proficient in math the real question is how do we fix it how do we turn it around because these numbers are big implications for business in the united states. >> they absolutely do. they correspond, obviously, with the pandemic, and i don't think we fixed that deficit yet in any way. thanks for watching, "power lunch," everybody. >> and "closing bell" starts right now. stocks are jumping on wall street following the best week for the major averages since june we are at session highs. this is the make or break hour for your money welcome to "closing bell," i'm mike santoli in for sara eisen here's are things stand in the market mentioned that the highs for the day, the s&p 500 up almost 1.4%. it was hovering around that 1% for much of the day. the dow up just about 500 points the nasdaq lagging slightly. parking lot of that is a weekday for tesla, and the russell 2000 also trailing behind it's mostly some of the mega

caps outside of tesla driving things check out our chart of the day it is the chinese internet group getting clobbered as president xi firms up his grip for power much more on those moves ahead. we'll talk to former pimco chief economist paul mccully let's get straight to the market and today's dashboard. the s&p 500 index now clicking just above the 3,800 mark. this is an area that it hasn't been above since early october, so trying to get to a month to date high right here you see in a broad sense, the market has been kind of just sort of bouncing above those mid-june lows, refusing to go lower even though bond yields had been going higher. there is this little bit of a down trend or significant one from those mid-august highs. people thought about a fed pivot that gave away to a test of the old lows, and it right now is trying to click just above that. now, the u.s. market has really started to distinguish itself

from some other global markets, and as a matter of fact, also detached itself from the way bond markets have been proceeding here's the u.s. s&p 500 along with this is the global treasury bond so the price of these bonds going down, yields going up across the world, and then the morgan stanley all country world index, excluding the u.s., so everything outside of the u.s., you see this white line, right it's kind of gone flat here even though the others have trended lower, we have a very strong dollar, could be part of it, that's going to be perhaps a big theme throughout the rest of the day. let's talk about the rest of the world. it has been a different story in china. take a look at hong kong's hang seng index down more than 6% to a 13-year ow chinese internet shares getting hit particularly hard, this coming after xi jinping strengthened his grip on power over the weekend securing a third five-year term over the weekend. joining us now is mobias capital

partner founder, mark mobias it's great to have you here to talk to today. we had you on i guess six, zseve weeks ago. you were cautious about china, you thought there was going to be genuine trouble for the markets, for the economy i wonder if any of that has changed now. we've gotten past the party congress obviously the currency's trying tie just, and maybe we get a reopening. are you still cautious there or are there signs that maybe things could turn? >> i am still cautious because i think we've got some really big political changes taking place in china you know, the treatment of the former president, and it really showed how xi is pushing his power. he's really showing his power to everyone in the party who was at the meeting and to the world so i think there's going to be a shift towards more of a mao type

china. less capital oriented, less market oriented. so i think we have to be very cautious still on china. i'm not saying that stocks are not cheap. they're very cheap in many cases, but i would be very careful. >> yeah, i mean, i guess i wonder if it also has implications for whether china can be as much or at least any engine of growth in the world or the region i mean, gdp came in okay over the weekend as well. i just wonder what that means for the whole area there in terms of the asian economy and markets. >> well, there's still a big economy. they're still importing a lot. they're still exporting a lot, but it slows down considerably, and what is particularly worrying is that they are not releasing statistics about the economy. they've cut out a lot of the vital statistics that people

look at, yo in order to assess what's going on. that's not a good sign also, they delayed the gdp numbers, so it means that something is boiling behind the surface and it's not going to be good >> yeah, clearly markets are worried about all of those things, all the body language and everything else. and where are you perhaps finding maybe better opportunities? clearly emerging markets still have some headwinds as well, are strong dollar, global slowdown, inflation still an issue, but where would you prefer to be looking for bargains >> well, india is the place where we're looking at we think that india's going to really power ahead the younger population, they're already posting something like 7% growth, which is probably one of the highest in the world. so that is really the place to be and taiwan, we don't think china's going to move against taiwan anytime soon, although it's a danger there but not anytime soon so taiwan has terrific

