but of course, depending on what happens between now and then and you know, we want to leave a door open to change our views. >> that's more than 20% from here, but thomas, appreciate your time today. we hope to have you back soon, and i'm sorry we had those technical difficulties getting the shot up sooner thank you for your time. >> thank you very much thank you for having me. >> just under 20%. i don't know >> 700 to 3,000. 600 would be 20. >> right >> no, no, i did that totally wrong. >> i don't think it's quite 20%. make sure you join us tomorrow "squawk on the street" is on the street >> much less than 20 good wednesday morning, welcome to "squawk on the street," i'm carl quintanilla with jim cramer and david faber. futures losing a little steam as some decent earnings results clash with a new cycle high in

bond yeeields, ten-year, 3.11. our road map begins with corporate earnings netflix crushes expectations united, p&g, also with strong results. >> plus, too soon for a fed pause. bostic says to expect short-term pain kashkari admits they're, quote, not even sure that the problems are getting worse. and jeff bezos delivering an economic warning of his own, saying batten down the hatches >> let's begin, though, with netflix today, adding 2.4 million subs after two straight quarterly declines. reed hastings says he's feeling positive about the road ahead. >> well, thank god we're done with shrinking quarters. that's a big feeling of, we're back to the positivity you know, obviously, this quarter in the guidance for q4, are reasonable, not fantastic, but reasonable and then we got to pick up the momentum everything the company's focused on, whether that's on the content side, on marketing,

lowering prices to the ad-supported, the paid sharing, the thoughtful approach we're doing there, lines us up for a good next year we still got fx. that's a huge hit, you know, as we've explained, so that's not going to go away but other than that, all the stars are lining up very well for us >> jim, got a couple big upgrades today, as the stock, 60% off the lows >> it was such a joyous call, like the old days. people should watch "gray man. "emily," david, they're talking about this -- "the extraordinary attorney woo." it was like the old days, what did you like best? you know what they like best of all is "bwa. >> bwa

>> basic with ads. >> thank you >> by the first -- by the second mention, it was bwa. so, there was everything in here that reminded me, david, it was a return to the halcyon days where there's so much great programming. >> we talked the last quarter, and we talked about how management seemed a bit lost >> yeah, lost. >> sort of had not quite -- weren't quite sure about the changes in the business. very different this quarter. you know, talked to a couple of shareholders to say, listen, if you believe in this management team, it just took them some time >> maybe it was covid. we don't know what happened. >> maybe and ad-supported, we've mentioned many times, is going to be a very important component of revenues for this company you know, over the last, i think, five years, they have had 30 million customers churn off >> i know. >> so there's an expectation that if you offer them this lower price tier with five-minute ad load an hour, not bad compared to your typical network, they're going to come back or they're not going to leave. and -- because they can go down to that lower level. not to mention the advertisers certainly like it, and you can

really figure out who's watching you can get perfect information, and i'm hearing they're expecting cpms of about 65 bucks. so the return on ad could be as strong as without ads, and it's a very important lever for them. >> they called out youtube, apple, amazon, and disney, talked about who's going to get the sunday ticket. you know, carl, one of the things i used to love about them is they would say, the more the merrier. then they dropped the more the merrier. it's back. now it's like, we like this, we like that. i was waiting for them to say, have you caught anything on that apple plus it was so the old way. it was reminiscent of the halcyon days of netflix. >> pretty nice piece in the "hollywood reporter" this morning about how they're going to open up some of their data to ad partners, no longer the black box as they engage a little bit more with nielsen. but more interesting was their commentary about the streaming industry at large and their view going to lose $10 billion this

year while they make 5 to 6 in operating profits. >> wasn't that something they literally are just saying, look, we're the winner they gave a nod to the other guys but this was maybe the most impressive call from them. at one point, they just developed. listen, we're not going to use the same metrics like, hey, okay. >> they're going to stop giving us subscribers, right? nonpaid memberships. that's it. we're not going to get that anymore. we are going to get a lot more or we're going to get, in terms of guidance on revenue, operating income, operating margins, net income, all those fully diluted shares, they'll happily tell us but they're not going to focus you any longer on paid membership. >> to get you back to 630 where it was in november >> that's for you to answer. >> i will say -- >> i was going to go back to salesforce what was it, 300 gave you that two for one split but they forgot to give you the shares >> i would point out, if you go back, remember, it was the 20th of april when this thing dropped

dramatically on that first earnings print that was well worse than anticipated >> that was the moment they didn't have anything >> bill ackman came out and said, i'm going to take a $400 million loss and leave. that was below where we are now. >> it did trade to 165 >> it did. it traded well below even there. take a look at one year. that's what i'm talking about. >> it has to do with what i used to miss about the market before the november complete collapse, which is that there's a little more high five now, it's just everything's bad. yesterday, i was finding there was a list of 30 software companies that came out, and every one of them looked like they had split two-for-one and all this enterprise software that sells at -- they come up with new metrics all the time, right? happy customers versus unhappy customers. rule of 780. i mean, come on. you're losing money. just say it. nobody wants you, data dog frog.

the whole thing's like the philadelphia zoo >> trash tech, one of the firms called it. trash tech but there was a note this morning saying, given that netflix was pretty well owned going into the print, this is what jpmorgan's point was, maybe it means good things for snap and google >> did you see that? how about the -- i love this citi came out with a -- david, i know you love these just like you love the evidence lab. >> nothing more. >> 30-day positive catalyst watch for snap >> 30-day positive catalyst watch? >> positive catalyst watch >> what happens after the 30 days >> what do you think i am, cinderella what the heck do i know? there's improving online advertising environment. now, not a single person has indicated that to me that's why i think this is very much of a catalyst watch >> 30 days it's like they're on watch >> yes >> like john snow was on watch down at the -- looking for the -- yeah.

>> on the watch, remember? the wall >> we'll talk p&g in a minute, but john mueller on "squawk" doesn't sound like they're going to lighten up on advertising >> i thought that was very interesting that they were being mueller was being probed, where the ad dollars go. i thought what was most important about procter is they said, to heck with our competitors. they can do whatever the heck they want. made me feel proud >> strong dollar affecting p&g also brought up many times by netflix as well. >> going to be a continuing boring theme >> adobe's guidance yesterday, the outlook for next year would be four points higher if not for currency >> david was involved with one yesterday that's much more heavy currency than people realize salesforce >> yeah. >> that is -- as mark said in his last quarter, marc benioff, he said, boy, i did well in japan, but the dollar did better that was kind of like --

>> i got it. >> it was like a friar's roast of salesforce. you did a little bit of a friar's roast of salesforce yesterday with jeff smith. >> i don't -- i mean, i think he was trying to be constructive. >> i think he was very constructive >> he was focusing, obviously, as you know, on operating margins, saying, listen, this is a company that's number one or two in everything, and yet when it comes to their margins, they are not even close >> what i thought was interesting about, when you speak to marc about the -- what the speech was like, same thing. higher stock price >> they want a higher stock price. what's going on there that there isn't enough falling to the bottom line, at least in the opinion of -- >> the position, i didn't think the -- the $50 billion in acquisitions and starboard barely mentioned >> that's funny, because i mentioned this yesterday in a later report, and speaking of another activist, who i won't name, who's fairly well known,

they had considered salesforce as well, this person told me, but it was much more from a capital allocation standpoint, in part focused on the acquisitions now, they chose not to engage, because benihof is benihof and you're not going to win. >> also the best vc. one of the things that he did with that last acquisition of slack is you're just beginning to integrate slack with everybody so you've got to keep spending >> was slack a good deal did they overpay >> well, marc, i think, would tell you, i overpay for everything because i got to get them very interesting he'll tell you, look, i had to overpay. but the one that he wouldn't overpay for is the one that may be welcoming back president trump. twitter. he would fwnot overpay for twitter. you can get it for $30 or $31. >> we're eight days away from the expected close of the twitter deal >> we're only eight days away?

