cumulative doubling in production that's what's going to bring sticker prices down and drive demand >> tasha, thanks perfect ending got 13 seconds to summarize the markets, which are now negative, at least on the dow. the nasdaq has gotten more negative the ten-year, maybe not to blame here i guess a new prime minister isn't a panacea for us, apparently make sure you join us. "squawk on the street" coming up next ♪ good thursday morning, welcome to "squawk on the street," i'm carl quintanilla with jim cramer, david faber at the new york stock exchange. premarket trying to hold some gains here as liz truss resigns as prime minister in the uk after just 44 days got some solid corporate earnings but again, rates at new cycle highs, two-year hits for six. our road map begins with the big news out of the uk, liz truss is

out after a tumultuous six-week term >> tesla shares down you're going to want to hear what elon musk had to say on that earnings call and rate hike fears once again, yes, you heard joe mentioned the ten-year yield at the end of "squawk box. that's getting to a level we haven't seen since 2007. >> let's get to the global markets this morning as the prime minister in the uk does resign, britain's shortest-serving prime minister and some reports that jeremy hunt is not going to stand for tory leader. she says we'll get an election within a week. >> these are very hard to process because maybe i'm limited in my thinking height of earnings season. getting really conflicting evidence that says how europe is europe is at the epicenter of weakness, probably already in a recession. and uk is a bit of a side show >> agreed. >> side show, it's brutal, such

an important country, historically >> it is resignation of the pm have any impact on our markets? >> none whatsoever >> that said, there's a lot of people looking at the tumult that took place in their bond markets when she first came in a few weeks ago and they introduced the plan to cut taxes dramatically and sort of unfunded tax cuts, so to speak, and what that did to the underlying markets, people were wondering, could that ever come here? >> well, i just think this there would be another time when we would just say that it's a giant clown show over there. i mean, there isn't anything there that impresses me as valid and a way to run the country i mean, this was a great country. could be a great country again >> are you talking about us or them >> no, i'm talking about them. >> oh, really? >> no, i mean, like -- >> just checking >> when you have -- carl, when you have a prime minister, when you have cabinet, everybody in

trouble, move forward, and our two-year ticks a little bit, someone's going to say it's related to sterling. no i mean, it's related to fed speak. look, we have to cover it. uk's a real country. but i just think that there was a day when i would have just been all over this, trying to impact -- figure out what the impact would be. >> isn't the story, though, i mean, it's a -- it's a response to bond vigilantes and markets and not just policies but personnel doing huge u-turns >> if you do something that is completely opposite of what we need in the world, then, yeah, you deserve to be bounced. i mean, we're at this critical moment in time where we have to stop inflation, and someone comes along with a plan that david is, let's stoke inflation? we did that in our country, and obviously, we're harder on her than we are on us. >> it was odd to say the least, in terms of the timing >> i thought it was ill advised.

>> clearly, it was ill advised because she is the shortest-serving prime minister ever >> and we're in for our third just this year let's get to cnbc in london with the latest on what happens next. >> reporter: yeah, so, certainly, the situation here is going to be quite tenuous. it was about three and a half months ago that boris johnson stood right here as well as prime minister then issuing his resignation but now liz truss pretty much doing the same, saying as well that another leader will then be found for the uk within the week having spoken to what is the 1922 committee, which is a leadership for the back benches of the conservative party here in the uk that leadership then found in just about a week's time, then, and jeremy hunt indeed, who is the chancellor of the exchequer, the finance minister, saying that he will not be putting his name in the ballot box to run as conservative party leader or as

prime minister, so that takes one person out of the equation, but there are afew names that are still being bantered around as possible leaders for prime minister or the leadership of the conservative party, and that being penny mordant, currently the leader of the conservative party within parliament. you also still have rishi sunak who ran against liz truss before she was put in as prime minister of course, you also then have boris johnson, who leads the most recent ugov poll as a possible candidate to take over from liz truss of course, he was the man in charge of 10 downing street just before liz truss, so very interesting that that name brings and rears its head again. coming out with a statement around 30 minutes ago, liz truss, the prime minister then had said, i recognize, though, that given the situation, i cannot deliver the mandate on

which i was elected by the conservative party and have thus spoken to the king, his majesty, to notify him that i'm resigning as leader of the conservative party. all of this coming after that minibudget on the september 23rd, which indeed raised fears around market turmoil, even forcing the bank of england, the central bank, to intervene in the gilt market and causing a whole host of turmoil, seeing the finance minister then leave the office a few days later. now, even the home secretary -- home office secretary, also leaving, so a lot of turmoil still happening. we'll see how this transpires. >> just a remarkable morning thank you so much, cnbc's arabile in london today. let's turn to tesla this morning, down in the premarket, reporting lower than expected revenue, cutting the delivery target but elon musk did remain bullish about the company and its demand >> i emphasize we have excellent demand for q4, and we expect to

sell every car that we make for the -- as far in the future as we can see so, the factories are running at full speed, and we're delivering every car we make and keeping operating margins strong a very small percentage of the total -- of the trucks on the road, we only have about 3.5 million, so we've got a long way to even reach 1% of the global fleet >> got a bunch of price target cuts this morning, jim, auto gross margin misses. >> i like the quarter and i think those who sell it are making a mistake he's got the -- look, he's got the 150 killer, so to speak, and that's going to ship at the end of the quarter he's talking about a tremendous opportunity to be able to export from china no one else is able to do that berlin sounds really, really strong the only thing i didn't like, and david, i want to question you on this directly >> okay, sir

>> should tesla be worth more than apple and saudi aramco together apple, $2.3 trillion, saudi aramco, $2.1 trillion. was that right and a buyback. or, and here we're going to really get him, i'm putting david on the red-hot griddle or, if you had to sell a lot of stock to fund twitter, wouldn't you like to have that language >> you would i'm going to have more on that, actually, on what's going on with twitter and furious equity raising going on there i'm not sure it's going to result in him selling a lot of tesla, and i'll talk about that later. >> really? >> i think possibly not. but i don't have all the facts but you're absolutely right, jim. it did get a lot of people's attention when he talked about seeing what he quoted was a potential path for getting to that number. i believe we can even take a listen in his own words. >> i'm of the opinion that we can far exceed apple's current

market cap in fact, i see a potential path for tesla to be worth more than apple and saudi aramco combined. now, that doesn't mean it will happen or that it will be easy, but for the first time, i'm seeing -- i see a way for tesla to be, let's say, roughly twice the value of saudi aramco. and i think that's -- i haven't quite seen that yet. i mean, this is the first time i've seen that potential >> it's the first time he's seen that potential, $4 trillion. listen, it's elon musk the man is unlike anybody else in terms of creating value at this point tesla does have, what, a $700 billion market value even now? had been close to a trillion spacex is worth at least 125 or $130 billion that's obviously a private company. and i will tell you, as well, in private conversations, he has been telling potential twitter holders that he thinks that company could be worth hundreds of billions, if not as much as a half a trillion.

that even got a laugh out of carl that is what he is saying. that is what he is saying. that is what his advisors are telling people as well, that that is the opportunity in twitter. so, that would be a ten-bagger, let's call it, from $44 billion to $440 billion, let's figure. >> and those who look to history and his record, jim, and say, see, he can do it, i wonder how much of that was due to an era of low cost of capital, government subsidies, industry trying to make a turn. >> in terms of ev business, holy cow. i mean, he's making every car sells, no advertising needed on twitter, i remember speaking with marc benioff during the period with salesforce when he was debating buying twitter, and twitter was to look nothing like twitter does now >> it's the x app now. he keeps saying -- i don't know what that means but it's going to be the x app. >> it's like the cosmos. we don't know what the cosmos means. >> the company did $3.3 billion, this is tesla, in profits.