companies, and a lot of the stocks are down. that's another place where we want to be. >> and with -- when it comes to taiwan, is it simply the bellw bellwethers, the taiwan semis and things like that are there other sectors that seem like they're interesting? >> we like the companies that are serving the semiconductor industry the so-called fabulous companies that do the software and the design of the chips. those companies are very interesting, and the good thing about them is that having no factories, if something happens to taiwan, they can move their whole staff to silicon valley. many of them already have offices in the united states and other parts of the world so those are the ones we are looking at >> and more broadly, i wonder if you're thinking of the stresses that might be on emerging economies when it comes to the fact that we do have this very strong u.s. currency that historically has been an issue for some of them and then just in general, this

idea that we have higher yields across the world and all the rest, and it seems like a familiar formula for when you would have some difficulties in those emerging markets >> oh, no question, a lot of countries in emerging markets that are in trouble because of the high debts higher interest rates are killing them, and also the strong u.s. dollar shows them when they're importing a lot of oil and gas, but then they're the exceptions there are a lot of other countries that are exporting oil and gas, and actually, weaker local currency often helps them this in their exports so local current and exports in dollars. so we're finding opportunities in some strange places where you normally wouldn't find them simply because of this change in the whole nature of the currency markets and interest rates >> yeah, i suppose it is a give and take and not strictly the

economy that we got used to 30 years ago when they were all financing themselves in dollars and whatnot. mark, it's great to catch up with you thanks so much >> thank you >> mark mobius there after the break, hopes for a fed pause or pivot have helped sentiment in the last week but is the market getting ahead of itself. we will ask former pimco chief economist paul mcculley next dow up 46. good luck. td ameritrade, this is anna. hi anna, this position is all over the place, help! hey professor, subscriptions are down but that's only an estimated 15% of their valuation. do you think the market is overreacting? how'd you know that? the company profile tool, in thinkorswim®. yes, i love you!!

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rally. fed officials entering the blackout period before november's fomc meeting but fef getting in some last minute dovish comments last week helping boost sentiment. is a pause or pivot really on the table over the next few meetings, whatever those things might mean let's bring in pimco chief economist paul mcculley to talk about all of it. it's great to have you weigh in here look, fed officials have for some time characterized what they're doing this year as front loading this program of tightening to fight inflation. it would seem six or seven months getting rates from close to 0 to four percentage points, that's about where we'll be in nine days would seem like a fair bit of front loading where is that going to leave us on november 2nd, do you think. >> i certainly agree with you you can't front load an entire campaign, unless you've got an ox psy moron on your hands

i think we are at a juncture, we're about to have an inflection point i hesitate to use the word pivot because i'm not sure what it means anymore, but i think we are approaching an inflection point where we're going to have kinder, gentler monetary policy moving forward, and i think that will be the big discussion at the fomc meeting next week they're going to do 75, but i take mary dally as a harbinger of the fact that it's going to be a very serious debate about what to do in december, and i expect the step down to 15 in december, so yes, it's a moment of kinder, gentler monetary policy to come, and i think the marketplace is having a small party, not like this summer where we got rebuked for that at jackson hole, but i think it's a justified small party right now. >> yeah, that's a fair point i mean, we're not exactly off to the races in terms of markets. there's not some sense of certainty out there that we have the ultimate destination in

sight, but it would seem even stepping down to 50 or becoming kinder or gentler is going to be to some degree dependent on getting some inflation data that's going to cooperate with that picture, no >> i think that's true, but i would not pound the table about that i think over the last month or two the community has started to recognize that core cpi, core pce, but particularly core cpi is by definition, but architectural design a lagging indicator, particularly on the housing side of things, and the housing market has cried uncle when you look around the nation, it is unambiguously clear that the housing market is crying uncle, but that's not going to show up in the core cpi until 6 to 12 months from now, so i think we're at a point where the fed could -- and probably will, stop pounding the

table so hard that it has to see core cpi cry uncle before he can move to kinder, gentler, and i think that will be part of the debate next week, and i think it will be the center of the debate come december. >> yeah, you characterize this as a process of the fed attempting to gracefully deescalate a bit in its war on inflation. cleary, though, fed officials are conscious of not having the market celebrate too hard, and how is it going to be able to walk that line if they start talking about how cpi and core pce, you know, are basically lagging indicators, would the markets not take that as a green light to run >> i think they will, and you put your finger right onto the limit. we went through it this summer it's not a new movie for us at all. we've seen it before and i think they can be a little less edgy about the notion that the markets are going to have a