big party? think there will be a big party? >> no, i think he'll be saying good-bye to everybody because he will no longer be ceo. >> he wears black t-shirts >> does he >> that's an important piece of data >> look at twitter, moved up a bit yesterday, various reports, but nothing i've heard indicates otherwise, that they're not going to close this thing in eight days >> how about ned segal does he get to stay? >> no, nobody gets to stay they all go. >> in other words, it doesn't matter that he's a good guy. >> it's elon musk's company. he can do whatever he wants. if he doesn't want them -- and he does not want them -- they will be gone >> do you feel like you're going to stay on the platform? any reason to leave? >> they cleaned up they have a filter now which takes out most of the pornographic references to me, and i like that. i particularly like the less "deliverance" aspect of what's happening in my mentions column >> we're going to have to see how it changes for sure.

when we come back, we'll talk about united, pretty good guidance coming out of that quarter and talk about capacity, see if they make mention of the wide-body orders we've heard about. also hear what two fed presidents are saying when it comes to inflation and the rate hikes. "squawk on the street" continues "squawk on the street" continues after a short break. from comcast business. with fully integrated security solutions all in one place. so you're covered. on-premise and in the cloud. you can run things the way you want - your team, ours or a mix of both. with the nation's largest ip converged network. from the most innovative company. bring on today with comcast business. powering possibilities. at fidelity, your dedicated advisor will work with you on a comprehensive wealth plan across your full financial picture. a plan with tax-smart investing strategies designed to help you keep more of what you earn. this is the planning effect. ♪♪ age before beauty?

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we mentioned p&g before the break. 157, beats by two vents. organic up 7 but almost every category had volume down >> yes >> and organic up 7 to 8

>> there was this whisper, which was that it was going to be a disaster and it was down 1 to 3 instead of being up 1, and mueller, on cnbc, he actually saw the stock tick up. he basically said, listen, we're not having any of the problems that people think we're having, and we're doing incredibly well. he basically just threw cold water on all of the procter falling apart stories that these analysts were giving david, it always shocks me i saw it yesterday with j&j. these are great american companies that people want to do well in a recession, so what are we supposed to do, sell these and buy jb hunt? is that what we're supposed to do going into recession go buy a little jb hunt? >> i don't think so. i saw a tweet that you forwarded about trucking actually this morning that didn't sound particularly good. >> yeah. some of the cancellation rates where they're no longer o overbooking, essentially, r is the trend. >> plus they still can't find

the drivers. i think wall street's uniquely caught on the idea that somehow the american people want to sell these companies that do really well in recession, even as their own houses constantly say, recessions, recessions, recession, so i don't think that you can trust analysts who work at a place who says there's going to be recession who also say, sell procter, because procter is what you buy, particularly when you said there's 0.2 tradedown. 20 basis point trade down? what are they trading down to? dollar tree shampoo? >> no. all good points. >> by the way, david, when you come to me with dollar tree, what they do, let's say there's a box of dots. they take, like, four dots out of it. >> that's what you get >> yeah. >> when bezos says he agrees with david solomon, who was on our air yesterday that, yep, the probabilities in this economy tell you to batten down the hatches. batten down the hatches.

key largo. jamie dimon's out there telling them the hurricane's coming, jeff's putting the hatches down. >> i got to get to home depot and get some plywood my wife is hitting a new high of houses >> that's a lot of hatches >> how about these provisions for auto lending at ally today, jim the company says, "to ensure the company remains protects as recessionary conditions feel more likely to occur in the coming months. >> that's why i'm not into carvana and one of the biggest disappointments of the year was generac, saying one of their clients, basically, went to file for bankruptcy now, david, the rap on generac was, the grid is bad, you want to have ev, and all i know is that that was a preannouncement to end all preannouncements. they basically had every base covered about what could go wrong. we had less potential demand, partner went bankrupt. i mean, i was reading, like,

well, let's just kitchen sink this one >> well, that's happening. >> yeah. >> stock's only down 15% they were supposed to be a beneficiary, of course, of the tragedy a couple weeks ago with ian. >> generac, you know, maybe -- i swear, i'm thinking maybe the grid has gotten better my lights have not gone out in weeks. >> you don't think it was just a classic covid pull -- i mean, they went from 50 to 500 during the pandemic >> there's a lot of things that we turned out -- like, abbott labs today, i think abbott labs, the upside came from covid tests, binax now david, binax later it's like, buy now, pay later, you know buy now, pay never this is binax, pay later what what's the matter? >> that's funny. >> we got a number of binaxs hanging around my house. i tried to stay away from them >> there was nothing funny about your interview with those very

aggressive scale-the-barriers activists yesterday. those guys meant business. >> they did. we'll have a little bit more, because i also caught up with dan yesterday at the conference. going to have a little bit of what we discussed as well. >> you know what the best interview was? and i caught some of it. i'm sorry i did not catch her name at the beginning. >> lauren taylor wolf. >> esg trying to figure out who's es zbg and who's not. it's one of the great non-parlor games. >> obviously, the music's playing, we got to go. >> i can't hear it >> there's a real esg backlash now, in part because of something we discussed a lot, which was the fact that it was used as a marketing tool by so many different asset managers that it -- esg itself is still viewed very positively, but those who were pursuing an esg strategy >> i'm going to tell you one money manager who was not pursuing it, but the customers wanted it. larry fink at blackrock.

customer tends to be right a lot of other guys are like, the customer is often right. no always right >> always. >> we're going to get cramer's "mad dash. we'll count down to the opening bell keep your eyes on yields here. ten-year backing off 4.11, but you got the front end still above 4.5. above 4.5. back in a minute and you are? i'm an investor...in invesco qqq, a fund that gives me access to... nasdaq 100 innovations like... wearab optimization tech. uh, how long are you... i'm done. i'm okay. the hiring process used to be the death of me. but with upwork... with upwork the hiring process is fast and flexible. behold... all that talent! ♪ this is how we work now ♪

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all right, let's get to a "mad dash" here. we've got a little while until we get to an opening bell, so may be some more things we can discuss, but what do you want to cover? >> there were two things that went wrong yesterday in san diego. one was petco where they lost to the phillies, san diego, but the second was that ever core piece,

close to home, the puppy needs more training, but this is the first time i want people to get ready for this one they have floating rate debt and interest rate headwinds. we're going to start hearing about that a lot of companies that came public, they were pe, they had floating rate debt and they're going to have their numbers cut off the fact that interest rates have gone so high, so i want people to start thinking, wow, i haven't thought about that headwind because it is going to be in their face this is a tailwind to headwind, david. >> it's a great point, and it is something that people should be aware of, given that significant move up in rates, particularly obviously for those companies that have floating rate debt, they're going to be paying more. that said, this chart doesn't look great long before rates were going higher >> i also brought it up because of the colgate agitation pet food is doing very well, but here, they say weakness of hard goods, hard goods. you know, the dogs, they don't care like, they don't say, hey, listen, we want hard goods

dogs won't eat it. so, i mean, let's just start getting to understand that the value of petco is diminishing because of floating rate death and i didn't even get into the bed bath & beyond reconfiguration of their debt where you pay a very high coupon in the out years to sacrifice near term. we're going to be looking at companies that we had not thought about in ages and looking at that balance sheet and saying, that's an issue. we didn't really care. everything was 3% except for when it was 2% those days are over. >> yes having fixed rate debt is a better way to be >> and i want to advise people now, it's a little late. the fixed rates are -- >> yeah, now, it's a little late now you may want to make a bet, actually, that riates are going to start to come down. >> i'm not willing to make that yet. the regular schedule fed governor blast of the markets hasn't happened yet today. >> right >> not yet >> not yet >> is netflix doing one? >> we did quote bostic and

kashkari in the opening show >> as soon as the two-year went to 4.5, it didn't matter what john mueller said about procter. it happened while procter was speaking it didn't matter s&p. right down >> we got a lot more to get to, including, we'll take another look at procter, we'll talk united, which we haven't really spoken about as well by the way, got an opening bell about five minutes from now, and you can catch us any time and anywhere, listen to and follow the "squawk on the street" eng llodstopinbe pca

