elon musk walked into twitter headquarters yesterday carrying a sink as his deal to buy the company moves one step closer to being complete it is thursday, october 27th, 2022 and "squawk box" begins right now. good morning welcome to "squawk box" here on cnbc we are live from the nasdaq market site in times square. i'm rebecca quick along with joe kernen and andrew ross sorkin. this morning, it is an interesting story if you look at the u.s. equities. the dow futures are up better than 85 points nasdaq down 53 it is because of the concerns in technology again today yesterday, you saw the nasdaq down significantly it was the down turn that was because of microsoft

earnings we got the night before other weak technology names you were facing. this morning, the pressure from meta we will talk about that in a moment s&p is flat. if you check treasury yields, they have been well behaved. 10-year treasury below 4.1%. higher than where it was yesterday, but 4.063% is a decline from 24 hours ago. the 2-year treasury at 4.43% that is probably why you see the dow higher those technology earnings have been the focus on the squawk planner. we will hear from caterpillar, honeywell, southwest and merck that is in the next half hour. we will bring you a first on cnbc inaftetinterview from merco robert davis you will get earnings from apple and amazon buckle up. it is a busy day for economic data we get weekly jobless claims and

durable goods and gdp. forecasters expect to see economic growth of 2.3% for the third quarter. that comes after contraction of 0.6% in the second quarter we hear from the ecb this morning. that is due out at 8:15 eastern time it is expected to raise rates by 75 basis points for the second straight meeting. let's talk about meta platforms. the companyearned $1.64 per share in the second quarter. missed 1$1.89. daily active users of 1.98 billion met expectation. average daily revenue per user is 42 cents below estimate the fourth quarter revenue estimate is weaker than

expected it is going back in a time machine. perhaps you may look at it and think it is on sale. the big bet on the metaverse hasn't paid off. in truth, it wasn't supposed to payoff the reality labs lost 3$3.67 billion. the company expects the unit to lose >> it is supposed to be at 500,000 users and they are at 200,000? >> that's right. >> it hasn't paid off. it was supposed to pay off a little bit by now? >> it is a losing exercise >> 200 is not 500. >> 200 is not 500. it will take time to get it off the ground or not. we'll see. >> here is how i look at it. this is the situation where in the past, facebook has been able to go out and buy something they

could not build. they bought inninstagram they cannot go out and buy they have to build you don't know if it will work you can't say instagram is hot and i'll go buy it they lost $9 billion this year when you talk about that investment, you get it if you make an acquisition. that is where a tested thing is already working. >> the numbers are scary the number that is amazing is $27 billion in revenue unbelievable company it has to grow it had a market cap assuming a lot of growth. now the market cap has really come down to earth where looking at it, i made the point and meta is down 60%. is it not a buy? it wasn't. what they're spending on that -- did you see the revenue was $270 million? they lost $3 billion

>> i'm not worried about the losing part of it. it would be interesting to see what the investment community would think if they shut the metaverse effort and project completely and where that stock would trade. it might trade higher, but marginally higher. >> the question is -- >> and is it a growth company? what is the future of the company? they have to do something. they are not an environment of acquisition. they can't buy anything. that's not in the cards. i give them some semblance of credit for trying to building something. this is an ambitious and possibly crazy effort that will or will not payoff it may take a very long time to work >> you are talking cap x numbers approaching what you would see if you were a verizon or at&t or a union pacific. you are no longer talking about a tech company with massive margins.

>> i think mark zuckerberg's view is if you are trying to create another facebook. >> that's my point >> you need to actually invest as if you are. >> my point is they can't buy anything they used to buy out of the troubles when facebook slowed down, they bought instagram you had competition with tiktok, they came up with reels. >> you need to explain reels they are not making money off it it is hard to monetize because of advertising >> you don't use reels or inst instagram. >> i don't use facebook. i love myspace i love my walkman. >> they have more volume that is nice for them. you are basically swiping between lots of videos short videos as a result, the experience doesn't really work with the same ad load you can't have ads running

between every reel >> we are saying what the hell is the metaverse hello? hello? i don't think this is a coincidence. that's a great idea. if surgeons could practice hundreds -- you know what? before they open you up, that's a great use. i don't think it is a coinc coincidence. everyone is saying what the hell -- today. what the hell is metaverse going to be? that is one -- >> that is the type of thing we would hear from ibm. has it developed yet >> i have trouble thinking we are not going to paris >> i heard this from microsoft for five years >> microsoft with the lens magic leap was another one of the efforts where there was billions powered in.