party now versus this past summer because financial conditions have tightened a lot since summer notably on the fixed income side and particularly mortgages, but equally important on the dollar. so if the equity market wants to catch a bid and have a bit of end of year party, it doesn't undo all of the tightening in financial conditions, and it's not going to do very much at all for the domestic housing market or for the gleobal fragility we see both in economies and financial markets. so i think the world is safer for a party now than it was in the summer, but clearly that is the biggest concern that the fed has is that the moment they even hint, i mean, slightest hint there will be kinder and gentler, that the marketplace will want to ease financial conditions too much for its own good, and i think the fact that

we've tightened them so much on the mortgage side and on the appreciating dollar side >> implicit in what you're saying, i guess, is that, you know, we may have enough in the works to restrain inflation and slow the economy down to a fair degree, which would perhaps mean we don't have to look for employment to weaken up all that much more or other parts of the economy that haven't yet really shown a lot of weakness to follow along is that correct? i mean, you know, i think the biggest fear the markets have had all year is that the fed was intent on tightening until there was a genuine uptick, a significant one in unemployment. >> i think we're going to see that as we move out into the new year, that we'll see a broadening of the weakness that we're seeing in the housing market and some other sectors in the economy. so i don't think that we need to be wetted to the whole notion that the fed literally needs to

see the economy withering in the street crawling, crying uncle in order to say enough is enough. that, you know, we've got a huge amount of tightening already done, and i think the way that the fed can tactically handle this is starting talking about the cumulative effect of what they have done so as to take the focus off the incremental change going forward. the cumulative amount has been a lot. i think they can lean on that as their rationale, if you will, for more kindness and a more gentle approach. >> all right, maybe they can -- maybe they can pull it off. >> it's a fine line. it's a fine line, no question about it. >> yeah, absolutely. all right, paul, well, hope to talk to you after the next meeting. it's the middle of next week talk to you soon >> sounds good, thank you. >> all right, paul mcculley, thank you.

let's check the markets. the dow up over 500 at this point, pretty much at the highs of the day, s&p 500 up a percent and a half, above that 3,800 mark, pretty close to the early october highs. now, the nasdaq is carrying higher as well, small caps under performing tesla, though, sitting out the rally today, hitting a 52-week low earlier on news it is cutting prices on china. we'll talk about the move and the big under performance of late. and speaking of tesla, it's number 2 on the list of top searched tickers on cnbc.com today. alibaba, the hang seng index and the two-year treasury yield. we'll be right back.

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let's check out today's stealth mover, it isinitiated cn overweight rating on the stock and an $8 price target, which is well above current levels, now just above two bucks wework has removed $2.7 billion

in costs through a multiyear program and that its future cash generation capabilities are being ignored by the market. ad adding vshift away could be a decades along tailwind the stock 85% off its highs still. >> coming up, it is a massive week for big tech earnings as alphabet, microsoft, meta, apple and amazon get ready to report in the next three days we'll talk to david rolfe from wedgwood partners about how you should be positioned ahead of those results. we'll be right back. >> announcer: the bond report is brought to you by pimco, a global leader in active fixed income

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welcome back to "closing bell," stocks are near session highs as we head towards the close. 30% of the s&p 500 reporting earnings this week that includes mega cap tech bellwethers, microsoft, amazon, apple meta and alphabet. joining us is david rolfe, wedgwood partners cio. david, you are significant investors in a number of those stocks, apple, meta, some of the others that we've seen the valuation compression that's gone on for 11 months now since the nasdaq peaked. now a lot of scrutiny on whether these companies, you know, maybe are not productive enough. they're going to have to do some cost cutting you have a shareholder going at meta management saying they should really trim back on investments. where do you see things? is this just a valuation

adjustment or is there a little more in terms of reckoning from the businesses here? >> i think there's a reckoning let's face it, mike. in this letter, i think he made a really good point that you could probably talking to more than a few companies in silicon valley zeroing interest rates, a booming market there's a lot of o'hihiring, a of really neat stuff going on in r a r&d. it's time to trim the fat in these organizations. it involves people maybe most of your listeners are waiting for a powell pivot, i'm waiting for a zuckerberg pivot, and i think gersner's letter was well done, very respectful, and all the points he made, these are the same internal discussions that we're having here at the firm and we've been adding, slowly but surely adding to our position in meta and some of the other tech names that we own