>> cash flow's fabulous. >> cash flow is real they're going to approach a hundred billion dollars in revenues not too long. >> the lumen injection system in the 1/10 of the blink of an eye, he's able to make the front part the guy is -- i mean, henry ford -- he's henry ford without that kind of odd political -- >> he gets kind of political too. >> but not as -- not as couched against particular religious group. >> correct thankfully >> trying to -- >> all right yeah >> evercore today does point out, dan ooifz, the bullish narrative is being challenged. is this about logistics issues >> the bullish narrative is being challenged >> increase competition all around the globe >> no, it's completely wrong it's about the fact that the man is just unbelievable even in a recession. he's got the cars that people want i thought it was remarkable -- other than his decision to do the, you know, the comparison,

which i thought was rude -- >> what, saying that he could have a $4 trillion -- >> i didn't like that. >> i thought it was interesting that he said, for the first time, he bloelieves that to be e case he didn't fully explain why now as opposed to last quarter >> when you're on calls about china, i mean, china -- one could argue that china is falling apart and that whether they -- they haven't even been able to steal the pfizer vaccine and reverse it can you imagine they haven't been able to steal moderna where are the intellectual thieves that i've come to expect >> chinese people may not want to -- >> they can reverse it >> they can reverse it and call it their own one part of china's economy that's working is tesla. it's remarkable. he's using china as -- he's figured out export in china, and everyo everyone wants to shut him down. i thought the call was so impressive with the exception of -- he should not sell any stock. >> ron baron comes on and talks

about those kinds of numbers too. >> do you think that relationship can coexist with what policy's turning into, in this country, regarding china? >> that's a very interesting question i don't know >> we hope so. >> we thought that trump, when he said he was going to drop a nuclear weapon of xi if he did anything in taiwan, we thought that was a ratchet up, but that was just a private conversation. but if you listen to what lamb research said yesterday, remember, they're the number one intellectual property company for semiconductors -- >> chip-making equipment >> done. so, there's lamb, no tesla, yes i mean, i was surprised he wasn't brought in on this. >> apple, yes. starbucks, yes n nike yes >> picking winners and losers. >> made in china for china is the way to do it >> although when it comes to

tesla, it's made in china for much of the world, not here. >> the only thing china can really be proud of at this moment is musk >> they might differ with that >> i know there's music. i don't care i want to say something. what they've done is switched to coal thank you very much for the environment in order to sell the lng in europe. that's what i call -- what's called pickling. that's the term they use pickling that's where you arbitrage things >> we'll hit ibm, beating on the top and bottom lines, pretty good revenue growth. we'll get to lamb research, at&t, tractor supply, and a bunch more don't go anywhere. who's responsible for building esg into your investments? at pgim, the pursuit is on for outperformance. as active investors, to outdeliver with customized strategies, integrating esg best practices into our investment decisions. as asset managers and fiduciaries, to outserve,

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continue to focus our portfolio, invest in our offerings, technical talent and ecosystem, and streamline our go to market model with strong performance through the first three quarters, we are taking up our revenue expectations for the year and now expect 2022 revenue above our mid single digit model. >> that was ibm ceo arvind krishna on the call for the company. you can see the stock is up 4% ai i'm getting a different read this morning they did exceed their revenue goals, but free cash flow conversion was very poor and a number of investors i've spoken to have focused on that. they generated $752 million in free cash flow for the quarter

the consensus was $2.2 billion and that does leave them to meet their $10 billion cash flow target >> he reiterated q4. that's nitpicking. >> i don't believe it is at all it have the quarter was excellent. >> analysts are taking down their calendar '23 numbers to around 946 from 990. the gap was the biggest since 2014 to be fair, they did have a $4.4 billion aftertax charge, noncash charge from pension. >> that was explained in the previous quarter david, the revenues. can we -- revenues >> why revenues? >> well, revenues, i'm trying to make -- >> because if it's empty calories, who cares? if you're booking stuff that's not going to generate free cash flow -- by the way, you're right, and i have a vote here, to be fair, from the cfo on the call he said, we had a very big fourth quarter

we have a very big fourth quarter in front of us, we've got to do roughly $6 billion in free cash flow, about 60% of our free cash flow, but we did in 2017 to 2020, we did it at or better than $6 billion of free cash flow in that same quarter, so we've got the right portfolio, the right set of operational actions, and that is what we're focused on. >> 12% if you do the currency. david, the most important thing is these people whispering in my ear, dividend's in trouble they have a ton of cash. dividend's not in trouble. the numbers were good. >> i can see you're absolutely positive free cash flows, percent of revenue, 5%, down from 13% net income, as a percent -- free cash flow as percent of net income, 42%. had been 98% explain what's going on then why isn't stuff dropping to the bottom line? >> first of all, i think the fourth quarter should be gigantic >> you think that because you said that, but should we believe them >> yes >> okay, why >> why because the hybrid strategy is

indeed working, and they got rid of a lot of stuff. they gave kindrel all their low-end reselling business it's unfortunate that kindrel is tough to own i think that what we saw is an actual growth part i'm focused on the growth. they're returning to growth. >> okay, but if you're booking revenues that aren't going to really generate profits, then is that really what you want to be focused on particularly if investors are focused on free cash flow numbers. >> i disagree that it won't generate profits i think getting actual business that people are using and the red hat strategy is working and basically i was looking for revenue growth i did not want bottom line i'm sick of the bottom line ge >> well, i -- >> no more ge. >> david's points goes beyond ibm. it's a series of reports now where bottom line has been tough but revenue's been ahead or margins have missed. in the case of ibm, they did >> i felt their growth strategy is starting to pay off and arvind, i was very skeptical when i looked at the situation,

and i came back and said, it was a decent quarter, and the people -- the haters are going to come out and say, the bottom line, but these were the same people who told me to worry about the topline. you can't keep making it so that, well, hold it, jim, it's topline, you didn't look at that you're looking at the bottom line and then they switch you. you can't -- i want to judge this company as a growth company, and i think there was growth there, and that's my point. >> well, i think that we can remember this moment, and we will take a look at what they delivered in terms of free cash flow for the fourth quarter, and if they hit that $10 billion number, as they seem confident in doing, we can sit here and say, okay. they did it. >> not we. i've already said they're going to do it >> okay. i will make note of it >> thank you >> you're welcome. >> thank you >> good talk good talk. we'll get cramer's "mad dash" and count down to the opening bell keep your eye on yields today. we got more fed speak on the way. ten-year, not too far away from the morning's highs of 4.18. don't go away.

once again, a series of pretty solid corporate earnings clashing with new cycle highs in rates. you got the terminal funds rate now topping 5% obviously some international news as well out of the uk futures have been in and out of the red. opening bell in a few moments, and don't forget, you can always catch us any time, anywhere, just listen and follow the "squawk on the street" opening bell podcast

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the opening bell is brought to you by nuveen, a leader in income, alternatives, is responsible investing. we got three and a half minutes -- excuse me, two and a half minutes before we get started with trading on this thursday you want to hit the transportation sector a bit for "mad dash" >> now, there's a company called night swift and they talked about a sharp decline in demand.