pe peggy johnson. microsoft's efforts are focused on the enterprise and trying to use it for training and all sorts of other things. >> businesses are willing to invest on that >> the point may be this divdevice is next level, if they get there. they may be in the enterprise business or consumer business. >> other companies are there and working to do these things >> i think the technology where they are and where they are going, at least at this rate, especially given how much they're spending -- >> the first thing i wanted to say -- >> did you bring your sink with you? >> before we get to that it is thursday you remember what happened a week ago >> i don't know. >> what happened a week ago is they abandoned over there and abandoned the tax cuts and futures went up in the morning

we said, wow >> that was a week ago >> it seems like a weird reason to go up the market went up and went down 500 points 300. whatever by the end of the day -- >> that was the inflation number >> the inflation number. it hit it after it went up it ended the day higher. the s&p got to like 3,500. below 36 or close to it. in the mid 36. did you see it today it is like 300 points almost in a week why did the market go up to thi point? >> we had strong earnings last week >> something's going on. >> do you want to have a policy conversation >> that's what we will do. >> i think you argue dr. oz and fetterman debate could swing the senate the question is does the market

in this case like a stalemate mixed government >> is that what it is? >> what else >> to stop two years >> of what >> the calvary is coming help us. help us. >> help you what >> stop this stop the pain. >> what? >> what is it you want to do >> the other thing is the yield. >> the yield >> we could have a three handle on the 10-year treasury. if it gets below or to a three handle, we'll all go >> if it gets a three handle, that has nothing to do with what happened in pennsylvania. >> what's going to happen with the growth recession >> we will have clifton on he is number one in looking at not just what with causes it, but let's say the worst-case scenario and republicans take the house and senate >> that is not the worst case.

>> he is saying he has a list of sectors that would benefit that have already been benbenefitting renewables have been hurt. since it switched three weeks ago. it is a significant switch it went from 3070 to 70. >> you heard about ge and the renewables division. let's talk about your sink >> the kitchen sink. >> elon musk walked into the twitter san francisco office with the porcelain sink. >> he had a meme >> it is better than a toilet. it would mean he is taking the company right into the toilet. any bathroom porcelain device is weird to show up with. staff in the office got a brief heads up they were told they would hear

directly from musk on friday earlier in the day, he changed the description to chief twit. that's taken >> you are maissing it. he met cool people at twitter. when that first came around, i talked to various people at twitter. people were freaking out there was a panic attack happening because he showed up with a sink. they didn't understand he wrote a nice note afterwards. >> he should be nice for the company you are going to own >> right >> yes >> he likes 30% of the people he met. musk -- >> i think that's why people were scared. >> maybe the people from cnn and twitter can start a company. >> cnn plus. >> cnn 2 i don't know that is the rumor. musk has until 5:00 p.m. eastern until tomorrow it's in the post. >> i would not throw stones at

glass houses >> i know. there by the grace of god. i know all those things. i take a little satisfaction in certain entities. completing the deal to buy the company or facing going to trial. banks have started to send $13 billion in cash to back the deal to buy twitter coming up, mid-term elections are less than two weeks away we talked about dan clifton. that is who is on. we talk to the strategist and markets are pricing in a red wave call it a tsunami. it could be a disappointment you never know credit suisse with a huge third quarter loss and a strategic overhaul geoff cutmore spoke to the ceo he will join us in a few minutes with details on that you are watching "squawk box" on