when the fed's tightening, we take our time. we overweight our highest conviction ideas, and with all this volatility the fed is creating, we hope to swing a better bet still. >> you say with meta, obviously, look, mark zuckerberg has voting control of this company. he clearly has, you know, staked a lot of, you know, the ambition of the company and its future on this idea they're going to have to find another routing to the metaverse through all of this investment on the other side of it, you know, there's a lot of folks that look at the valuation of meta and say that the market is almost projecting that it's kind of in a yahoo, aol situation of no growth, lots of cash flow and an entrernched business and nota lot of growth. do you think that's danger >> it could be again, the valuation speaks to a k company that has uncontrolled spending and that the growth algorithm is broken. we don't think that's the case if we're wrong, and it's been paid for this year

there's no doubt about it. if we're wrong, we don't think the downside is that great obviously we hope we're not wrong. if we're a little bit right, the stocks would double or triple over the next couple of years. >> when it comes to alphabet, i mean, you did say you'd like to kind of get bigger in your highest conviction names in an environment like this. would alphabet be one of them? because it has had a rough go of it, but not really because of a lot going on within the company it would seem, except general advertising demand concerns. >> right, right, yeah, we're bracing for maybe not necessarily a tough quarter but maybe a little bit of light guidance we've owned the stock for years. it's our second largest holding and over the years the market has provided really great opportunities to add to that position, and we've tried to take advantage of that, but it certainly doesn't have a multiple that speaks of, you know, no growth like meta, but

it's really cheap, and i think that's another company that's tightened its bell as well we remain of -- our second position, we remain very big -- on alphabet. >> are there any newer positions that seem to just kind of come into your zone based on what the market has done? >> you know, nothing really new, new. and the weakness earlier in the spring and summer, we added a couple of times to paypal. we were adding taiwan semi, and we just added again to taiwan semi just last week. talking about low multiples. the stock is trading more than ten times trailing and forward earnings, and we would argue that it's the most important company that involves technology, silicon valley obviously chips and so forth, but we would also argue it's

probably one of the most important companies in the world. a and you're getting it at a multiple that speaks to, again, a no growth environment. and i mean, this is when you think about a year or so ago when everything was booming and it had a big multiple, it was easy to buy it then, the right decision probably was to sell it buying is hard when the crowd is screaming at you that you're making a wrong mistake but we always try to remember the paradox, mike, that to get rich you have to make your biggest moves in the heat of a bear market. it's hard to do p but that's where conviction and discipline comes in, so we try to practice that. >> yeah. that's right, there's always scary headlines that are giving you the excuse not to do that when things are rough. david, great to catch up appreciate it. >> thanks, mike, talk soon. here is where we stand in the markets. the dow up about 480, s&p holding to a 1.4% gain, right around that 3,800 mark

after the break, the big picture on clean energy, solar and other green industries have been getting slammed of late. mostly lower again today, we'll tell you what is driving those moves. and don't miss cnbc's 2022 work summit, tomorrow and wednesday we'll bring together top names and business policy, labor, banking and academia to discuss the future of work to siee our lineup and register for this online summit, go to cnbc.com or scan the code on the screen we'll be right back. s chain, easy-to-use tools, and paper trading to help sharpen your skills, you can stay on top of the market from wherever you are. power e*trade's easy-to-use tools make complex trading less complicated. custom scans help you find new trading opportunities. while an earnings tool helps you plan your trades and stay on top of the market. space.

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♪ ♪ no more waiting. no more running. [ screaming ] we finish this tonight. time for today's big picture and we're taking a look at the clean energy space, solar stocks have been under pressure of late and getting hit hard today, even

as the overall market ral lis. pippa stevens has a closer look. >> the solar etf is down another 2% with today's declines dr drink -- driven by china-based companies. more broadly these stocks have fwo gotten hit hard over the last few months thanks to sensitivity to rising rates and their related rotation out of growth this is especially true for the residential solar companies given their business models require frequent access to capital. the group has now more than erased the initial spike after senators manchin and schumer announced their agreement on the climate bill the tan fund is down 16% since the end of july. sun run and sonova also falling. amid the skepticism around the group, third quarter earnings will be key. things to watch include pricing

power as well as how companies are navigating ongoing supply chain issues, mike >> pippa, it's fascinating that the interest cost has become such a big swing factor here you would think other fundamentals would be moving in that direction, just generally high utility bills and lots of focus on having more sustainable energy i wonder if there's a way around it on the residential side, the idea of just exactly how they sell these products and they're financed. >> there are a lot of tailwinds longer term including the i.r.a. and the group got a lot of interest after that was announced. that's completely been erased and the residential solar companies have up until this point said that their value proposition remains, that even if they're raising rates, as long as they raise them less than utility rates raise their rates then solar still looks attractive so they do have that going for them long-term right now, but right now it seems like investors are squarely focused on that rising rate question and of course this industry

really developed during a time of easy monetary policy, and so we really have yet to see how they react as rates continue to climb higher. >> yeah, china related and housing related and rate related are tough places to be for any group right now. pippa, thanks very much. shares of tesla it hhitting brakes again today on news of a price cut for some of its vehicles in china. we'll talk to an analyst about whether there's a large demand problem in play. and meta and apple hikes fees when we take you inside the market zone. - [narrator] if your business