they cut the forecast. i would say the boom is over spot rates have collapsed. they're basically saying business has had a sudden deterioration. you know what this reminds me of fedex. so, you're beginning to see, we can get to union pacific, too, which had not great numbers but this is part of the slowdown some of this would be, i think, what dow chemical is talking about, which is housing. housing has really started to come down as a major engine, appliances come down, but knight transportation, i found very jarring because there was a time, david, where we didn't have enough truckers, the -- everything was going wrong in terms of supply. now, there's plenty of supply, but the costs that they have in terms of truckers has not gone down >> didn't we hit jb hunt the other day too? >> jb hunt was similar that's why i mentioned it. jb hunt was similar. these are very well-run companies and they're seeing a

deterioration that's so rapid that it's important to point out for those that think everything's fine in this country. we can talk about the prime minister of the uk, or we can talk about -- >> what does it say to you what are the broader takeaways from this, what you're hearing from these transportation companies? >> okay, so, we're not -- dow talked about how there's housing decline. no one's talking about wage declines yet, and we certainly don't have any food declines, but if you're the fed and you're going to continue to raise, you now recognize that certain parts of the economy are doing quite poorly you don't care because your goal is to make it so that we break wage growth, and the average cost for household, $445 per month, has to come down, but this is the beginning. this is the beginning of what you should be hearing, which is that, like fedex, commerce -- because the transports are grade leaders -- commerce is coming down now, union pacific did not give you any reason to be excited either so, i think it's in keeping -- if you're with the fed, you should be saying, you know

what's going our way like bullard, it's going our way, we got to keep it going, but it's going our way carl, as far as i'm concerned, anything on track positive >> the opening bell. cnbc's realtime exchange at the big board, emerald holding celebrating advertising week here in new york. at the nasdaq, an ipo, prime medicine, a biotech focused on genetic therapies. everything you're saying, jim, kashkari acknowledging the pain in housing, does that give credence to gundlach's tweet >> i thought that was -- he made a lot of cogent points it's just that we can't get food down i've been getting in touch with -- i usually don't talk to my manager, but there is this

kind of growing belief that if somehow russia and ukraine could come to a detente, which means play for a tie, then we would begin and china would be able to reverse engineer an mrna or pfizer, then your going to come down on the wrong side of growth i come back and i say, it's already deteriorating so quickly in europe, and if it weren't for our lng being shipped there, they would collapse in the winter china shows no signs of doing anything positive. and those are slowing the economy, and our country is really being impacted by the rates. so, the fed's winning. it's painful when they're winning, but they're winning >> yeah. you kind of sound like dow chemical >> i'm repeating what jimmy said >> eu challenged, china challenged, six-quarter low. >> and housing is bad. but fettering is still doing

better than expected but he's calling a recession. by the way, alcoa, which was disastrous, the prices are coming down and the costs are going way up, including two european factories, david, where the cost of energy is ten times here >> right >> now alcoa is not down three or four because they have some demand, but we're getting, over and over again, david, fundamental things that are weakening that should weaken if we're going to have any hope here remember, we're not hoping for good we're hoping for weak. >> right >> like, new core today, weaker than what they were projecting the great steel company. so, yeah i'm focusing here. >> don't get distracted by me, jim. focus yourself i'm just getting myself ready to talk about at&t. >> i like the fact that he's forward thinking >> that's good we got someone to do recon >> but new core missed and i think new core is a great american company they have lower shipping

volumes, so you have steel, aluminum, trucking, urethane, put them together and you can make a pastiche which says, fed, you're winning as opposed to saying, fed, you're destroying. they're not doing that they're winning. >> i would add that philly fed was a miss and yet prices paid were higher. >> see this is -- it's like knight swift. they're still paying the truckers more. they've not been able to break the wage cycle david, do you have anything in your pile of tricks over there to break the wage cycle? >> is he felix the cat >> let me look no, i don't see anything sorry. let me check my texts. no no, i don't have it. i can't break the wage cycle for you. >> look at this, david, i've got the agreement with dell. >> yeah, we want to talk about that it's an interesting story. >> two old friends >> yes, byron and michael's firm getting together to help rich people get richer is how i describe it. >> what are you, lenin

>> these are firms that are already focused. it's actually a very interesting story, but again, not related to -- >> these are two of the finest guys to ever go through goldman. if we could have a camera on what's being walked by right now. don't be don't be that animal >> it's a picture of a giraffe >> i want you to recognize, david, it's not rich people getting richer it's smart people doing the right thing. >> is that what it is? >> well, because you -- i'm pro-capitalist >> as am i byron's currently raising a $13 billion fund, but putting these two companies together, they are going to -- this is byron trotz of btd along with msd partners, right, became famous as being buffett's banker, is going to provide an investor base for, well, for many very wealthy people, for example, tech founders who are trying to find a place to put their capital that can compound over time. they're not looking for enormous

amounts of risk, but allow them to diversify their capital base away from their original funding. you know, i think certain parts of the big investment banks that focus on these kinds of things, absolutely >> you know why? >> it's a multiclass asset manager at this point with a large private equity fund that also is going to be able to have, under lemkow, an advisory capacity, but they are not looking, jim, in any way to compete with the likes of goldman or even, you know, a guggenheim that's not thafreir plan >> if i were those different firms, i would say, you know what lemkau, powerhouse, loved. trott, fantastic, loved. i remember trott when i was at goldman. these are two loved people and i say -- david has tended to not like or love or anything bankers. he's very neutral. but david, if i asked you about those two people, about lemkau and trott, you know what i think you would say? fine people. >> yes fine >> that's about the -- see, you

give faint praise. i damn with faint praise you give faint praise. i said, whoa, i'm glad i'm not going against those two. >> i'm not going to give faint praise this morning to taat&t i'm going to say, they had a quarter a lot of people liked. john stankey was a guest on "squawk box. they exceeded many analyst expectations in terms of subscriber additions, seeing it here described by a number of analysts as better wireless ads, revenue, ebitda growth for its part, jpmorgan reiterates it was overweight and goldman-sachs saying, solid results, improved or maintained its '22 guidance for key financial metrics. you see all the ads. you see what is perhaps very active promotional at&t but it's working in getting them customers. >> don't you think it's interesting that apple was mentioned on the goldman call,

working, getting new customers here, at&t, and yet there's going to be some report from some publication we've never heard of where somebody got shorted, and leaks that there indeed are microchips that involve the broad part of the antenna of the 14 pro and you got to sell apple. meanwhile, apple is integral to verizon, hans vestberg on tomorrow, to verizon, to at&t, to t-mobile, to goldman-sachs, but david, there is a part, according to imagination.com, imaginationdragon.com, which says they are not ordering as many chips that they use for the sound system >> right all right. so, you're tossing that in the junk pile, the idea that they're having issues. >> i'm saying people get short, they call some stupid publication. no, not stupid ill advised publication that doesn't really do double check, and by the way, can i just say, carl, if you are a supplier and you talk to the press, you'll never get another order from apple again, so is it worth it to give it to

imaginedragons.com >> did you see the mizuho desk note about that information report, basically saying, two sources, really, on apple supply chain? do you have any idea how complex apple's global supply chain is >> they could go from china to -- i mean, apple sources better than any other company. when you speak to companies with supply chain problems, with the exception of tesla, which, by the way, wants to be as big as apple and saudi aramco combined. >> let's just go with $4 trillion. >> nobody has a better supply chain than apple >> on at&t, that's back to the 50 day for the first time in a long time. >> at&t was riding on the back >> at&t, consumer wire line, fiber net adds of 338,000, estimates were below that. at&t's beat, you know, postpaid phone net ads, 708,000, and again, that was ahead of most of the analysts' expectations their free cash flow number was 3.8 billion. that was a bit below what had

been the consensus stankey also did talk about inflationary pressures and a number of other things in his interview with the "squawk box" gang earlier, but let's give taib at&t its due for this morning. >> i said, enough is enough. it's just not worth it to be negative on them i happen to be a big fan of t-mobile >> i know you are. that's been the right place to be without a doubt >> thank you because the inverse cramer is short -- >> without a doubt by the way -- >> the inverse cramer hates my wife >> t-mobile's market cap exceeds that of verizon by $14 billion, just to put that in perspective. >> isn't that something. >> remember about six weeks ago i was talking about, remember, how it passed that for the first time i mean, it's left it in the dust >> we have to keep those things in perspective >> believed to have the best network is now, the mobile, not verizon. and growing the fastest by far >> have you switched >> i have not. >> i sat next to mike, it's one of those things where -- when you sit next to t-mobile guys, they look at your phone, and

they're like, what two tin cans talking to each other? they are so aggressive they try to convince you right there, right on the spot what is that i said, it's a verizon well, hands-down, the worst. that's where i got that joke from t-mobile. >> i get it. >> always selling. yeah, at&t's going to lead the s&p this morning >> look at that. >> that doesn't happen a lot >> no. >> american, jim with the beat, guiding above for the december quarter >> i love the quarter even better than preannouncement. >> load factor, 85.3 is up almost 7 points from a year ago. >> going back and forth with lebeau about whether the industry does have fundamental change because typically you can't buy this going into any sort of recession, but this theme about the weekends and the new way we work means that you can travel, like, every week's a three-day week, which, of course, by the way, jibes with my, people don't do jack when they're at home on fridays it is absolutely incredible there could be an airline rest