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everything broke at the same time >> joe, good morning we are less than two weeks out we really start to see three big changes three weeks ago. the first is the congressional ballot turn to the republicans republicans have won mid-term elections even when it was poir pointing to a slight democrat lead number two, the betting odds began to move and we build election portfolios at strategas. we have the democratic portfolio or republican portfolio. we run the stocks relative to each other to see how the market is pricing in the election we found this has been a much better indicator of polls in the last few presidential cycles for most of august and accept, t september, this was projecting a house and senate of democrats. we have gone from a 35% chance

of republican sweep to a 70% of republican sweep the move has been dramatic it is reflected in the polls and betting odds and now stock market >> what is in the republican portfolio, if you will what is in the democratic portfolio? have you seen actual movement in the past three weeks in the last week, the markets, the overall market is responding to what is happening in the uk or the ten-year or possible swivel i call it a swivel a lot of things going on you can never experiment >> let's take those separately we are seeing the republican portfolio start to get a lot of momentum in three key areas. energy infrastructure. to your point, higher oil prices and also the republicans are likely permitting reform

immigration stocks stocks benefit from better immigration enforcement at the bo border we think that is isolated in terms of the republican priorities the third is defense spending. also impacted by other events going on in ukraine and china. those are the three big areas that we have been seeing the momentum in the republican portfolio. all three are election related even if it is partially. on the other side, where you are seeing the weakness in the democratic portfolio has been clean energy stocks. these stocks have a really big bounce when president biden passed the inflation reduction act. you are talking 15% under performance in the s&p 500 in the last 30 days of the stocks joe, this is overdone. this is hard for the republicans to do something meaningful to take the tax credits back. that is the pure play on the election let me make one other point. if you see that the consensus is

wrong and election begins to shift and the republicans are only going to win the house and democrats win the senate, you will see that manifest in the clean energy stocks will which rally into the election. to the broader market, we found the mid-term elections and getting to the midterms is the catalyst for the election. a lot of silly season goes away. you tend to get more fiscal tightens in the mill dterm elecn year when they suffer losses, they look for fiscal policy and the market sniffs out you get better fiscal and monetary policy that may be more restrictive because of inflation and rising interest costs on the debt i would not be surprised if you see a lame duck session of congress in the weeks after the midterm election as congress tries to get as much done before the republicans take over on january 3rd. election is one point. we are going to have an exciting year end as well >> it is interesting the defense

sector for the republicans at this point, i don't know who is more friendly toward additional weight to ukraine long-term defense stocks benefit from republicans near-term, it is a weird dynamic. >> joe, we made that distinction. it is easier to get ukraine aid under democrats than republicans. it affects the large base. it is a very insightful point. >> what are you doing election night? are you around if we want you? >> i am around election night. i host an election night special for stragegas clients so they don't have to watch networks >> you have to cancel that we want you around at 8:00 will you be around >> i can make sure i'm around for you, joe

absolutely >> all right thanks, dan. >> thank you when we come back, shares of credit suisse plunging in switzerland after the bank posted a large third quarter loss and announced strategic overhaul that the market had been waiting the stock is off 12% geoff cutmore spe toktohe ceo early this morning he will join us next gang, we need our paranormal services to be more versatile. i know a group who can help us. not those new age shamans again. i'm talking world-class business experts. data geeks, strategists, tax advisors, the works.

what about technologists? 40,000 strong, baby. we'll be able to hit our projections both fiscal and astral. this company sounds great. what do you think, agnes? looks like it's unanimous.

welcome back to "squawk box" shares of credit suisse plunging after the overhaul we have geoff cutmore who spoke to the ceo he joins us with more. geoff, a lot going on. we have been focused on this date for some time >> reporter: absolutely. we have been waiting a long time to get the restructuring announcement ulrich korner came in a few months ago with the reputation

of yielding the knife. this means a 15% cut of cost base they will raise $4 billion from exstrategic investors and a rigs issue here one investor named is the saudi international bank he will bring $1.5 billion to the table. on top of that, we get the split of the investment bank it will be a markets business to service clients. there will be a freestanding credit suisse first boston business that will be a standalone they hope to bring third party clients into that. american michael kline will run that business. interesting to see the first boston name being repriced first came on the scene in 1988 when credit suisse and first boston came together

there is a lot going on here the question is is the saudi partner the right partner going forward and is this the right partnering for resturucturinges? let's hear from ulrich korner. >> further strengthening of capital base we have the necessary ing ingredients to go where we want to go. arguably, i would think one of the strongest growth regions in the next ten years we are in the region with the businesses more than 60 years. you know, we felt very much supported by, you know, the new challenge coming in and believing and supporting our transformation going forward >> reporter: the trouble is, andrew, as you very well know here, this is the kind of work