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we are now in the cl"closing bell" market zone. dan suzuki is here to break down the crucial moments of the trading day, plus kristina partsinevelos and oppenheimer on tesla. welcome all. love your thoughts on the market action today it seems like we've been here a few times today, market sustained a little bit of a struggle in the face of higher yields, fears of the fed are we going to head into a recession or not earnings growth slowing down we may have found some kind of attraction, at least in the short-term do you think it changes anything about the overall direction of things market leadership, what it means about the implications for the economy? >> yeah, mike, good to see you i don't think it really changes anything for the medium to long-term story, but in the near-term i mean, you've been commenting on this as well you know, sentiment and position on the market did get really oversold in the near-term, so

you know, of yoyou have this environment where earnings is coming in as expected, so pretty bad. we saw a similar dynamic last quarter where you got to rally, you know, on the back of, you know lack of, you know, things getting worse than expected. at the same time, you have this optimism around the fed pivot. i think that, you know, kind of makes sense in the near-term i think the fed story did get sort of fairly priced, if not overly priced into the market, and so it's not to be -- it's not crazy to think that the market can rally as you come to terms with that. i think going forward, though, the big issue for the market is that growth is going to be the predominant driver and growth is going to continue to slow. that means that's going to put downward pressure on rates, it's going to put downward pressure on earnings over the next 12 months and i think that's going to cause a lot more volatility in markets i don't think it changes the leadership story at the end of the day, the tech growth leadership that we've seen over the last few years has been challenged by this repricing of inflation,

repricing of the fed, but what they haven't fully done yet is repriced growth, and this idea that they're not going to be cyclical, i think that's a lot more hope than it is reality >> right, and maybe if they're not cyclical, but if yields are coming down, if you think that's going to be the case because people are worried about overall economic growth, don't growth companies by definition start to look a little bit more attractive or not yet? >> no, i don't think so, mike. i think it's going to be a bit of a tug of war. if the growth holds up and rates go down, certainly that's a good environment for those stocks if rates are coming down because growth is slowing, i think people are going to focus on the profit story you've already seen some of that dynamic start to play out with a lot of the earnings for these tech and growth oriented companies come down, but if that continues, i think that's going to be the next leg of the story. i think that's going to offset the potential benefit from lower rates. one way to think about it is it's all liquidity story these stocks have benefitted tremendously over the last few

years. if we see lower rates because we have lower growth, that's not going to be as strong liquidity environment as we've seen in past slowdowns. >> got you chinese tech stocks meantime plummeting today, the kweb e sinking around 15%, jd.com among the biggest losers this after president xi jinping consolidated his power over the weekend in preparation for a third term let's bring in kristina partsinevelos. we want to focus on alibaba here, once the world's largest ipo now trading below its listing price. >> yeah, that was, what, eight years ago when it listed at 68 bucks a share, and today you can see shares have plunged down to what, 63, $64 right now. earlier today was $61. baba is an exception with the sense that yes, it had a failed ipo two years ago of the digital payments affiliate, and the fact that just this past august, baba

did post its first revenue decline. overall, we know that chinese tech has been selling off like you mentioned what went down in china this past weekend, and it's having a triple effect on pind pinduoduo, jd.com and further dragging down the nasdaq, or golden dragon china index which tracks a lot of these firms. that was down 14%, almost 15% at the moment that's because investors are really concerned about the future of pro-market reform in china, and the possible return, if i could say it, to a mao regime >> right, i mean, that certainly is i guess on the outer edge of what the market is registering in the way of its concerns here. the government's already said they don't really want their tech companies to be kind of global businesses so to speak. dan, just with the political stuff really front and center when it comes to the china investing equation, and yet seeming like the economy there, if anything has a reopening