>> premium cabin load factor up 5 to 10 points from pre-covid. now they're saying, first class cabins will no longer exist because that gives them more room to enlarge the business class cabin. >> i just think that they can charge at will people are flying overseas you probably go to london right now and get, you know, one of those bespoke larry kudlow suits for, i don't know, what price? >> what do you think >> probably, like the way men's wearhouse. >> nice. 250 bucks. >> yeah. for a bespoke suit no, i'm talking about people realizing, we have not talked about this enough. we talk about the strong dollar and it's endless but how about for the inflationary factor of you can go and travel, which people do, post-pandemic, and the rest of the world is our oyster? our oyster you know, like the ones from the west coast >> i'm ready to travel any time you want you guys want to hit the road? i'm ready. you with me? where would we want to go? >> i'll lend you a place in italy.

>> what do you mean, led me? there was a time we used to take the show on the road >> i'm ready >> meet our dozens of fans in other cities >> i want to see what the weather is in florence if it goes below 34, we lose our whole crop >> i want to add to what i was discussing with tesla. >> florence is 77. the crop lives i'm sorry. >> no, don't be sorry. because, you know, we're getting closer, of course, to the close of the twitter transaction, and i have been told by any number of people lately that there is a furious effort under way to raise more equity, raise more equity for this deal this is in addition to the $7 billion that has already been circled by elon musk, remember, with the investor base that he talked about, that we know about. this is in addition to mr. musk's contribution. there are emails going out to capital sources from all sorts of different institutions, saying, you want in? you want in? you want in?

$100 million can you do $100 million? can i interest you in more maybe a little more. here's some of the writing that's -- that we're seeing right now. >> this is very interesting, david. >> first of all, we've received communication from the bankers the closing will be on october 28th, so that's exciting, isn't it we would like to affirm this transaction is for people who want to back elon and believe in his vision and operational superiority. the transaction will include a substantial pivot on strategy to transform itself into a super app under the moniker, x corp., and that bears a substantial risk it is not valued in a conventional way, as is the case with tesla and spacex. but a number of these firms that are out there -- >> are people buying this rap? >> i don't know if they're buying it. but this is part of what's going on right now, trying to gather up as many equity commitments as they can from its well-heeled investors, saying, come on with elon

and by the way, there is also something else here, which is, hey, don't forget spacex maybe you want to get in on that too at some point. and mentions, of course, of spacex in terms of the valuation at one point in the early going and what it is now what tesla was as we talked about earlier. >> i'm a believer -- >> there is a lot of furious equity fund-raising going on right now. i've heard this from any number of different people who have been approached. they're out there. maybe that will preclude mr. musk from selling more tesla stock. i don't know >> we don't want this to be a pump and dump, 5 to $10 billion buyback, maybe, and we're as big as -- i don't even want to say it because it's so ridiculous. i continue to blooe telieve thee ideas for twitter that we have no idea what it's going to look like but it's going to be better than today >> it's going to be a super app under the moniker, "x" corp. >> a lot of comparisons to we

chat, although, how much are regulators interested in watching this thing get bigger, not smaller? >> i'm going to reiterate that i think meta is not going to blow up in my face. >> it's going to be a private company next friday. >> what? >> twitter >> and then what do we do? how do we measure it >> i don't know. we don't >> okay. >> meantime, guys, pretty mixed market dow is up, s&p lower, energy leading along with some tech let's get to bob pisani. >> good morning, guys. flattish open, you're right, and given the worries about an imminent earnings collapse, which is not materializing, i guess that's a bit of a victory. take a look at the sectors, energy is leading but semis, ark innovation, metals and mining, those are the three big risk on, all fractionally positive as you can see here a lot of earnings starting to come in. we're getting close to 20% of the s&p 500 reporting some big companies with earnings beats, ibm, we've been talking about that all day at&t, nice move there. american airlines did well, but down here, it had a move up

recently union pacific, that was a beat, but they had gave very cautious guidance, particularly on carload, so i think they're going to be lowering the fourth quarter estimates for union pacific, so that's down. we did have a few misses jim was talking about knight, but i was curious that some of the big super regionals, fifth third and key corp. also had misses they weren't big, a few pennies, but given some of the beats we've seen in the big banks, that was a little surprising overall, the earnings trend has been favorable but the sentiment -- investor sentiment is still just awful. i keep following this american association of individual investors, and weekly survey, look at these numbers. 22%. these are near historic lows usually, bullish is about 40%. bearish is something like 30% or 28%. these are completely inverted and they've been this way for weeks and weeks on end so still pretty negative investor sentiment, despite the fact, though, the bottom line is so far, the numbers are not bad remember, everybody's expecting

this imminent apocalypse in earnings and it's not happening. so far, for the third quarter, we're expecting 3% overall growth much of the boost is from the energy sector, still, but it's not collapsing, even in tech 4.7% is the fourth quarter growth normally, when you get a recession, this is what everyone believes, earnings tend to drop somewhere around 20% or more that is not happening. so, if you look at the times here, earnings during recessions, just recently, aer earnings have dropped rather dramatically, '89 to '91, during the big one, the great recession in 2008, down 56%, but that's a real anomaly, and 22% during covid. that's how much earnings have declined the good news is that the market bounces back the earnings usually bounce back within a year or two and even if you look at the s&p 500, just at the price, it's fairly rare to have declines of 20% or more it's only happened ten times since 1950, but if you look one

year later after the decline, it's higher than it was 70 president % of the time and that includes even the down years, so the bottom line here is that not only is there no evidence of an imminent earnings collapse down 20%, but even if one happened, the historical evidence is that you're made whole two-thirds of the time, and carl, that is the beauty of capitalism, a very ruthlessly efficient allocator of capital >> thanks, bob bob pisani as we go to break, let's check bonds this morning, another busy day in macro we've gotten some indicators but we'll get jefferson, cook, and bowman in terms of fed speak, leading economic indicators and existing at the top of the hour with the two-year not far from 4.

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time for jim and stop trading. >> i was going to talk about how much i like pioneer. downgrade yesterday which i think is ill-advised covid bioprocessing business, maybe a little too much inventory. if you sell dana herd, you don't know what kind of company, you never should have bought it. these are the brightest people it's a heck of a well run company. >> originally -- $180 billion market value, even notice, even now. >> they have a great business they bought from ge. life science business is second to none, abbott labs and tmo

they say, dream on sell if you want, get the hell out of that stock. i want you to sell it because i'm going to be a buyer. sell it to me, moron, because i need your stock. >> about a three-month low off the opening lows as well >> i think the giraffe was selling because -- geoffrey the giraffe is in my mentions column talking smack to me and i want him to sell all of his danaher to me. take it to 200, joker. blind giraffe finds danaher. terrific >> tonight, what do you have >> i don't even know. >> maybe geoffrey the giraffe. >> snap and -- >> i once was 126 bowlero. >> i'm always finding things out about you. >> you have your own ball and jacket. >> of course >> really? >> absolutely.