that you want to do when times are good and the sun is shining. we know that the macro environment is deteriorating rap rapidly. a $4 billion loss attributed to shareholders at the net level. $13 billion effectively leaving the business and a negative rote of the 38% there is a lot of problems as far as the business momentum is concerned with the organization and the share price performance today would suggest that actually shareholders are still skeptical as to whether this is the right restructuring program, but we will have to see. clearly the ceo has his work cut out with this one. >> so, 20 th24 is what the expectation is the markets don't like that.

was your sense the markets previously thought they would figure something out that would be meaningfully better than this >> reporter: there has been a lot of speculation running up to this and a lot of scenarios run as to whether they would exit the u.s. markets completely and walk away from wall street i did ask ulrich korner and the spin out to first boston means they are walking away from the business p the leverage finance operations. whether they are turning their back, if you like, on the largest and successful capital markets in the world he argued not. it is clear that the bankers have taken the decision to run down risk weighted assets by 40%. that means that is a big lost opportunity if and when we see the so-called pivot and capital

markets come back at the uptick perhaps in activity that would benefit an investment bank they will lose all of that opportunity. i suspect, andrew, that is perhaps the market reaction here because i think even as the markets like the idea of de-risking and more stable wealth management and asset management business, at the moment, begiven the decade, cret suisse cannot capitalize on relationships. do you want to do your wealth management banking with an organization that had litigation after litigation problem and had a succession of ceos with a failed track record of turning around business. a lot of pain. >> what is the sense that wealth management clients stick around

and field the fire therwall iss? >> reporter: you know how the banks operate. you want the wealth manager to come to you offering a lot of attractive deals and ways to improve not only their fee income, but basically give you a more profitable experience through credit suisse. i think the trouble is if you are planning on firing thousands of employees which they are planning to get to this $2.5 billion cost reduction, how do you get excited employees getting up every day and going to work on behalf of the bank. that is a big challenge. the trouble is there are plenty of rivals out like ubs or deutsche bank or a slew of american banks to offer similar or better client perexperience that is a big headache

>> geoff cutmore, thank you for bringing that news. we have other news this morning. earnings rolling out in a rush here honeywell out with the numbers you can see the stock is up a little bit .75% adjusted earnings per share coming in at $2.25 that was better than the street. the street was looking for $2.16. honeywell reporting revenue of $8.995 billion that was shy of estimates. honeywell is lowering the full year sales between $35.4 billion and $35.76 billion the street is for $35.6 billion. they may raise full year for free cash flow guidance. they are talking about raising full year outlook. just looking through the numbers. you can see the stock is a little higher on this.

i want to talk about caterpillar and merck. caterpillar looking at earnings per share of $3.95 on adjusted basis. that is better than p expected revenue came in $15 billion. just very quickly. looking through the numbers. they do talk about during the quarter the strong earnings. during the quarter, they did see a slowdown with a few issues shoot. that's not the original report i looked up. the stock is up 2% these are better than anticipated numbers. >> merck 1 $1.85. ken frazier is actually now going to step down as chairman and robert davis will succeed ken frazier as chairman of merck. let's go the guidance. it is online in adjusted basis

the company is now looking for $7.32 to $7.37. the street is at $7.34 already that is where the street is already. the revenue number guidance. estimate is 58.5 for the year. they said right around there the estimate for the year falls in line with guidance of 58.5 to 59 the high end of the guide answer is above where the street is you know all of the names. keytruda sales up 20% to $5.43 billion. a monomonocolonal.

