

earnings, but also the notion that maybe that's also slower than we think. >> that's what i think i think it's going to decline more slowly but not recover as rapidly. the bathtub recovery rather than v-shape. we haven't seen this nominal gdp in our lifetime. maybe it's not a collapse and then recovery. maybe it's sort of a slow bleed. the s&p 500 is a superior set of assets the companies can protect margins for a couple of reasons. if you have non-u.s. employees, there has to be an absenteeism as nomal gdp slows, maybe it's -- i think you'll see a slower bleed in earnings the street's at 240 in s&p 500 earnings next year when people look at the s&p at this price, that's what they're dividing by to get the ratio people think maybe the real number is 220. maybe it's 215, 220 and then - >> the world you're describing is not interesting at all and a lot of people will lose interest

in equities entirely. >> it's not the god-given right we've had a 20-year equity rally. >> but it has to be a test pattern. >> but you have to asset allocate i think it's really good for people who pick stocks well because they'll finally get dislocations to say, here's what i know i know things will have steadier and more stable profits. health care services, we need them energy and metals, the world is short those things and demand will exceed supply for the next five, six years. when we look back, sectors were up 20, 30% more than others and that's mostly what i do for a living the moving average and -- i have no clue, dude. you know that's not my thing. >> we do and you are a great strategist, too, don't worry. >> once you stop getting better at something, you have to do something else >> i better leave then. >> well, you know, i'm not saying that, man come on. i'm not taking shots i think right now you can look next year and say, where are estimates more achievable and

where are they less achievable health care services is an area i love that kind of stuff energy and metals are going to be up a ton next year. you can find ways to outperform. you don't have to worry if the market is down 5 to 15 over the next 1 months if you can find stuff up 15, 20. that's where i do for a living. >> you frame it well in your recent note about destroyed alpha over the last several years. it's great to have you in. >> thanks for having me. >> enjoy at least this green day. >> we are. >> thanks for having me. still to come, we'll speak with a former ftc chair about the regulatory concerns over that krogealrtnsotti dealso penal

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about 10 more times! (laughs) no stress. i just discovered yieldstreet. they vet investments that don't ride the stock market rollercoaster. - [narrator] yieldstreet: private market investing. kroger's acquisition of albertsons likely to see significant regulatory pushback. ceo rodney mcmullen addressed the issue head on on "closing bell" friday >> we've been working with our

outside counsel from an ftc standpoint for a while obviously, we'll sit down and be very cooperative with the ftc. it really gets back to the conversation and comments i made before we actually believe this will increase competition if you look at the synergies that the combined companies will create, we will invest $500 million in lower prices for customers. especially in this inflationary environment, that's a huge help. >> joining us, former ftc chairman, william kavasic and professor at george washington school of law. what do you think, do they have a good case to make in front of the ftc? >> i think they have really good arguments to make and they seem well prepared to make them they understand completely the environment they're working in they understand that they'll probably have to put together a package of divestitures to overcome concerns in some markets. it has sounded in some comments

that they're also committed not to use labor redundancies as a cost-savings mechanism they are putting forward an investment plan that should be attractive as well they have good things going for them they seem to be patient here, too. that is, they are giving themselves a lot of time before their anticipated closing date well over a year they do face some headwinds, though one is a general view on the part of the antitrust agencies that in so many areas, including grocery retailing, the anti-trust agencies were too lax in the past. the ftc will review this and the ftc has made comments recently expressing concerns about rising prices in the entire food chain, including retailing. so they begin with an attitude of skepticism. the political fan base that supports the ftc's work, individuals such as senator warren, have demanded that the ftc take a close look at this one. i suspect the one item that will

be toughest is the skepticism about die vestitures as useful settle many tools. >> we know the ftc has already expressed some skepticism you just alluded to in terms of whether you can actually divest enough that it makes for an actual competitor in the field what is your view in terms of how they're going to approach this and what it's going to potentially require, therefore, of whatever divestitures come from this union? >> they have to do two things. the first is to identify a buyer that will genuinely recreate the competitive force that might be lost to the merger you have to find a buyer that's committed, dedicated, experienced to be effective. the second is to put together the critical assets that will permit the purchaser to operate effectively in whatever market is identified. and it's in these two areas that the views of the parties about what would be acceptable and the view about -- of the ftc about