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travel demand for airlines is permanently higher. it's at a higher level, and those trends are just offsetting it so it's not that there's not economic weakness, but the other trends are tailwinds that are overcoming the headwind. >> that's united chief scott kirby on "squawk" talking about travel street's at 96 cents >> one of the largest boosts i've ever seen i think that one of the things

getting from a lot of different companies is, americans are more savvy about what it means to have a strong dollar than they've ever been before i find it fascinating that people know i'm getting two for one italian handmade shoes if i go to florence >> yeah. >> versus, say, rock ports >> you know, we talked about the decline of business travel i thought what was very interesting was his quote where he said, every weekend is a holiday weekend because of the rise of hybrid work. and the fact that people now are happy to be somewhere else on monday and come home on tuesday. >> unless they work for goldman-sachs. >> yeah, unless they work for goldman-sachs. but again, that was kirby. every weekend is a holiday weekend, and they're starting to see that in the passenger trends in terms of what had been quieter times that no longer are because people are returning from wherever they've gone for the long weekend >> carl, is that what it's like out there? >> up 26 versus the third quarter of '19, it's crazy >> it is i mean, i wish i belonged to that country what do they say to their

bosses hey, chief, rain check >> "the journal" has this piece about day traders from a year ago finally going back to their jobs you see that one >> yes >> all those who stayed home >> well, i think that there's a recognition that the -- it's not as easy as they thought. >> it rarely is. >> remember when they were telling you, i found this thing, snowflake, and this something is going to the moon. what is snowflake? it's weather-related so i would tell them, global warming's going to kill you. people knew nothing. >> there's the opening bell, and the cnbc realtime exchange and the big board today, minerals technology celebrating its 30th listing anniversary. at the nasdaq, the national cybersecurity alliance ahead of its cybersecurity summit so we're going to revisit 3,700 here at the open, jim. >> i'll tell you how old i am. i was saying, oh yeah, the mineral technologies deal, i took a big slug down when pfizer

offered it and geez, that was 30 years ago. >> speaking of 35 years ago today was black monday >> how do you like that? >> remember that day >> i may have to talk about that in my no huddle tonight. david, i do a section at the end of the show called no huddle figured after 17 years, i'd give you a heads-up >> thank you for that. >> jim had a "mad money" celebration at the exchange last night. >> it was really nice. >> wonderful >> it was great. >> very nice star-studded affair. lot of people showed up. you were very gracious in taking the entire time to thank every single person who makes you, as you said many times, look so much better than you deserve to be >> it's like the academy awards, you get the people up there who say i want to thank the gaffer is these people work incredibly hard i come out and take 130% of the glory. i decided to divvy up that last 30%. >> for a little bit of time. but they are incredible team,

and you are lucky to have them what am i looking at >> don't look at me. >> i wanted to talk tesla for a second, just because -- >> tesla >> we're going to get numbers, right? there is an expectation. >> we do expect elon to be -- he said he was going to stop and then he didn't stop in terms of the call >> so, elon may be on the call by the way, i misstated. the 28th, which is the day that we expect tesla -- excuse me -- twitter to close is next friday. i got my calendar mixed up not next thursday. but we're also going to see what deliveries look like there is some question about, given the tightening delivery times, whether demand at all, they're going to see any impacts, and obviously, you've got china, which is such an important market for them. you know, they -- what is it i mean, tesla in the third quarter, they made 55% of tesla's global production in china. and that ratio seemed potentially increasing in q4 they're making automobiles in china not just for china but for other markets outside the u.s.

>> look, i would -- it would not shock me if you blew the numbers away i continue to respect the fact that no ads -- no ads. i mean, watch football, you get the sense that the other guys, you know, come buy a car come on down tesla's, like, if you need me, give me a call tesla's just -- he really has it going, and i would say that that stock, by the way, has been a terrible performer >> we mentioned the ally financial credit questions this morning. the carmax debacle the ford preannounce you expect them to circumvent all of that? >> no. i think it's going to be hard, but i will say that he tells such a great story when he's on there. when he's on the call, it's really terrific. but even the semiconductors, the chip shortage is ending for the autos. there's going to be so many -- people are not going to be buying cars, david they're going to wait it out, because things have changed. rather radically >> well, the average price of a

tesla is obviously gone up a lot. >> the other guys? >> yeah. and musk has discussed that. he said, it's sort of indicating, you can't keep doing this it's unsustainable >> by the way, used car prices now down 10% year on year. that's the biggest since 2013. >> finally happened. >> jim, i don't know if you saw this downgrade of best buy today on deflationary concerns evercore cuts to inline because comps could run negative we're already seeing it. and consumer electronics >> so, that negative piece on lowe's too i happen to like lowe's very much i think that when you look at best buy, it is now the cheapest i remember expect when people told me amazon was going to wipe them out 5.4% yield, david. most people say, at that level, that's not sustainable >> something's got give. >> something's got to give >> yeah. do we think their dividend is in any danger whatsoever? >> i think cory barry's doing a great job as ceo

i think that if jensen is right, ceo of nvidia, about a new gaming cycle, i think she'll be okay but at the same time, the long knives are out here. and it's very rare to see the long knives out for a company that i thought had already gotten through this whole notion of being the showroom for amazon >> yeah. one thing's for sure netflix is raising all the media names. you got paramount, dinisney's bk to 101 this morning and united is lifting a lot of airlines, jim. >> look, united was just -- remember, the united quarter was a quarter that, as david mentioned, you thought they could never do unless it was business travel, because the business travel people sit up front. they're really important >> they do much higher margin customer. but again, i made -- i just made this point moments ago, but it is interesting to think that

they are seeing higher demand as a result of people's willingness to travel more often because they don't have to work on monday morning from the office >> i like that but it is interesting that we're so used to these days losing money if you see something we like like, oh, i use google search, i'll go buy google stock the one thing that has worked, i'm always on extremely filled flights. i'm going to go buy united it worked. david, keeping your eyes open, seeing that you couldn't put your stuff in the overhead, it made you money >> yeah. >> when was the last time that actually your eyes made you money? >> i don't know. >> versus losing >> peter lynch >> exactly >> style of investing. >> but ever since november, everything you try to do like that is just hopeless. wow. you know, i went to the mall, i saw people at gap. >> that didn't work out too well for you. >> no. no >> no. you got to be careful. >> yeah. >> well, speaking of being able to witness stuff, the housing market sort of confirming what we already believed to be true,

some tough comments out of zillow today starts, obviously, disappoint. mortgage apps down 4, 5. re refi is down 6.8 >> that's done one of the things we're going to see next is right now, the offerings, there's no transactions occurring to speak of because the people who are offering are 20% above the people who are bidding and historically, it's always been the cyclical turn right about now where people say, that's it. i got to go. i got to go. i'm going to -- prisoner's dilemma. i'm going to go first, david the guy -- people are going to break price. the buyers are not going to suddenly say, you know what? mortgage rates are going up big, i got to step up >> no. but you're right first, you get the, just, significant diminution in any activity whatsoever, and then you get the fall >> time-honored and the stock will be any different this time. >> look at what's happened to volatility in bitcoin or ether it's like an ekg that's gone

flat >> it is and we know that -- we really have to believe, although the fed governors haven't said it, that they should be targeting bitcoin as something that shows there's still too much speculation. they don't talk about speculation in the system. they look at the food basket and by the way, the food basket, we're seeing some people thinking the food basket's getting better i'm not. i'm not seeing that at all go aisle to aisle, you're not going see the it kroger does make a compelling case that they have lower prices, and costco has that kirkland brand, which has got lower prices, better quality, i think. but i'm not seeing the really great decline, and it isn't like candy for halloween. we had to figure this morning, halloween candy is up 13%. >> is it >> year over year. >> that's a lot. >> yeah. i would say so >> although i'm always left with so much of it, maybe i can just do a better job portioning

>> what kind of lousy candy to you get? >> we buy those bags and inevitably, they end up in a big bucket and we all eat it for the next three months. >> candy corn. >> i don't eat is that stuff just little individually wrapped twixes >> we keep those, obviously. >> we don't eat candy corn >> i gave away smarties for years, and you get near the end of the night, and it's like, i got a lot of smarties. you can take a handful they take all the -- >> they do i even miss that age already with my kids, dressing up. they were so cute. >> not me, partner i dress up as the bull every year >> dress up as the bull every year >> in good and bad years >> and i thought i knew everything about you >> i have a bull outfit and i put it on. >> really? >> yep it's hot >> do you walk around the neighborhood what do you do >> kind of a little parade around the neighborhood.