and they will use it with keytruda you see more and more clinical trials to see what will help the he efficacy of keytruda solid tumors guardasil. sales up 15% for the -- i'm looking for the actual revenue number to see what it was. did we put it at the bottom? 14.9 versus 14.08. >> interesting with all of the companies dealing with strong forex. they are going up against. they managed to beat revenue all three of the companies revenue expectations

all three stocks trading higher at the moment. >> the dow up 112. coming up, an exclusive interview with the ceo of merck. as we head to break, here is a look at yesterday's s&p 500 winners and losers >> announcer: executive edge is sponsored by at&t business at&t 5g is fast, reliable and secure and you'll get our best deal. nice, but i can't accept it. unless every business gets the best deal. on every iphone. uh, actually... we already do that. the plumber with the ascot! big bjorn, little bjorn, too! the caterer who really cares. every business should get the deal! we make a good team. every business gets at&t's best deals on every iphone. including up to $800 off iphone 14 pro. (♪ ♪)

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good morning welcome back to "squawk box" here live at the nasdaq times square a mixed pick with the dow up 140. nasdaq lower down 62 points. we have a lot of earnings reports coming in that are moving both of the those indexes around the s&p 500 up slightly becky, you may want to go through some of those earnings sure caterpillar up 3%. it came in with numbers better than expected on the bottom and top line $15 billion in revenue $3.995 in earnings per share it looks like it will be seeing

a lot of strong demand and growth honeywell up by 6.6% right now honeywell beat earnings per share handily. they are raising some of the guidance for the full year that is why the stock is higher. merck came in with better than numbers. that is up .30%. southwest, i have not looked through yet. >> that is adjusted earnings of 50 cents per share you don't want to miss the interview on "squawk on the street" later with phil lebeau update on the story we told you yesterday. tomorrow is the date to buy i-bonds. otherwise the rate will drop we warned you yesterday it was probably the day you had to do it sometimes it takes a day or two for it to come through if you haven't done it yet, it

may be too late to make the purchase it has to be completed with the email. if you tried to do it yesterday, you may have run into problems the scramble to lock in the rates broke the web site treasurydirect.gov i tried to buy some last night you could not get through. it was because demand for i-bonds was unprecedented. they couldn't keep up. they are doing lots of things to fix this including adding to the server capacity it has no timetable to resolve it you broke the internet, guys well done. coming up, shares of meta platforms are in we will dig into those. later, we talk to thomas fanning over the likelihood of higher bills this winter "squawk box" returns after this.

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do you have those budget markups? thank you. mmhm. [bubbles] welcome back to "squawk box" meta shares plunging the company missed on the top line, but revenue beat estimates. 1.9 million expectations i argue it wasn't supposed to payoff some of the numbers were ugly. reality labs losing $3.67 billion. bringing the year to date losses to $9.4 billion. joining us now is rich gree greenfield rich, you saw the print and listened to the call you thought what >> it is interesting, andrew if you go back a few quarters ago, it was the first time mark zuckerberg got on the earnings call and said we're facing this

incredible threat called tiktok. that was in late january of 2022 it was so interesting to hear him yesterday talk about how their substantial investment in reels and make facebook and instagram more video centric i don't think most investors believe that i think most investors looked at facebook and instagram as losers relative to the growth of tiktok here is mark trying to come out after looking vulnerable early in the year saying o, no, we'r growing share. we're taking time spent and at the same time, it is not translating into revenue obviously, revenue is going in the wrong direction. part of that is the economy. part of that is obviously the apple privacy changes that were made i think investors are having a hard time footing what is happening in the business versus sort of the way the company is

presenting themselves and what is the real story. >> rich, what do you think the real story is which is to say do you think -- i, by the way, spend more and more time on instagram trapped in the vortex of reels and video at the same time, we are talking about the ad load which is significantly less significantly less than tiktok there is so much more volume on tiktok >> i also think at the end of the day it is less about just pure time spent right now. i also think the hot new object in town, the platform everybody wants to be part of which has faster growth. facebook may not lose time spent, but losing on the relative growth basis. tiktok is growing faster and advertisers are gravitating toward that medium all of this, andrew, is a side show to the fact that revenue growth is slowing and core product has the questions, they

are gunning the spending basically, one, to improve the core apps. they are spending a lot on a.i. to catch tiktok. no doubt they are trying to catch tiktok from the algorithm. and plowing through on the metaverse just like the opening comments, andrew, i don't think most investors believe in the investment maybe they believe in it, but they believe it is uninvest ablauninvestable in the five or ten years. >> do you think this core platform is a fixable situation and a year from now we will have a different discussion about facebook and instagram and reels? >> i think it will be challenging because i don't think the core creativity. if you talk to credit at this time ors, they find tiktok to be a more creative platform i don't think this is just