what might be sufficient will diverge. you can easily imagine the ftc looking at the parties and saying, we want you to put more assets into the cart and we want greater scrutiny of who the buyer is going to be part of this comes from past experience with grocery retailing with grocery retailing deals where the ftc has been burned in transactions where the buyer wasn't really adequate, the assets divested weren't sufficient, so i suspect the big point of debate and discussion will be the adequacy of the buyer and the adequacy of the assets that are offered. >> although back then, i mean, the backdrop of inflation was so different, i wonder how the commission is thinking about where the line is between a retail price of a grocery item that is higher than it should be, versus where the macro determines it should be, because inflation has been so troublesome so quickly >> and there's an awareness as well that the forces that are shaping food prices go all the

way up stream through the supply chain. i think there is at the same time, a view that if you have truly robust rivalry, including the thin margins, that that's going to serve an important disciplinary function. but here again, the openness that the companies have just expressed about having a candid, ongoing conversation with the agency gives them an opportunity to do the education that they think will be useful in framing the transaction in a positive way. >> yeah, william, real quick, how long do you think the review takes here >> you get, of course, what antitrust people know is the second request that's the fairly elaborate request for more information that will cover the geographic regions in which the companies compete, will identify other competitors that have emerged and become significant, and the likely arguments about efficiency affects investment,

labor commitments. i would say that if you look at a transaction of this size and complexity, the review easily goes into the middle of next year >> okay. william, really appreciate it, thank you. >> you're most welcome, thanks for having me on >> big show coming up this morning on tech check, you're not going to want to miss our interview with l.a. clippers owner and former microsoft chief steve ballmer. it's called clipper vision, get his thoughts on investg inin tech right now that's all coming up at the top of the hour. he'd crunched numbers day and night. that's it. to maximize profitability. morning. i have quarterly numbers that are beautiful. and forecast revenue from every corner of your organization. is that important? or you could use workday. the finance hr and planning system that helps cfos make better decisions faster. for a solve problems like a genius world. workday. for a changing world.

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welcome back to "squawk on the street," i'm dominic chu stocks are starting on a high note, every sector in the green and up more than a percent consumer discretionary stocks are among the leader after lagging last week, and within that sector, we're seeing some gains in amazon and also tesla two of the biggest waitings there. by the way, tesla was trading at a fresh 52-week low as recently as this past friday. watch travel and leisure names, caesar's, expedia and carnival, all firmly in positive territory. keep it right here "squawk on the street" will be

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powering possibilities. - oh, the stock market is doing that fun thing again. news from the future: you're going to live through that about 10 more times! (laughs) no stress. i just discovered yieldstreet. they vet investments that don't ride the stock market rollercoaster. - [narrator] yieldstreet: private market investing. uk finance minister jeremy

hunt scrapping tax plans in a bid to appease the market. >> reporter: a good afternoon, certainly things are moving drastically inside the house of commons. members of parliament are questioning and aggressively putting forward their thoughts regarding the u-turn then and the cul-de-sac that has been put forward to buy the finance minister, jeremy hunt, in which he reversed almost all of the measures put forward in the mini budget by the former finance minister on september 23rd and liz truss. the prime minister, however, not in parliament at present, saying that she needed to attend to urgent business, and instead, then, the leader of the house of commons actually taking over the questioning there. big question marks around the stability, the economic stability that is needed at a time like this and many questions being asked then, by the members of parliament as we speak

>> thank you we've got a broad market rally that we have discussed over the last couple of hours the nasdaq up some 2.8%. that's going to do it for us here on "squawk on the street" "tech check" starts now. >> good monday morning, welcome to "tech check," i'm carl quintanilla with deirdre bosa, the first week of tech earnings is now the time to get bullish finally? we're going to talk about it plus, developers, developers, developers steve ballmer out with a new bet on direct-to-consumer. we're going to talk with the man himself in a moment. and fox slumps, today's tech movers all hour. >> nasdaq of course seeing a big reboundthis morning as the volatility continues there's only a few names in the red on the nasdaq 100.