>> really? >> i had gym, i had blue gym and red gym. >> nice. >> i think we should go bowling. >> i bold a 180. >> really? >> jim, we'll see you tonight. we did as much as we could this hour we got a lot - >> danaher, sell it to me. take it down to 200. >> on the show, on tesla's quarter -- >> ibm up since you trashed it. >> i didn't trash it i had a debate with you about it >> receptacle. this is -- >> you don't like that >> amazon is doing well, too. >> don't go anywhere - yieldstr: 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.

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welcome to another hour of "squawk on the street. i'm carl quintanilla with morgan brennan and david faber. the s&p hanging on to 3800 got some fresh data crossing the tape let's get to rick santelli >> yes, september read on

leading economic indicators. not pretty down 0.4 of 1% that's a bigger drop than expected on a month-over-month basis. outside of february, every month this year has been negative. that is unreal and history dictates this isn't pointing towards good economic activity down the road. and we also have another important release. our september release of existing home sales. and for that, we head east to diana olick. diana? >> well, rick, existing home sales in september fell 1.5% from august to a seasonally adjusted annualized rate of 4.71 million units. that's slightly better than the street expected but was the eighth straight month of sales declines these numbers are based on clo closings sharply higher mortgage rates are, of course, to blame inventory isn't helping. there were 1.25 million homes

for sale at the end of september. that is down just under 1% from a year ago at the current sales pace that's a 3.2 month supply, a balanced market between buyer and seller is considered a six-month supply tight supply continues to push the median price of an existing home higher to $384,800 in september. up 8.4% year over year prices are starting to cool off month to month a lot more than they usually do at this time of the year realtors are still reporting bidding wars and a quarter of homes selling above list price due to that inventory. houses are sitting on the market a little longer. these contracts were likely signed in july and august before the 30-year fixed mortgage rate hit 7% as of yesterday, it was at 7.22%. morgan >> wow diana olick, thank you we're 30 minutes into the trading session. here are three big movers we're watching

ibm raising its outlook for full year revenue growth. soft revenue increased 7%. basically robust demand for the dow component digital services helping to offset the impact of that strong dollar shares are up 3.5% allstate, the s&p's worst performer tumbling after the property and casualty insurer reported it will report a third quarter loss catastrophe losses rising in large part due to hurricane ian in september those shares are down 11%. finally a freight name in focus. union pacific falling after posting mixed q3 results and trimming full-year volume forecast those shares are down 3.5% right now. we're going to talk with the railroad's ceo and chairman lance fritz about the state of the supply chain, the economy and a key one to watch in the coming weeks, labor. that's later this hour we turn to tesla about a 16-month low after reporting better than expected profit for q3 but did miss

revenue estimates and cut the full-year delivery target. on the call elon musk made the case for why the company is recession resilient. here's what he said. >> we're not reducing our production in any meaningful way. recession or not recession rear certainly recession resilient. because basically people both have in large part made the decision to move away from gas cars to electric cars. >> our next guest is still bullish, price target 316. joining us, baird's ben callum is the price action this morning suggest to you that the market is like, okay, we get ramp inefficiencies or is this soft demand >> we have a market back drop where any miss the stock is going to hit like this i think we're set for a very,

very strong q4 stocks on their own in a lot of people's portfolio out there, especially s&p 500, a very large one. i think there's a lot of room for people to buy it and buy it on this dip ahead of a very good quarter. >> musk has said, you know, it's important to smooth out some of these quarters and to make it easier on workers in the factories. do you think that's going to be in the offing? what's your target look like for next year? >> yeah, so we don't grow by 50% like, you know, they talk about year after year 50% growth i do think this is something -- going direct to consumers versus dealerships. they always have this rush at the end of each quarter, trying to smooth that out they've tried to do that for a while. i think, you know, ramping up the factory in austin will help that as well as getting cars closer to the consumers. >> ben, how big is the opportunity around the semitruck that's expected to start getting

delivered at the end of this year >> thanks, morgan. i think the important thing is we got a new product out there we haven't had a new product really since the model y the cyber truck next they alluded to a $25,000 or less expensive car out there as well but any time you get a new product out there, i think it's good for the stock, product refresh. in the grander scheme of things, it's a big market. not as big as the passenger car market but it's good they'll finally be out there after being delayed several years. >> the other market we don't talk about very often is the energy storage business within tesla as well. it's not a very big part of the overall revenue picture, but the fact we have seen these spikes in energy costs, not just here but abroad, is there growing demand here? and why isn't tesla making, i guess, more use of that opportunity? >> so, i thought this was one of

the highlights of the quarter and i cover renewable energy as well and i remember a few years ago elon talking we're going to do 1 giga watt next year. they five coal plants they did during the quarter if you put that in terms of batteries i think that business continues to grow. why hasn't it grown faster i think the main reason is because their cell supply const constrained. they're the best in that you see other oems, even gm moving into this space here, they haven't had the foresight that tesla has across the supply chain. i think tesla is a leader there. i think they continue to -- will be and i think that business can be a very large business by itself >> ben, it's david a musk conference call is different than pretty much every

other ceo out there. that said, i'm just curious to get your reaction to his comment that he thinks there is at least a potential path for tesla to be worth what apple and saudi aram core are combined? >> thanks, david a few years ago he was late for a conference call, i think it was the spacex had delays or something and comes in and the first thing he says is, you know, tesla is going to be bigger than apple. that's when the company was $50 billion or something like that and, you know, everyone kind of laughed him out. so, you know, it's -- it's a big, big statement there i go back to that. you know, he's not that far off. he gave himself until 2025 bigger than apple back then. i don't underestimate him. i don't like everything he says, but at least -- at least he goes big. >> so, ben, my co-anchor here, david faber, has been reporting

on twitter and that deal and how that's progressing as well given the fact that musk does oversee spacex, he does oversee tesla, he does have two other startups, even before twitter enters the fray here is he stretched too thin can he continue to navigate all these different ventures >> and he's got lots of kids, too. he must be stretched thin. i think he's got a deep bench, you know, at tesla, even though as turnover, i think he's got that bench there i think spacex, too, is probably his pride and joy. you know, with twitter, i think it's probably getting a little overextended but i'm not elon musk and i don't have his vision and, you know, so far he's done a pretty good job. >> ben, appreciate that, watching tesla today thanks >> thank you

let's turn to the broader markets right now and for that we are, in fact, more than 40% of americans report their personal financial situation has been hurt by higher interest rates. steve liesman joins us he has the latest from the latest survey. >> if you look at three things, what we call the trifecta of troubles affecting americans, you can see there's widespread pain from these three financial developments our survey of cnbc all america economic survey for the third quarter, 43% say their personal financial situation has been negatively affected by higher interest rates stock market decline even more, 47%. by the way, there could be more to come as you know the federal reserve continues to raise interest rates and over time more and more people are affected by that of course, inflation being the third leg of the trifecta or the third leg of the stool, if you will, 77%.

the outlook for homes and stocks, both have turned negative 28%, which you can see is below the previous bottom, 31%, saying this is a good time to invest in stocks very pessimistic for the public. 32% saying they expect their home price to increase haven't had that since 2011. one piece of good news, though, take a look at people's wage impp tagss 41% say over the next year they expect their wages to be higher. that's the highest we've seen since the pandemic unfortunately, though, a lot of people think we're in or headed to a recession 68% overall believe that then you break it down by party and, of course, we get some partisanship inside these answers here 83% of republicans compared to 53% of democrats and there's those independents right where you would expect them. right in the middle of 68% saying we're either in right now, will be or already in a recession. the already in is about 9%, but

it certainly adds to it. what's interesting here is 53% of democrats representing the party in power believe that to be the case right now. we did see a pop in biden's approval rating by about ten points we saw some increase in people's views on the economy still to very low levels, guys our pollsters both democratic and republican pollsters telling me they think this really opens the way for republican gains in congress in the november election. >> it's that point, the independents on that screen behind you, probably the ones to watch. steve, it's so nice to see you walking what we call the wall here at cnbc. >> the wall, just like old times. i have to be careful that my suit matched today an interesting challenge >> we're going to turn to the broader markets. stocks are rebounding on pace for a third consecutive week higher the dow is on pace to have the best week since late june.