ahead of it, how would you think about investing in that market at the moment. >> yeah, mike, i think you've said it very well. i think if you're worried about the politics, you don't want to touch china, but i think, you know, focusing on politics and investing based on politics is really the road to ruin. i think, you know, i think what we try to do at rba is we try to take the politics out of it. i think if you focus on those fundamentals that you were referring to, you know, the chinese stock market actually looks pretty good. not only does it look good, it looks like the complete opposite of everything that's happening everywhere else in the world almost every market out there, you're seeing a continuation of slowing profits and tightening liqu liquidity. the chinese stock market is likely to see improving profits growth over the next couple of quarters and liquidity has been improving partly as a result of lowering interest rates, which is, again, you know, the opposite you're seeing in most markets and not to mention the fact that, you know, nobody wants to touch these stocks with a ten-foot pole, and that's reflected in valuations here

looking at profits, looking at liquidity, looking at sentiment point you in the direction of being able to invest in these stocks despite the geopolitical issues which is often, you know, more of a red herring than anything else. >> all right, that is certainly the contrarian take and a market that is not really in sync with ours cyclically. we'll see how it plays from there, and thank you to kristina we have more news on the china front. tesla briefly hitting its lowest level after cutting prices for its model 3 and model y. the ceo sees signs of a recession in china let's bring in charles rush, he has an outperform rating on tesla and a $436 price target on the stock. put it in some con text for us here the stock has been under pressure from multiple fronts. the china story maybe seems to give pause to those who felt like tesla was faciing more or

less insatiable demand. >> there's a couple of things that i want to highlight first, they had eight days of inventory exiting the quarter, so extremely low inventories for four of the vehicles two, they're going through a ramp of two new facilities in berlin and austin, so they're shifting around where these vehicles ultimately end up a lot of vehicles coming out of the shanghai facility were coming out of europe ultimately. there's a shift of supply availability the third thing is that tesla has really gone through a price adjustment in a variety of ways, on an ongoing basis. so they tend to, you know, err a little bit on the low side before raising prices. i wouldn't be surprised to see them lower prices, feel out where the demand is firm for them and creep prices higher as things start to ramp up. it's one of those things where they have been, you know, kind of working with the market in terms of selling through, and want to continue to be in that

facility. >> it certainly makes a lot of sense, all of those things on the other hand, the market seems to be at least alert to the possibility that the 50% volume gains that are anticipated for this calendar year, you know, globally, or maybe a close call in other words, it's not just in the bag. it's not that they can just feed open-ended demand, and i wonder if that's part of what has been compressing the valuation, or is it elon musk selling shares and everything else. >> and there's all that noise around twitter and whatnot, but ultimately the barricades has been founded on the idea that competition was coming and that it was going to eat into tesla's market share and margin profile. that has been the case for the last decade. the company wouldn't be able to hit their margin targets nor sell the volumes what we have seen over the past decade is they have been able to do all of hthose things, and so

now what we're talking about is low cost competitors in china coming in and taking lower margin, and trying to eat into that market share and that margin profile our view is that tesla's brand still continues to be fairly strong and china, despite some of the missteps and communication side, and they're going to be able to sell just primarily on the functionality of the technology being better and having a better platform you know, and so as we see them work through this, i think they're anticipating a lot of these problems early, adjusting the business and typically have over corrected to the conservative side to make sure that they continue to produce a lot of vehicles and saw them through very effectively. >> now, your price target implies a double from here for the stock. what catalyzes that at this point do you think >> it's really pretty simple just them continuing to ramp up volumes and get, you know, not even all the operating leverage that's available in this model we don't have them get into the low and mid-30s in terms of

gross margins. that's a real possibility. we have them hitting 5 million vehicles in terms of total volumes. that seems like a very real possibility for the organization, and certainly the operating leverage they have been demonstrating over the last couple of years has been more substantial than we had modeled and so we're giving them a bit of that credit but not fully we see a full, you know, five to seven, 8% incremental margins at the operating level as we roll through the potential on the gross margin and operating leverage and substantial upside on revenue on the order of 20 to 30% incremental revenue from increased volumes and that derives upside to our model here, and that's not even including what they can get from the fst program. as we look at this, a double from here, reflects conservative assumptions with a lot of head room on the execution. >> fst being self-driving. colin, thank you very much appreciate the update. meta, gaining background