>> can you imagine opening your door and there's jim cramer dressed as a bull? >> you can't tell it's me. it's got a bull head >> right >> there's always a bull somewhere. i'm on your -- i'm on springfield avenue >> all right >> speaking of, there's a bull market in netflix shares today, guys, we've talked about it this morning but it's up over 12% right now, still down for the year the news itself, quite a strong quarter. we've got ad-supported coming very soon to the platform but they're talking about ad adding 4.5 million paid net adds in the fourth quarter and that outlook has helped the stock as well, talking about 6% year over year growth, excluding fx, which is taking a toll on the company, given its foreign operations and very strong dollar in the -- on the call, reed hastings cited bob eiger's quote

from a few weeks ago you were there, i think, carl. a quote where he talked about linear tv going off a cliff. do we have that? takea listen >> bob eiger said that linear tv was going off a cliff. what i underappreciated was just the impact on advertisers. their just being able to reach fewer people and then the 18 to 49 demographic is even faster than the decline in paid tv. so, this is what is really fueling the cycle is the really collapse of linear tv as an advertising vehicle. outside of a few properties like sports >> which brings us to disney, of course, shares of which are up almost 2%. sports, you heard it there espn, the collapse of the linear bundle, so to speak. that's been an issue yesterday, at the conference i was attending, i did catch up with dan lobe i had spoken about third light

yesterday morning in light of colgate and a new position third point had taken there, talking about the value of hills, the pet food business, and the fact that given consolidation in the hpc business, perhaps colgate could play a role there, perhaps even sell. all of that is not the things that he is necessarily recommending but certainly worth mentioning in light of that new position but i did also talk to him about disney, because it's only a few weeks ago that he rebuilt a significant position there >> right >> he's been involved with having carol iverson, the former facebook executive, join the board very recently, and here's what he had to say about disney sort of when we caught up yesterday. he said, "despite their having a great scale, their costs are completely out of control. they're in the process of reducing them. they've taken specific steps, which hopefully they'll be communicating in the next quarter or two and we'll see the result of that will get them back to their pre-fox merger margins."

went on to say, because the business has really shifted from, as we know, theatrical release to dtc they don't need to spend 300 to $400 million on something people are going to watch on a home tv. costs are going to come down that was certainly one key part of his thesis when he introduced that, once again, new position in disney. remember, he had owned it for quite some time, sold it higher, bought it back more recently he's backed off entirely on the idea of separating espn but he continues to be focused on chapek delivering on those cost cuts >> i think they need to deliver on more theme parks. i'm revenue-oriented than i am cost cut oriented. they have a gem in theme parks, and are they really out of space -- places to put theme parks? i don't think so >> we know where you think they should put a new theme park. >> the land of enchantment >> i'm sticking by the 300,000 acres i found for them right off the corridor between the denver-austin corridor

have they followed up with me at all? have they? >> no, they haven't. they haven't, because they're disney and they spend all their time thinking about these things. >> well, they don't think about what i'm thinking about. they're trying to figure out how to get rid of the guy in the monorail one of the -- the monorail guy that goes through the building >> i love that yeah, yeah, what the heck -- the contemporary >> i stayed at the contemporary with my folks. >> so did i in '73 >> i have fond memories. >> so do i >> my father let me have a turkey leg >> i thought that was so cool when i saw that go through the contemporary >> how about the polynesian? the dancing there. >> yeah. >> remember those days, david? >> we all do, which is why the parks were so great. >> last time i was happy >> when you were at the happiest place on earth >> yes and then i did -- i had a droid made of my youngest daughter at

the floridian, and my then-wife, karen, said, that stays in the room it's horrible. and it was kind of a downer. >> memories. >> downer. i saw bo jackson >> that's nice >> he said nothing to me >> okay. >> let's get to bob pisani this morning. >> and of course, we also have had travelers. that's up five bucks and that's helping the dow stay in the positive territory just went negative here. let's take a look at the sectors. somewhat defensive tone, so you had consumer staple and healthcare stocks up cathie wood's ark innovation, the classic risk on, down a little bit semis down just a little, although some of the metals were good, and mining there's big three, risk on, slightly to the downside today i think the important thing is the earnings apocalypse, as i like to call it, has not materialized, despite the concerns about fedex more than a month ago. you see the big movers today netflix, procter & gamble, asml,

big company, big semi manufacturer in the netherlands. travelers, good earnings and baker hughes also. still early. but the numbers aren't bad at all. and united is really helping the airlines out this morning. all the big names, delta, southwest, american, all trading to the upside, so another big earnings report, again, helping the market what we're down is on macro-concerns we saw yields move up and so the overall market weakened, but the earnings reports themselves are not bad this morning so, what's the story it's early yet, okay i don't want to make too much out of this. we got 62 companies reporting. that's 30% of the s&p and i'm still calling it apocalypse delayed. 76% are beating estimates, and what i care about, which is the overall trend for earnings, are down slightly, but not getting slashed, not turning dramatically negative in any major sectors. they have been coming down in key sectors like technology. but again, third quarter, still

expected to be up close to 3%. the fourth quarter, still expected to be up 5% these could change, and the -- they likely will creep down a little bit but no great earnings slash. so, look at the s&p 500. remember exactly three months ago is when we started to move to the upside because people started realizing the earnings apocalypse wasn't happening and the market started rising after we didn't have a disaster with the second quarter earnings. so, we're trying to do this again with the same situation, in the third quarter remember, it was september, i think, 17th that fedex made the announcement and we went from the middle of september to the middle of october, straight down, bottoming at a two-year low and fedex was essentially what started all that. we have a situation where maybe things will be a little bit better at this point, and maybe we are starting to bottom. i want to just point out a company, prologis, which i follow very carefully. this is one of the big warehouse

companies. they call themselves a logistics company but they really manage warehouses, so they reported earnings that were six cents better than expectations today for the third quarter, yet they narrowed the expectations lower -- slightly lower for the fourth quarter that sounds like pretty cautious guidance and yet the stock here is actually flat today even though they narrowed the guidance slightly lower for the fourth quarter that's a good sign of a potential washout. so, remember, these companies were darlings of the covid situation. this thing went up 200% during covid, hit peak about april, middle of april, and you could see how dramatically lower it is it's down almost 40% from its highs at this point. so, that's a sign of a washout when you have cautious guidance, a slight beat, and you don't really raise the numbers for the fourth quarter, and it's on the flat side, that's a fairly decent tell at this point. who knows? but i'm encouraged by that carl, back to you. >> quick reminder, you can always get in on the cnbc investor club with jim

sign up and find out more at cnbc.com if it's easier, you can always use the qr code on your screen takes you right there. as we go to break, watch bonds today, as we said, two-year still above 4.5. we will get kashkari at 1:00, and beijingge book at 2:00. be right back. i started as a single mom with $2000 and a passion for new orleans. i'm lauren haydel owner of fluerty girl. today, my tiny online shop has grown into eight stores. we're a must-stop shop for unique nola-inspired gifts. lauren doesn't just create cool nola merch; she creates opportunities. small businesses like lauren's

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haven't talked a lot about geopolitics this morning we've got martial law in the south of ukraine today because of russia. china is in focus as well. look at some of the lag gers we'll get stock trading in a minute with jim. you'll always remember buying your first car.