joining us, head of integrated equity, ernesto ramos. there's such a tug of war happening between earnings that have come out so far and what's playing out in the bond market and rates. how do you see it? >> well, the market is right now trying to figure out so many things earnings and the economic outlook going forward because the fed has been injecting strong medicine to slow the economy down, demand down. that medicine really hasn't taken effect because there's a big lag. so, the market is trying to figure out how hard that medicine and how hard that downturn will be there's really no clear way to figure that out until the data starts coming out. even though the earnings so far have been reported are okay, it's the next step not necessarily the next quarter

but the second and third quarters beyond where we are today where we'll see the effects of that slowdown and there's really no clear indication of how hard the effect of the breaking will be because of the lag we're really navigating a little bit without a clear path forward. so, it's going to be very reactive and volatile to whatever the latest data point is i think the expectation of the consensus is we will enter into a recession, economic recession, that will mean an earnings recession. how deep is unclear to most people it's going to be volatile for a while until we get a clear picture. i'm afraid what's going to happen >> if i'm reading between the lines on what you're saying to me right now, it sounds like you think we are in the midst of a bear market rally. this is not necessarily sustainable here >> well, the market's quite oversold you're getting a rally, whether

it's a bear market rally or we've seen the bottom for a while, that remains to be seen it all will depend, again, on what the fed -- the market's trying to figure out, how high is the fed going to go right now it's 5%. at the end of july, it was 3.2%, so there's been a big shift upwards in how high the fed will end up going in their terminal rate the other thing is when will that terminal rate be achieved right now it looks like march or april of next year but the speed at which the raising might make it be sooner, and when will they pause as the market tries to figure all that out, the question is how hard will the downturn be? that's where we don't have a lot of clarity the market will rebound way before -- as soon as they have that clarity

to answer your question about the bear market the ultimate rally, it's unclear. the point that is very clear is the market is quite oversold right now. the negative sentiment is quite pronounced, as steve was pointing out in the earlier segment. there are conditions right now to establish some decent short-term to medium-term bottom again, if the fed continues to raise rates quickly, something else might break that's another concern the financial system is under stress because of the speed of the rate hikes that creates a lot of dislocations, and out of the blue something like the uk gilt's market was not helped by the fed, but helped by the fed and mismanagement of their policy announcement. all these things come into play. it's a complicated situation. >> we are going to ask if truss's resignation quiets

things i wonder what you make of the fact that 3700, where we are now, where we were during the summer, and the ten-year was at 3. >> yeah. and then you saw that massive rally starting in june through august until the inflation data really reverted -- it kind of softened and then reverted back to really, really hot inflation. and then the fed just really brought the hammer down on the rhetoric and just said, we're going to be very, very aggressive in raising rates. that killed the rally and brought us back down to new lows and sentiment turned negative. so, right now i think we're close to what we call a bottom, but if something breaks, something that creates big financial stress, not stocks not working, but something big, then the fed will have to hold.

all bets are off because it depends on what the stress is. >> thanks for joining us. >> bottom line -- thank you. >> all right we've been following the news out of the uk closely this morning. the prime minister resigning we are live from london with the latest and some headlines that crossed since we last spoke. >> reporter: yeah, it's a big afternoon. a lot of permanent tagss coming to the fore. the breaking news story is the prime minister, liz truss, has stepped down as the leader of the country and the conservative party. that process then will be followed by a week-long battle for leadership pretty much when an announcement will be made by the conservative party for a leader in the future the next prime minister. it was around 3 1/2 months ago when boris johnson stood outside 10 downing street and announced his resignation from the office of prime minister. that is being followed up again

and certainly happening. some key names being brought forward with ben wallace, who could, indeed, lead the party forward. you also finding that rishi sunak who stood as opposition to her when we needed to find a leader for the uk, also is standing in line you also have penny mordaunt, the leader of the lower house as well who is, indeed, in the running. but the big name also leading the polls, according to ugov is boris johnson, to step back into that seat again as the leader of the conservative party as well as a prime minister of the uk. so, of course, all of this comes after liz truss promoted, encouraged and put forward a mini budget on september 23rd, which was aimed at cutting a whole host of tax elements, which were unfunded, creating around 45 billion pounds of

spending cuts when it comes to taxes. that saw the markets roiled and the bank of england felt it had to intervene in order to create some stability in the market and assure that market pullback wasn't as bad as we found it then we heard of quasi kwarteng, the finance minister, also resigning, having u-turned on a number of policies last week then on friday we saw a new finance minister then being put in the house this week then, yesterday, in fact, in the last 24 hours, the home office secretary also stepping down on what was a technical breach of regularities using her personal email address to send through official documents. and that also coming after in-fighting within the party so, it seems that credibility completely gone for liz treuss. the question if it's gone for

the entire party a new leader set to come to the fore next week. >> it's been great to have you as our eyes and ears in the uk as we go to break, here's a road map for the rest of the hour, including a lot more on how to value tesla we'll take a look at how short interest is playing a part in moving that stock. we're live on the banks of the mississippi river. falling water levels there, they could mean higher prices. speaking of supply chain, we'll check in with the ceo of union pacific, lance fritz joins us later this hour "squawk on the street" will be right back with all of the major eresigr. ♪ ♪ ♪ ♪

- 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." let's get a check on a sector that's been a key inflation bellwether, materials. the ishares global tellers ticker mxi losing a quarter of its value in line with the losses on the s&p 500, but it it is up fractionally today a number of companies within the sector reporting results last night and this morning aluminum producer alcoa producing an unexpected third quarter loss it's now reversed losses in trading to start the day it was down 7% it's now up 7% copper miner freeport seeing a beat across the board, up 7% steelmakers, steel dynamics and nucor. steel dynamics, shipments hitting a new quarterly record you can see nucor shares higher

as well. energy price is a big headwind and a strong dollar has dented pricing for a number of industrial pemetals this year a lot of green on the screen. the s&p up over 1% up next, we have one cannabis company expanding into your local gas stations. ceo of greenthumb industries is going to join us we're backn o. itw thinkorswim® by td ameritrade is more than a trading platform. it's an entire trading experience. with innovation that lets you customize interfaces, charts and orders to your style of trading. personalized education to expand your perspective. and a dedicated trade desk of expert-level support. that will push you to be even better. and just might change how you trade—forever. because once you experience thinkorswim® by td ameritrade ♪♪♪ there's no going back.