after initially falling hard earlier in the session bank of america downgrading the stock to neutral ahead of its earnings on wednesday. analysts pointing to weakness in ad spending and separately, ceo of writing in an open letter to mark zuckerberg that meta needs to rebuild confidence with investors. julia boorstin joins us to wrap up all of that what exactly is gershner saying here. >> he held 2 million shares as of the end of 2q he can advocate for change, but mark zuckerberg does not need to take his advice. he says he wants meta to reduce head count expense by 20%. reduce annual capx from 30 to 25 billion and limit investment in the metaverse and reality labs division to no more than $5 billion a year. that's cutting that expense by half

what he's really asking here, mike, is for zuckerberg to focus on the core of the business that's making money right now, and that is advertising and not to spend too much money on these long-term plans. it will be really interesting to see if zuckerberg takes any advice because of course zuckerberg does not have to. with the stock down about 60%, we'll see if he goes in that direction when meta reports earnings wednesday >> for sure it will be fascinating to see how much of this, you know, gets traction with management, especially because if you really kind of look through the details, gerstner is saying stop pretending you're a fast growth company anymore. it's more about harvesting your cash flows and riding the digital advertising market. >> getting back to basics. we ahead a lot of this from snap, the first of the social platforms to report. snap talking about how they're not investing in cool futureisti technologies and they're focusing on ad platform, but snap is using ar to make money

from ads now, and i think the question for meta on wednesday is going to be how are you making money now, and less interest in the ten-year plan for now at least >> absolutely. julia, thank you so much apple meantime, making a surprise move, hiking prices on tv and music streaming services. apple music will cost 10.99 a month. that's up a dollar, and apple tv plus goes up by $2 to 6.99 a month. steve kovack joins us. >> it's about being able to pay the artists more and priviovide better product for you that's true. but they're also facing head winds with foreign exchanges in companies like europe and asia, and we have already seen them go into price raising mode throughout the fall, raising

prices on the i-14, in the app store throughout the eu, and now raising prices on their own services this is all coming, mike, as we're getting reports from morgan stanley, bank of america and others that app sales were down for last quarter, which puts a ding on the services business we have watching apple try to make up the lost ground wherever they can, and that includes raising prices on home grown services apple tv plus was way cheaper than its rivals and they have add a ton to their library, but what is surprising to me, mike, is that apple music is more expensive than its rival spotify, and i'm curious, what happened, going on, the conversations behind the scenes that made them think that they can go above spotify in pricing when those products are similar and pricing is the only differentiator they could potentially have there i'm curious to see if spotify

raises prices or tries to keep the under cut apple music. >> that will be a great test of, i guess, the strength of apple's ecosystem, and just weather people feel like the switching costs are worth saving a couple of bucks, steve. we'll keep an eye on all of that just a couple of minutes to go in the trading session dan, in terms of -- we have been talking about a lot of these big, you know, platform technology companies they were the winners of the prior few years. they have had their valuations cut back you have clearly been cautious and skeptical and negative on that category of stock is anything chaunging along that front, given where valuations are? >> i don't think so, mike. you got to separate the story from the investment. i mean, i think a lot of these companies have a great story but i think it's just like you saw in 2000. i mean, people with expectations and valuations got way too high. we think that it actually, you know, got so big that it was a bubble and bubbles take times to deflate. certainly you're going to see a

lot of rallies on the way down 16 double digit rallies, ultimately you ended up with a market that was 83% down i don't think we're going to see that type of pain. i think there's more pain to come, and the most important thing here, mike, is that bear markets always signal a change in leadership. even if the worst is past us, you know, these are not going to be the leaders of the next cycle, however long the next cycle lasts. i think that, you know, you want to be cautious here. they are still the most expensive, and they still have that as things continue to slow. >> dan suzuki, appreciate the time today thank you so much. we've got about 45 seconds left in the trading day the s&p 500 is off the high slightly, still above 1% move for the day. it's just under the 3,800 mark take a look at the volume split. it actually has been more mixed than positive. 1% gain, but it was basically 50/50 when it came to the breath

of the market on the new york stock exchange here. it was the mega caps leading the move the volatility index has been s stubborn the market is going to go out with a dow gain of 430 points. 315 is the number. let's go to scott wapner welcome to "overtime" you just heard the bell at a very loud new york stock exchange the new york city mayor is here, and they've got a good crowd to ring us into overtime, and portfolio manager erin browne. she says to prepare for a bounce in stocks. all that lies ahead beginning in just 24 hours with the start o