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jim wasn't kidding when he said he dresses up as a bull for halloween. >> how did you find that that's an outfit i wear. it works kids are obviously frightened of it. >> still have a tie on. >> i don't like to be out of my tie. >> i know you don't. that's a little ridiculous

it's halloween it want a tail where is the tail? >> i down the jacket off that was a major concession. >> if you need a tail, you could do the back end and do it together would that be good >> that would make me something. >> it would be very good i think you ought to think about that when you go to an activist concert. >> thanks to both of you let's get to jim in stop trading. we keep finding out who is a covid winner and who is a loser. abbott, for instance isrg, turns out there were a lot of -- not enough procedures during the covid year. they did buy $1 billion in stock. not a big company. what i like about these guys is that it really does work i was thinking maybe it's slowing. but no, just the procedure is slowing because of covid now's coming back. the same thing from johnson & johnson yesterday when they talked about med tech.

procedures were down there they stressed the overworked health care workers so this is good news >> busy tonight between tesla and ibm. >> oh, my. ibm, i don't know. a nice yield through that's not a reason to buy a stock in this era. j.j. bienaime, you still see drug stocks perform well in this environment. i'm focused on that. >> good show, guys >> thank you. >> see you tomorrow. >> thanks, carl. i'll be with you the next hour. >> "mad money," 6:00 p.m. eastern. more reaction on net fflix reacting dow down 54. at pgim, the pursuit is on for outperformance. as active investors, to outdeliver with customized strategies, integrating esg best practices into our investment decisions.

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michael is back. and he's more dangerous. maybe the only way he can die... is if i die too. [ screaming ] good wednesday morning welcome to another hour on "squawk on the street. i'm kentucky with morgan brennan and david faber. got some pockets of strength here this morning on some decent earnings and guidance out of netflix and ual and adobe. it's fighting a tough macro headwind on higher yields, dow

down about 66 points >> 30 minutes into the trading session, we'll start with three movers we'll start with generac, the s&p's worst performer. down after they released q3 results. cut the growth outlook margin also under pressure much of the pain coming from residential business as we've heard before, inventories within the pipeline meantime earnings continue procter & gamble higher after they beat organic sales up 7%. they did cut full-year revenue forecast blaming the strong dollar can pricing continue to offset not only inflation but those fx headwinds? investors are betting so today stock up 2%. another blue-chip leading the dow. travelers reported better-than-expected earnings. catastrophe losses largely due to hurricane ian

they were up 10% from a year ago, premiums rising across all three business segments. personal insurance up 13%. guys, this is another piece of that emerging sticky inflation story, insurance coverage. >> let's turn to one of the big stories this morning stockwise it's netflix the company exceeded earnings expec expectations, also expectations in terms of sub ads adding 2.4 million subscribers in the third quarter and forecasting to about 4.5 million for the fourth quarter. the stock up almost 14%. joining us is michael nathanson, fo and barton crockett from rosenblatt securities. michael, i'm looking at your latest note. you still don't seem fully convinced. you say we look into the future despite the increasingly complicated challenge in modeling these new moving pieces there you're referring to the soon-to-be introduced ad tier.

we believe frafrts are ever estimated the near-term earnings power of netflix even with the 14% rise and those good numbers, you're not on board? >> david, we look at where some of the people bullish on the stock are, and i think they're just overestimating the benefits of these two changes they're ignoring the cost of currency going the wrong way we'd love to be more constructive here, but our first rule of thumb when it comes to stock analysis is, if the street is above us, we're concerned if we're above the street, we're really bullish i keep thinking this pivot is a lot harder than people think it's complicated we just give it a green light to think it's all going to work, the company looks positive let's upgrade and off to the races. you know me well, we're skeptical. >> what gives you pause about it when i speak to investors as i know you do, they seem enthusiastic on the ads here

the targeting for advising, $65 cpm i'm hearing. the fact they've had so much churn through the years that will be stopped as a result of having this lower price tier what gives you pause >> there's a couple things remember last week we did a note saying, look, curb your enthusiasm we raised numbers. we thought this is a good pivot. two things jump out at us. one is the risk of people spinning do you think, looking at the $6.99 when they pay $19.99 or $15.49 and say, people at hulu take ads as a way to reduce my bill there's a near term spending on modernization, there's a lot of enthusiasm for the launch of the proukt d. but the cpms they're looking to get are so above where the world is, the initial excitement from madison avenue, but longer term prices have to come down. so we just think that we're putting the cart before the

horse here there's so many moving pieces that just responding to, yes, it's a good idea, definitely a smart idea, but the math is going to take some time to be accretive versus where the street is. we're conservative about the speed of the improvement here. >> barton, you seem like you're conservative based on your reports here as well i want to get your thoughts on the quarter we just saw and also the fact that netflix is basically changing that guidance and has told investors they're focused on revenue as the primary top line metric. how do you see it? how are you doing the math with all these changes afoot? >> thematically not different than michael, although i think i get there in a little bit different way. the report last night was not a massive beat they beat their sub guidance by 1.4 million on a base of 223 mil million, so less than 1% that's noise

for people to get held up on that, netflix isn't guiding to subs anymore, partly because they can't do it at the level the street wants these huge misses and upside reactions are really just a measure of the size of the base and the difficulty of getting to the precision the street wants they won't do that anymore they'll talk to revenues where 1% variance is not driving huge gyrations in the stock that's helpful i think people are get too bulled up on the read for this as for advertising, i think one of the problems is netflix is only leading with this on this basic tier with ads. it's very limited, one stream limited, no ability to download. they have a basic version without ads that i think is one of the lesser popular plans. and this i think will be a haircut from that. the other way to do this is like disney is doing it, where everybody is getting advertising by default unless you opt out and pay more disney has trounced netflix in

eyeballs for s5 advertising. disney will be the better ad story in 2023 we think than netflix. >> to dig into that a little further, you'd buy disney as earnings get under way and more impartial to netflix >> yes i think the streaming story at disney is much more positively relative to expectations than netflix. disney we have the wildcard of the recession and theme parks, but in terms of streaming, i think disney is going to have a better year ahead than netflix. >> michael, let's widen out to our usual conversation do these numbers from netflix say anything in terms of or change your view at all in terms of profitability and/or the act of direct-to-consumer to continue to expand. >> i'm smiling david when i think about this beat this quarter, it came most likely from india. you know disney plus narrative where india has been a big driver of subs and we ignore it

because indian ar pu is less than a dollar. i think the u.s. market and european market is reaching maturity at these price points, and i'm not convinced. we'll see. i think the ad tier is a smart play, but they need to do what hulu has done. two-thirds of hulu's base takes advertising. i still think at the end of the day this is a hard model, a model where you require tons of original content you need price increases every year to hit where the street is. the majority of the base will have price hikes anniversarying next year. will it be able to take price again next year. this year there's a ton of term. i think we're hitting a wall on the upper limits that people are willing to pay i think it's complicated, david. i'm not convinced it's a great model. i've said that from day one. >> you have. we've been having that

discussion barton, i'll end with you. when you look at the company right now in terms of its content spend, do they have the ability to potentially lower it at all, to increase margins, or are they going to always have to maintain if not continueto increase >> i don't think there's any reasonable argument that they would be substantial lib meaningfully reducing the $17 billion they're planning to spend for this year, next year i think the real question is whether there's a pivot a step up it's clear that we're moving towards a world where table stakes and streaming will include other things like sports, maybe news, things where netflix is not a player, and they'd have to spend a lot, probably absorb sto do those things over the longer term you have to have that in the back of your mind that the model is not baked, they're only playing in a portion of what they're going after if they're going after tv. at some point there will be