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the first whiff of a new partnership at their local gas station. circle k partnering with greenthumb industries to sell medical marijuana at circle ks in the state joining us greenthumb ceo ben kovler ten stores to start. it's been legal in florida, medical has, for quite a while walk me through what you think this means >> yeah, we think it's a big deal we're bringing cannabis to where the american consumer is we see a lot of strength in the convenience store channel. this is going to be an adjacent store to the circle k gas

station. a rise express medical marijuana facility like any other cannabis dispensary in the state. florida is still a medical market, the third largest cannabis market in the u.s. with over 700,000 patients. >> was this a situation where the industry pitched to the distributors or the distributors said, look, we see what's going on here, we would like to be first in line? >> i think it's a little bit of both you've seen circle k engage with fire and flower before this is not their first forray into cannabis. it's still federally illegal in the united states and takes willingness on both sides. greenthumb has been out there talking to parties in lots of different industries and sectors as we continue to normalize, credentialize and talk to people about the benefits of cannabis for the american consumer for jobs and tax revenue. >> ben, i think a lot of folks don't realize how big the florida market is. i guess, talk me through that and how much of a case study it is for you to potentially be able to expand to other states,

especially with midterm elections looming, we see marijuana on the ballot again in other places >> oh, yeah. a lot going on this deal is florida focused florida, 20 million people, one of the largest populated states in the country even though it's medical only, it's the third largest market in the u.s. in terms of dollar volume over $2 billion a year run rate so, we see that as a strong market we'll start with ten stores in a test and learn phase in 2023 in order to analyze what to do next like you said, across the country with president biden's comments a few weeks ago, relook at scheduling, get people out of jail, which is something we've been talking about for a long time we applaud him and excited for this to happen, it's going across the country cannabis provides positivity to people, a lot of well being and that's contrary to what people have learned it's a slow battle of new information and we're excited to lead that charge >> if you had to guess, if and

when recreational is widely available at, say, gas stations, how many years out or is it a matter of years? >> well, i think the best analogy is looking at alcohol. we remember how alcohol started in the convenience channel in the drugstore and it was in a cage or different entrance, and things changed think about gambling and river boats and it would leave at 2:00 or 4:00 p.m. and then didn't leave and now it's not even a river boat sometimes they realize, the sky's not falling, we have more jobs, more tax revenue i think in the u.s. and canada you'll see the cannabis market being over $75 billion in size >> got a lot of notice yesterday. appreciate you coming on and helping viewers understand what's going on. ben kovler. >> thanks. let's get a news update. for that we go to kristina partsinevelos. >> thank you, david. more news out of the uk. the british defense minister

says a russian fighter jet, quote, released a missile near an unarmed british surveillance jet in september ben wallace said he communicated the dangerous engagement and russia is investigating what they call a technical malfunction. a taxpayers group in wisconsin has asked the supreme court to block president biden's student loan forgiveness plan. the brown county taxpayers association directed their emergency request to justice amy coney barrett. the application for loan forgiveness opened on monday and the biden administration could begin processing requests as soon as this weekend. a new study says gas stoves and ovens can leak harmful chemicals even when not being used a study from a nonprofit energy research group found at least 12 hazardous air pollutants emitted from gas stoves, including benzene. the w.h.o. has said there's rz no safe level of benzene exposure when it comes to cancer

risks. of course, i'm one of those people with a gas stove. back to you. >> as am i kristina partsinevelos, thank you. coming up, we'll sit down with union pacific ceo lance fritz later this hour. 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.

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of the opinion that we can far exceed apple's current market cap i see a potential path, which has worth more than apple and saudi aramco combined. that doesn't mean it will happen or that it will be easy, but for the first time i am seeing a way for tesla to be, let's say, roughly twice the value of saudi aramco i haven't quite seen that yet --

i mean, this is the first time i've seen that potential >> that was elon musk talking about just how big he thinks tesla could eventually get how should investors think about that valuation dominic chu is taking a look at that today >> take a look at the picture in context. he mentioned some of the relative amounts we're talking about, but at current market prices apple's market cap is just around, call it, $2.3 trillion and saudi aramco roughly $2.2 trillion. let's call it $4.4 trillion combined market cap. tesla is down right now, $208 change meaning it's worth $660 billion right now. now, that's big, but it's nowhere near the, remember, $1.2 trillion plus that it was at the height back a year ago tesla, because it's lost just about half of its value, has gone a long way from $1.2 down to 660 to put that in relative context to other automakers and there's

an argument whether it's comparable with pure ev and those that make evs and internal com comb combustino engines to toyota, $182 billion, and so in relative context, tesla is worth much more than many of the big players in the auto industry globally speaking. there's a case to be made, though, that given what's happened with tesla and its valuation fall, that it does trade at a discount or it has been this is over the last two years. we're looking at tesla's forward price to earnings ratio, how much you pay today in stock price for every dollar of expected earnings in the next 12 months at its highs in january of 2021, we're talking about 209 times multiple on forward or expected earnings today it's closer to 39. it has been tailing off quite a bit in terms of valuation there. as for what the analysts say, current state of play, right now

still about two-thirds of analysts maintain a buy rating on tesla stock if you take a look at the average price, a little less than $310. so, as things shake out, david, on what's happening with tesla, we'll take a close eye on whether or not those valuations, because they've fallen off so steeply, are enticing anyone to buy. right now t is the relative valuation compared to other automakers that has a lot of people saying, should it be worth as much as elon musk says it should be worth back over to you. >> always an interesting discussion, of course. those analyst targets would get it to $1 trillion or so. you have to get to $1 trillion before you get to $4 trillion. thank you. want to take a look at blackstone, a company i followed in part because of the bre product, product for high net

worth investors. they started it six years ago. it's been returning 13% a year that's about four times the public read index. a lot of the portfolio is comprised of logistics and rental housing over time the reason we focused on it because it has $70 billion they were taking in enormous amounts each month it's obviously contributing overall to the assets under management at blockstone, approaching $1 trillion. on this morning's conference call and at the moment he mentioned t the stock did take a bit of a slump but has since recovered. jon gray said, i would say as it relates to near term inflows, that is dealing with breit, yes, it is possible we could see negatives over some period of time negative means people pulling money out of breit instead of putting in something i asked at our alpha conference a few weeks ago it would be an interesting

development. blackstone overall responding to a number of different things but breit has been in part focus given the enormous rise in assets $70 billion makes it as big as most of the reits out there. to put it in some perspective, they talk about performance, still up 9% this year, but the yields available, well, they're not quite as compelling as they once were, given the move up in the two-year and the ten-year. morgan >> after the break, water levels across theu.s. have been dropping jane wells is on the banks of the mississippi river and has more on what this means for the supply chain jane >> reporter: hey, morgan, old man river isn't rolling along. thes have dredgers scraping the bottom as the mississippi becomes the latest challenge in the supply chain what it means for farmers and for you when we come back. - [narrator] if your business kept on employees through the pandemic, getrefunds.com can qualify you for a payroll tax refund of up to $26,000 per employee,

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got 1% gains on the nasdaq s&p pretty sturdy, about 3700. the vix did dip below 3400 for a moment for s&p/nas, best week since july the dow, best week since june. we'll be right back.

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welcome back falling water levels on the mississippi river could have a big impact on the supply chain and consumer prices. and that is where we find our jane wells jane >> reporter: hi, david yes, i love the smell of dead fish in the morning. look, i want you to remember one number, 2,000% it's a big one first, this boat is dredging, scraping mud off the bottom to get barges moving through again at some point. i should be under water. if you look over here, these smaller boats have floated down and now stuck in the mud the red, rust part is where the water should be.

this is because parts north like in the ohio river valley, haven't had enough rain and they feed the mississippi as a result, thousands of barges have gotten stuck in sand. the water level near memphis hit an all-time low this week. tonight all southbound boat traffic, about 80 miles north of new orleans, will be stopped for 12 hours it's incredible. it's having a huge impact on commodities, especially agriculture where it's harvest time and half the grain exported out of the u.s. comes down this river. grain elevators are backed up. the cost of shipping has skyrocketed. here's that number i told you about. barge rates are now 2,000% above benchmark. it's never been like that. even if you get a product on the ship, it doesn't get stuck, you still have to wait >> it really has an impact in two areas. number one, channel depth and, number two, channel width. you can't get as much freight per vessel out of concern it might ground and with channel width being

restricted, you get get as many barges all connected together to move as one single unit down to export terminals near new orleans. >> reporter: so, you can see what's happening with soybean futures. on the cash market they have been coming down a bit what does this mean for you? these grain exports were supposed to help make up for what's happening in ukraine. the mess here could keep global food prices high if farmers can't export their grain and they don't have enough storage for it, they'll have to find a domestic market for it asap could be good for domestic food prices, which would be nice, unless you're a farmer back to you. >> jane, the shot behind you is just -- it's startling if a picture could tell a thousand words why not ship by another mode of transportation, whether it's rail or truck or something else? >> reporter: right farmers and others prefer the river because it's so much cheaper. the american farm bureau federation says shipping is

about one-tenth the cost of rail, one-sixteenth of strucking. now with barge rates so high, it becomes more competitive that is assuming you can find space on a truck or rail right now. >> jane wells, thank you. shares of union pacific are quarter. revenue beating expectations due to increases pricing, but profit missing. the freight railroad also cutting parts of its full year outlook citing operational inefficiencies and inflational pressures. lance fritz joins us now to discuss the quarter and more lance, great to have you on today. to keep the thread going from what jane just reported on the mississippi, bmo putting out a note on this, that this disrupted grain movement given what we're seeing with the river levels, that it could be an opportunity for a company such as yours are you seeing some of those flows transfer to the rail right now? >> yeah, morgan. good morning, and thank you for

hosting me yeah, we are seeing some demand shift. you know, we typically transport grain to the river in the northern portions of the mississippi so that it can get on the river and dogo down sout. a lot of those movements are coming to us and wanting to go south on our railroad to the gulf it's an opportunity. not necessarily a car load opportunity as much as a length of haul opportunity. we're seeing it and trying to take advantage of that to help our customers. >> let's talk a little bit about the quarter. at a time where everybody is trying to read the tea leaves on the state of theeconomy, you'r trimming your annual volume forecast despite rising shipments the last quarter, i might add. why? >> yeah, great question. so let's focus in on the quarter. the quarter was a noisy quarter. we had labor adjustment for the labor negotiations that are in the process right now coming out of the peb and what we essentially did was we had sequential improvement

operationally, that supported more volume, and we also had strong fuel surcharge and good pri pricing. that supported our financial metrics. you know, records in net income and et cetera, et cetera as we look into the fourth quarter, what we shared was we still see growth we just don't see quite as much growth as we had expected at the start of the third quarter those issues are, the consumer slowing down, we're seeing that in both their purchasing or experience, fewer goods, and overall, their concern and so we're seeing there's a little pressure on the domestic intermodal side, on the parcel side, but there are some markets that are still very strong for us coal is good, grain is good. rock is good, infrastructure so it's kind of a mixed bag, but overall, we see the heat coming out of the market. >> okay, so just to dig into that a little more, our own

laurieann larocco said you're seeing container shipments coming out of china falling off a cliff, but on the other side of the equation here, the fact that we have seen a lot of those flows, those cargo shipments, divert away from the west coast to the east coast, given things like congestion and labor strike concerns at the ports there. so how much of when you talk about a softening consumer, how much of this is from your standpoint, company and geography specific, how much speaks to the broader economy? >> that's a great question so the moving parts for us when we think about international, intermodal, that's a container coming from a supplier in asia, hits the west coast, and then some portion of that is given to us to bring by rail into the inner states that percentage had dropped dramatically earlier this year the percentage of international containers that shippers give to us to move by rail, as opposed

to trains loading them into truck or a domestic container and moving them in as that has recovered, that's kind of covered up, if you will, some of the softening of overall inbound containers dropping. those moving parts are going to continue to play into the fourth quarter and next year. so exactly what our international intermodal business looks like is going to be driven by those two things. containers are dropping, inbound numbers into the west coast ports. but the percent of those given to us as a railroad to move inland has been increasing and we'll just have to see how that plays out >> you mentioned labor we have seen and certainly just in the last couple days it's ratcheted up a notch, the breakdown in the ratification process with the unions. there's this growing likelihood this labor deal now goes to congress are you ready for a perspective strike come november 19th? >> let's not get ahead of

ourselves, morgan. so the dynamic right now, we have six contracts that are ratified, six different unions five are in the ratification vote right now and we have one that failed ratification that was our maintenance of way engineers. bmwed. i think that was a very specific issue. when the peb came out, they recommended wages, but then they also recommended for that particular union a change in the amount of travel money they get to work away from home, and the perdiem amount they get when their wy're working away from h. that specific negotiation had to happen on property and that just got concluded on union pacific last week. our bmwe employees were casting a ratification vote on an agreement they didn't really know all of the moving parts on. and now they will. so we have some negotiation to do with that union we're in status quo, we have agreed to status quo while we're

doing that and i'm confident we'll find a way to craft an agreement that can be taken back out for ratification that doesn't mean a strike is not possible it just means it's not in my opinion, i don't think it's probable i think we have plenty of runway to figure it out >> lance, do you see bringing in the labor secretary again and all night sessions and 4:00 a.m. news announcements are we going to get back to that kind of showdown >> carl, i certainly hope not, right. what i'm hoping is that there's a relatively clear path here to create an agreement that can go back out and get ratified for our maintenance way employees and that the other five unions in ratification now react to the reality of this deal, which is it's got a fabulous increase in wages for them, recognizing their hard work. it also begins to address some of the quality of life issues that are unscheduled workers have, and we're committed on property and have already begun

the discussions to further address those issues and really ultimately take them off the table. get to a place where railroad jobs not only are attractive because they're very high paying but because they're awesome jobs >> so given this conversation, how is hiring going? and just as importantly, are you retaining those workers? >> yeah, one of the things we showed this morning is that we have actually hit our hiring and training plan for this year. we said to the stb, we needed to do about 1400 employees. specific to conductors, the train and engine men, and we're at 1408 this morning we feel very good about our hiring we have had some real issues in very targeted spots that tends to be rural areas where there's not that big of a workforce and unemployment is very low and we're retaining at about what historic levels are

our normal all in attrition rate for our craft professionals has been about 10% and it's about that this year. so i really don't see the great resignation happening to us. i do see that in certain areas of our territory, we have got to create more workforce so that we can have a hiring pool to hire from >> all right final question for you, lance. given the entire conversation we're having here right now, pricing, you have been able to raise prices and stay ahead of all of these inflationary headwinds we talk about every quarter. can that continue? >> morgan, it has to continue. inflation is quite rear for us we just mentioned how attractive this labor agreement is to our craft professionals. that's real inflation for us as well we're seeing it across the board in services and in the goods we purchase so as we go into next year, we committed and we're confident that we can price above inflation. and we have to because inflation is quite real right now.

>> all right, lance fritz, ceo of union pacific, joining us on heels of earnings. always great to have you oba day like today >> thank you >> we get more railroads, csx after the bell >> awesome looking forward to that. we have a lot of earnings as well we have already gotten to a bit this morning but worth coming back to let's start with at&t. those shares are up more than 8%, in fact, i have seen them up as much as 9%, the company did exceed many of the analysts who follow it's expectations for subscriber additions a beat overall in terms of subscribers and they're guiding towards what is roughly $14 billion of free cash flow in 2022 and obviously, that is not a bad number there the outlook was maintained at $14 billion. again, adding those subscribers, perhaps somewhat promotionally, but being rewarded ibm shares also higher

this on a revenue beat, but when it comes to free cash flow which i just mentioned, some are questioning the conversion of free cash flow from the revenue number only $752 million in free cash flow they have to do $6 billion in the fourth quarter to reach the $10 billion free cash flow number ibm has for the full year that's going to do it for us on "squawk on the street. "tech check" starts now. >> happy thursday. welcome to "tech check." i'm jon fortt with deirdre bosa and carl quintanilla today, nasdaq in the green as investors work through reports on two very different companies. tesla and ibm. tesla falling pretty big, down 4%, as sales fall short. the company cuts the full year delivery target. ceo elon musk sounding positive as ever on the long term, saying the company one day could be worth more than apple and saudi aramco combined. yeah but on the flip side, ib