pressure to change that because everyone is, amazon, apple, paramount are doing it i think netflix will face pressure to do it as well. >> barton, michael, thanks to you both appreciate it. >> thanks. let's talk some airlines this morning united is close to a two-month high today after posting better-than-expected results issuing n up deet forecast phil lebeau talked with the ceo this morning and has more. >> carl, the guidance for the fourth quarter is what's moving the stock higher today they had a huge beat in terms of q3 analysts were not expecting them to come in and say, look, for the fourth quarter we expect to earn between $2.00 and $2.25 a share. you know what estimate was going into that guidance 86 cents a share so way above united expecting revenue in seat mile -- revenue per seat mile, up 24 to 25% with an operating margin of approximately 10%. bottom line is this: they see no slowdown in deplanned, zero slowdown in demand, not only for

the fourth quarter but as they start to look out beyond the holidays into the first quarter. one of the things that scott kirby, ceo of united talked to us about this morning, they're also noticing a change in the patterns, the travel patterns for people as they're buying tickets. >> it was a thursday load factor there were a lot of days eight to ten point load factors in the middle of the week that's people doing extra trips they never did before because they know how the flexibility. >> load factor basically meaning how many seats on the plane are filled 8% to 10% higher for tuesday, wednesday and thursday than they were prepandemic remember, we've got a couple other important earnings reports coming up for the airlines american and alaska on tap for tomorrow, and as you look at those stocks, moving a little bit higher today we will also be talking with the ceos, two more exclusives that

you don't want to miss tomorrow morning we'll talk with robert isom, and then ben minicucci from alaskan airlines. we know they'll have strong numbers for the third quarter. increasingly, the question is what is the pattern of travel beyond the fourth quarter and how sustainable is this, guys? >> that is exactly where i'm going in my head with this, phil i don't know about everybody else my family is still playing catchup on weddings and big events and everything else from the pandemic when i hear him talking about this idea that travel demand for airlines is permanently higher it perks my ears up here the other question i guess is what does it mean for capacity does this mean we'll see more routes and more aircraft added into the mix now >> they're limited, morgan they're limited. airbus and boeing are building and delivering aircraft as quickly as possible, but they're not back to the production levels they had before the

pandemic so your delivery rates, while they're increasing, they're still way down from where they were prepandemic even if you are an american or an alaskan airlines and you want to add capacity, you're limited. united is not taking full delivery this year some of it is getting push out into next year that's simply a case of the manufacturers being unable to supply as many of the new aircraft as the airlines would like >> supply chain which we've been hearing about in aerospace and defense. quickly, phil, tesla, after the bell, what are you watching for? >> basically what are they going to say about production, especially when you look at the three important gig factories. china which is the largest, and then the ramp-up in production at austin in texas and the giga factory outside of berlin. those are increasing production. let's see what they have to say on the call about where they are right now. >> phil lebeau, thank you.

always busy. >> you bet. as we head to break, here is our roadmap for the rest of the hour including shrinking consumer savings one report saying spending may fall even further. >> plus more on netflix. we'll sit down with the company's former head of content acquisition. >> mortgage apps hitting the lowest levels since '97. what that means for home buyers when "squawk on the street" comes back in a moment - yieldstreet presents: alternative investing with kal penn and older kal penn. - oh, the stock market is doing that fun thing again. - hey news from the future, you're going to live through that about 10 more times. (laughs) - oh, it's no stress. i just discovered yieldstreet. they vet investments that don't ride the stock market rollercoaster. - ooh. i think some of my gray hairs just reversed. - yeah. you're welcome. - [narrator] become an investor today.

yieldstreet: private market investing.

welcome back to "squawk on the street." despite rising costs and high inflation, the consumer proved fairly resilient, in part due to excess savings which grew during the pandemic but now new reports are saying those savings may be running out. steve leisman has the story for us >> good morning, morgan. the outlook for fed rate hikes reaching new highs following hawkish fed comments yesterday it comes as worries grow that consumer spending in the holiday season may not do too well here. futures markets pricing in 496 peek fund rate 4.52 priced in for year end meaning the market sees roughly two more 75 basis point rate hikes this year. the march higher and the funds rate comes after neel kashkari suggested the bar is high for him to pause. >> the problem for me with trying to say, hey, it's time to pause, is we're not even sure

we've got rates high enough to push services inflation down until i see some compelling evidence that core inflation and services inflation have at least peaked, i'm not going to be ready to declare a pause. >> so investors have to factor in higher rates but potentially less growth concern is rising that the consumer could be tapped outcome christmas an estimate from joe lavorgna finds that excess savings from the pandemic are almost gone what happened to 6.5 trillion consumer treasure chest. now estimates by lavorgna, just 650 billion. pulling back further as consumers rebuild their nest eggs a new holiday survey out today by deloitte of around 5,000 shoppers online, finding that spending is going to be unchanged at $1,455 per household compared to last year,

just 31% plan to travel, down from 42% last year, that's between thanksgiving and christmas. interestingly a majority of those spending more and spending less say it's because of inflation. not all hope is lost social security cost of living checks have been mailed. unemployment low, job growth strong throughout the year the biggest thing that could save the holidays, lower inflation. carl, i just don't know if santa packs that gift in his sleigh. >> wells has a note out to say saying holiday shopping may represent the last hurra for this economic cycle. we'll find out more in the coming months. let's bring in jpmorgan's chair of global research joyce chang. great to have you back good morning. >> great to be with you. >> you guys have been active on the research side. i noticed the other day you had a bit about inflation and argued the downshift is under way and we could be looking at headline cpi in the low threes by

september. >> i think you'll see headline cpi come down by half. really what we need to see is that domestic inflation comes down further in a lot of the meetings we've had with policymakers, they've said that, look, even 3% is still too high so i think that move down from double digits of 5% is happening with inflation, but it's really how do you go from 5% to 3%. that's why i think the central banks are going to stick with overtightening here. they want to anchor expectations there's still a lot of concern about financial stability in the marketplace as well, given all that happened in the uk. i think central banks here are going to hold the line, not just the fed, but the ecb and bank of england, also. >> steve was just mentioning consumer spending. one lesson from the banks this week has definitely been the level of deposit still two to five times prepandemic levels.

are central banks grappling with the fact that there's still a lot of unburnt furniture in the fireplace? >> we've seen a big drop in the excess savings excess savings were extraordinary at the beginning of the year, 14% of gdp. by the end of the year we'll see this down to the long-term average. when you look at chase checking balances, they're still well above 2019 levels, but we're seeing more divergence here, due to lower income levels that's actually begun to fall more sharply i think you still have cushions here we're going through them pretty quickly. maybe you can get through this in the year end. i think that's going to become more obvious by next year that these cushions have disappeared. so, you know, i think the excess savings has helped a lot this year we're also starting to see that some weakness in the earnings that are coming out as profitability is coming down those are factors we continue to watch very closely, particularly as we do see growth coming down

as we go into the fourth quarter and the beginning of 2023. >> joyce, looking around the world right now, whether it's the rapid rise in rates that we've been talking about, whether it's some of these incredibly volatile swings we've seen in currency markets this ldi crisis that played out recently in the uk, can we expect to see more of that type of dynamic manifest here if so, what would you be steering clear of in terms of investments? >> look, there's a lot of lessons learned from the ldi crisis because it really does show you the importance of financial stability and the market liquidity conditions. so everybody thinks about accidents happening in emerging markets, frontier markets. what we've seen is there's vulnerability even in the liquid sovereign markets. one thing we continue to track closely is the market liquidity conditions they are very depressed. for u.s. treasuries we're seeing some of the worst levels in 15 years. the markets aren't broken,

they're functioning. liquidity is a concern i do think there is the possibility of more accidents. and just coming back from the imf world bank meetings last week, emerging markets frontier countries, there's still more talk about restructuring, repayments problems, reserve depletion as well as we've seen the dollar's strength. i think emerging markets could be one area in the frontier markets, not a systemic crisis, but in the frontier markets where we need to keep an eye out. it's also the liquid sovereign markets given liquidity conditions where you can see heightened volatility continue. >> you guys somewhere been pointing out higher risk of geopolitical volatility, tighter conditions, lower savings. i know you took down your numbers on s&p earnings by 15 bucks to $ .25 consensus closer to $2.40. a lot took note of the u-turn from what was a bullish stance

for most of the year can you talk about hows that changed? >> first of all, the stronger dollar is an issue we're about 18%higher on the dollar over the last year. every one percentage point change in the dollar is about 40 basis points of earnings so we've seen third quarter spx earnings, really like a five dollar move. part of that contributed to the, forecast we're also seeing that, after having corporate profits around 14%, there's some excess inventory that's being off-loaded at more discounted prices as well so there's a combination of factors. there's the geopolitics, russia, ukraine, what's happening in the commodity markets. energy still does remain our longstanding overweight recommendation here. there's also just the stronger dollar and the fact that we have growth sharply in the u.s. come undown to less than 1% next year there's been some sflngt the third quarter. the savings rates, excess

savings of houses is up. that's forced a review of the earnings outlook. >> joyce, really good summation of what seems like for every push there's a pull. it must make it difficult to figure out where it's headed next joyce chang, thank you >> thanks so much. we have energy-related stock. baker hughes is up despite a revenue miss related to the company's recent reorganization. exxon having a strong morning, eog as well. they both got upgrades "squawk on the street" will be right back (air tool sound) to help you stay ahead of the curve... or you could use workday.

the finance, hr and planning system that helps cfos make better decisions faster. on the other hand, we had a great fourth quarter. for a accelerate your decision-making world. workday. for a changing world. i started as a single mom with $2000 and a passion for new orleans. i'm lauren haydel owner of fluerty girl. today, my tiny online shop has grown into eight stores. we're a must-stop shop for unique nola-inspired gifts. lauren doesn't just create cool nola merch; she creates opportunities. small businesses like lauren's open doors for neighborhoods to thrive. support your community. support small business. - yieldstreet presents: alternative investing with kal penn and older kal penn. - oh, the stock market is doing that fun thing again. - hey news from the future, you're going to live through that about 10 more times. (laughs) - oh, it's no stress. i just discovered yieldstreet. they vet investments that don't ride the stock market rollercoaster.

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consider adding this. call unitedhealthcare today about an aarp medicare supplement plan. welcome back to "squawk on the street." we're getting a check on the transports this morning, which is lower right now the ishares transport ecf ticker iyt, it's fractionally lower despite united's fueled gains, another name of the frustrate

side to watch is j.b. hunt which also reported quarterly results. those shares, if we can pull up that chart, are higher right now, about 1.5% higher after posting better-than-expected profit and revenue the intermodal company saying, quote, peekak season is here, bt doesn't seem to be much of an event. also worth noting, a softening in the brokerage business in these results. all the dynamics we'll be watching as railroad earnings kick off starting with csx and union reporting. given the mood set by fedex a couple weeks ago with the pre announcement from that company david. >> after the break we've got eight dow components, 64 members of the s&p that will report earnings this week we'll have more on how the commentary around those earnings may shape market sentiment ofoue, wve crse' had a strong

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i'm contessa brewer with your cnbc news update. vladimir putin has declared martial law in areas he annexed. it will take effect tomorrow in the one ukrainian capital captured by russia, they're urging civilians to evacuate, their warning of possible shelling by ukrainian forces in efforts to retake the city russian tv shows residents waiting for boats to leave the city ukrainian officials say the russians are use propaganda to scare the people of kherson and insist only russian terrorists would shell ukrainian cities british prime minister liz

truss appeared before parliament to apologize for mistakes made with her abandoned tax plan. truss responded she's a fighter, not a quitter. in new jersey a fire collapsed a house that spread to three other homes. no one injured, but pretty dramatic. back to the markets, a little relief. dow up 100, s&p held 3700 as we got a few reporting today. mike santoli is with us, real micro versus macro. >> for the past couple days, the company's specific news relatively well received a relief to be able to focus on earnings that are clearing a low hurdle just in general i think the market can look through things like foreign exchange related shortfalls hesitance this morning because you had the ten-year treasury yield pushing the a new high

you almost have to micro analyze the intraday moves it backs off to 4.07 somehow that's clear for the stock market to get a bid in it seems as simple as that the don't over think it view of the markets, don't find with the bond market is telling you it's telling you the fed might get to 5% short rates in may if you look at the total bond market over the last year versus the s&p 500, it's the same chart. it's not tgoing to stay that way it's interesting the stock market has to continually make its piece with each new threshold of yields on the upside. >> i was thinking earlier in the summer, remember the day the three of us talked about the tn-year at three being a source of stress. >> that's a good reminder that what constitutes high and basically an insurmountable hurdle has changed 3.5 as a peak in junement that's when the stock market made that prior low. at 3700.

i still think everyone feels like there's a lot of pent-up potential energy in the market from underinvested institution, from negative sentiment, this sense we're going to keep grinding lower and the seasonal strength that can all kick in the the bonds don't kind of veto all those things. >> just to go back to earnings, in some ways it seems like almost a top line in line is the new beat, just when you're looking at the results as they're coming out right now i wonder if that continues here as well. it feels a little goldilocks-ish back to what you're saying, there's a report in the "wall street journal" that day traders are going back today jobs. how does that speak to the exodus of retail traders from this market, how that speaks to what we're seeing right now. >> that energy has largely been snuffed out. you can still look at individual names. you can look at tesla and the options flow in that stock it doesn't take much to revive it as a general mover of the market, no in fact, i've seen some that

says retail traders are heavily, if they're doing anything, buying put options on individual stocks they're riding the negative momentum and no longer goosing valuations and really playing the story stocks that they were in 2020 and into last year >> looking at the chart of the bond etf and the stock points out, of course, there's been nowhere to hide really for an investor i think the 60/40 portfolio has suffered the worst losses since 196 or 1969 >> it might be earlier than that. >> they have taken their nets and gross way down, mike i do wonder sometimes whether there's going to be scene some sort of point where they start to ramp back up. >> i don't think it would take much in terms of another few percent to the upside in stocks. i don't think it's a matter of, well, then we're off to the races. people feel like they need to

participate. even the bank of america global fund manager survey, the highest cash levels in 20 years, only 6% plus cash levels but that's enough. if they feel like they're kind of too frustrateighted with cast things have to line up to have that kick in people have done well playing defense this year. that's the only thing they've been able to do is stay in cash. >> mike, thank you mike santoli. let's turn now to the chip sector asml is one of the top sector's gainers -- top gainers in the sector, that is after saying it's seeing limited impact from u.s.-china curbs kristina partsinevelos has more on it. >> i want to break it down asml is part of the camp that believes they won't feel as much of an impact think of asml as a monopoly.

they don't make chips. they make the machines that make the chips. these are very specialized, $200 million ligtographymachines that not everybody can make. demand is outpacing supply they had record bookings even though they told employees to stop services chinese customers, there's a concern they'll start shifting manufacturing or business to taiwan and not the united states or europe and given the political tensions with china, that could still be a problem for the supply chain down the line asml, overall, isn't the only one that's not too worried about these china export rules tsmc, for example, mentioned recently with its earnings report management saying the effect was limited and manageable silicon design firm synopsis also echoing tsmc saying the rules won't impact revenue it reaffirmed its guidance a few days ago

other chip makers are not necessarily facing the same scenario equipment maker applied materials cut its forecast last week blaming the new china export rules they predict it will cut sales by $400 million in q4. then you have nvidia that warned maybe at the beginning of october about the same $400 million impact so we have to keep in mind these export rules impact only high-end artificial intelligence chips not all chip makers and chip equipment makers will be affected by the rules. many are actually getting one-year extensions like samsung and tsmc there's definitely two camps right now. carl >> of course some of the chips, talking about the high-end artificial intelligence chips, you're talking about potentially military applications which speaks to why the export curbs have been put into place the fact you do have the makers saying this is going to be manageable, is it because they already had sold so many of

thesis stems into that country is it because they don't have that much business there to begin with why exactly is it manage snbl has this been a further tightening and the writing was already on the wall? >> talking the equipment makers or the actual chip companies. >> equipment makers. >> the equipment makers, a lot of the product have already entered the country. you're not spending millions of dollars each quarter buying a machine. you buy a machine and maybe five years down the line you'll upgrade it they do have exposure. maybe saying it's limited and manageable like tsmc said. it seems like they've been able to mitigate this, working on possibly shifting the supply chain. the concern is supply chain shift will go to taiwan. the problem with the united states is the concentration is all in taiwan. we don't necessarily want this should geopolitical tensions raise and the dynamic between both countries disintegrates >> trying to bring some of it

home, christina. that's our kristina partsinevelos. coming up at the top of the hour on "techcheck," a lot more on netflix. interesting levels 277 will be a six-month high, first time to the 200-day since january. that begins in about 20 minutes. don't go away. - yieldstreet presents: alternative investing with kal penn and older kal penn. - oh, the stock market is doing that fun thing again. - hey news from the future, you're going to live through that about 10 more times. (laughs) - oh, it's no stress. i just discovered yieldstreet.

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welcome back after two consecutive courses of subscriber losses, netflix adding 2.4 million new subs. joining me now is spg global principal simon gallagher. great to have you ban on here. i want to start with this ad-supported platform that the company is pretty quickly announced and now poised to roll out. my first question for you is, is this going to put netflix in more direct competition with linear tv? >> look, i think they already arein direct competition with

lynn gar tv. it broadens the addressable market we've spoken about this before only 8% viewing time in the u.k. and u.s. i think linear tv is still the global behemoth. the upside is significantly greater because they have the much larger addressable market. >> how great is the risk of cannibalizing between the current subscribers who are paying more to not view ads. >> that's certainly a consideration. i'm sure they've done detailed financial modeling that looked at what they can generate on the cpm basis. i think they're probably pretty confident the new subscribers they'll be able to generate, even if there is some degree of churn from the higher-priced tiers, they'll be in a better, healthier position i have to say on the earnings call yesterday, i haven't heard reed hastings as optimistic and excited about the future as he was in a number of quarters.

>> he seemed to have a little pep in his step with some of the remarks he was delivering. >> absolutely. >> in terms of content, we know before it had been quantity. we've seen the shift this year to quality, and something you've talked about on the show as well is the execution of that strategy, is it taking root? can you say it is when you see a subscriber addition in the last quarter? >> i think so. they pointed out that gray moon had been viewed in 118 billion households around the world. that's an incredible number to point to i think there really is some of the new both on film and tv. so, as i said last time i was on, i think sometimes we're a bit too critical of the content they're bringing out but everything can't be a hit. they certainly have more than enough hits i think to satisfy the subscriber base. >> speaking of hits, there's a long story in the "wall street

journal" that talks about netflix's exploration, whether the company would benefit from longer, wider theatrical releases for some of their movies, sort of building up an audience prior to hitting the platform what were you thoughts on that and what was your experience, if you can share it, in terms of previous discussions when you were at the company. >> obviously i was at the company a long time ago. i discussed that with reed who is famous for wanting go for a walk around the block. we skissed it discussed it on those walks. even if people don't go and see it in the cinema, it does motivate them to view the title when they see it on the streaming service, they recognize it was theatrically released and makes it more appealing as they go through the selections of what they might do on a friday night on the service. i understand it was a period of time over the past ten years where netflix has been about

differentiating themselves i think they've done that now, and i think it is an important time to say, hey, there is a title active rain man that will provide a more premium experience sure, put it on the theatrical platforms for a limited run, and i think that will deliver more engagement downstream. >> the other interesting thing was doubling down on the binge model. they said it's hard to imagine how "squid game" would have become a mega hit without the momentum that came from people being able to binge it certainly not everybody is following suit i wonder if you think it needs to go one way or the other, or can various streamers tailor that strategy for themselves >> this is an interesting one. certainly yesterday looking at some data, i was very surprised to see netflix had reported their support of the binge model.

it highlighted on the google word search results that, when they compared to some of the premium shows on other streaming services, the binge model seemed to get more engagement from people searching for that title. so it changed my opinion on this a little bit and brought me back to the binge model i think like many oerks i started to think it's better to release them on a week-by-week basis or certain episodes at the tiechlt i think they might be convincing me that the binge model is the better way to go. >> finally, con they make a point that our competitors are losing $10 billion while we're making $5 to $6 billion. they're at 17 billion. how much more does it have to go up and/or increase the number of subscribers or are they at a good level >> i think they're at a great level. i think they're only -- every

year they're refining better and better what the audience is looking for, what resonates with the audience, what content creators are able to capture the audience and engage the audience they're constantly finding that. i don't think you'll see the conten providing they don't enter into sports or some additional news genera. >> thank you a check on the markets here. there's definitely a tug of war between as we said earlier the impact of higher rates and some pretty good corporate results and guidance dow is up 50, the sector leading at this point. involves some tech and energy. stay with us get the new iphone 14 pro on us. right now t-mobile is including apple business essentials so you can easily manage your team's devices.

on the network with more 5g coverage. only from t-mobile for business. - yieldstreet presents: alternative investing with kal penn and older kal penn. - oh, the stock market is doing that fun thing again.

- hey news from the future, you're going to live through that about 10 more times. (laughs) - oh, it's no stress. i just discovered yieldstreet. they vet investments that don't ride the stock market rollercoaster. - ooh. i think some of my gray hairs just reversed. - yeah. you're welcome. - [narrator] become an investor today. yieldstreet: private market investing.

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number of earning laggards, including abbott labs, they topped estimates on profit and revenues but the baby formula shortage and declining covid-19 testing trends hurt sales. one outperformer is isrg the ticker after the company beat the analyst expectations on the top and bottom line, so one of the biggest gainers up nearly 14%. back to you at the new york stock exchange. >> dominic chu, thank you. yeah that baby formula shortage still alive and well after the break, mortgage apps what it means for home buyers that's next.

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has grown into eight stores. we're a must-stop shop for unique nola-inspired gifts. lauren doesn't just create cool nola merch; she creates opportunities. small businesses like lauren's open doors for neighborhoods to thrive. support your community. support small business. rising rates weighing big on the housing industry diana joins us with more . >> reporter: morgan, mortgage demand is in its fourth straight month of decline applications dropped 4% from last week.

we're 38% from a year ago. refie demand dropped another 7% for the week,86% lower than a year ago given today's higher interest rates there are record few boar rorers who can save money doing a refie. and the rates from mortgage news daily, fixed at 7.15%. given what we're seeing today that will likely move higher and borrowers are looking for any way to save. the adjustable rate mortgage rose to 12.8%. now we also got the latest read on home construction looking here at single family where it starts down 4.7, down 18.5% year over year and building permits which are an indicate e of future construction, fell 3% for the

month. all of this should come as no surprise given the drop in buyer demand a report from red fin says sales dropped 25% year over year, new listings down 22%. we'll get the official numbers from the national association of realtors tomorrow here on "squawk on the street." back to you guys. >> what does this mean for home builder stocks >> they can go lower, it's not great for the stocks we don't see any runway to get improvement given where demand is un until we see that bottom out, it's not great news for the builder stocks >> diana, thank you. of course it speaks to, david, the fact that we see generac performing so poorly today too. >> as for the broader markets as we get ready to hand off to

"techcheck." we're seesawing based on the yield or ten year as they tick up we tick down. vice versa that does it for "squawk on the street." "techcheck" starts now happy wednesday welcome to "techcheck" i'm jon fortt with carl quintanilla, deirdre bosa and julia boorstin today stocks are mixed but is there hope for the bull's? netflix is surging as strong subsubscription numbers help there. and what it means for software and a look at one chip industry name bucking the trend as china curbs hit the rest of the sector asml pulls acpast the competitin this morning. netflix is the top gainer on the nasdaq and s&p as shares surge on stronger than expected results an