instagram reels. the same about youtube shorts and snapchat >> i have to hit you with two other things if mark zuckerberg woke up tomorrow and said we are not longer do meta we are spinning that off we are not doing it. the stock would go where where also would -- >> when you say meta, metaverse. >> the metaverse is over forget about the metaverse, folks. it was a fever dream and it is over what would the market do what would happen to the company? >> i think investors would be really excited i think most of what you are seeing is sort of the disconnect between incredible spending on the future some of it is for today with the a.i. this is about spending tens of billions of dollars over the next five years on something that investors don't think is tangible he is hurting his stock price. no doubt. >> greenfield, we may need you

back tomorrow or next week to talk twitter elon is in the house. >> we made the call. 5420 it is happening. this is pretty amazing when he hands out cash tomorrow. >> we will discuss that with you many a times in the next couple days thank you for joining us >> us this morning. >> thanks. when we come back, we're going to dig through merck's results th twihe ceo, robert davis. "squawk box" will be right back.

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♪ merck out with its third quarter results and joining us right now to break down that report is robert davis, he's the president and ceo of merck and soon to be chairman of the board. some strong numbers today. you all beat on the top and bottom line and raised guidance for the full year both for sales and earnings per share what's driving that growth >> well, really, you know, we have such strong momentum across

all of our key growth drivers, whether it any of our businesses the momentum is there. we're making steady progress in the pipeline and what it allowed us to deliver was a strong quarter. top-line growth at 14% 18% if you adjust for foreign currency importantly, those results allowed us to invest 22 cents in the form of business development to augment our pipeline to continue to bring in great science that's going to protect us for the future as well. we feel really good about where the business is, the momentum we have, and the fundamentals that we're seeing. >> sales up 20%. what's the most important development with keytruda? >> what you're seeing is, we continue to see strong growth.

we've been able to expand keytruda into ever increasing numbers of different tumor types. that's driving the growth as we go into new indications and also importantly, we're moving into earlier lines of therapy obviously, the real hope as you think about what you're trying to deliver for patients is to get into the earliest lines of therapy that when you can get to the cancer before it's metastasized, that's what we're trying to do it's that move and expanded indications across other tumor types that is what's fueling the growth we're continuing to see with keytruda. >> the news from moderna and the vaccine that they're developing, keytruda doesn't note to know whose tumor it is, it works on all of them. if you could combine it -- i don't know if you're working with other companies besides moderna that actually go in and

take a bypaiopsy of an individus tumor and find out how it's different from other tumors and use it with keytruda it seems like you could do it again and again and again. >> it is as we look at what we're doing with the personalized cancer vaccine, obviously, we've seen early data and are very encouraged by it. see a lot of opportunity there but as you point out, one of the things we're trying to do is to extend keytruda in the form of driving a deeper response. that's what the hope is, by combining an mrna-based vaccine with keytruda, you can kedeepen the response and effectiveness of keytruda. and we're also continuing to be very interested in antibody drugs, a different technology than the personalized cancer vaccines also again aimed at how do you drive enhanced effectiveness for

keytruda keytruda is obviously foundational in the treatment of cancer these other platforms are ways to enhance the benefit that keytruda brings to the patients and that's why we're excited to partner with moderna on this >> there aren't too many places that you can poke and ask questions about, but for animal health sales, they were down 3%. the gross margin contracted to 73.7% from 73.8% what's that a result of? >> yeah, well, you know, i would separate the results from what we're seeing with the underlying fundamentals of the business the underlying fundamentals continue to be quite strong and we had a meaningful impact from foreign currency in our animal health business. most is outside the united states there was seven points of negative foreign currency in that number. if you adjust for that, our actual growth would have been about 4% and that was spread evenly across our livestock business as well as our

companion animal business and that really is what you're seeing as the impact as we normalize that business from the strength we had last year, primarily in companion animal, due to the pandemic. obviously people were adopting pets and investing heavily in those pets that led to outsized performance last year. this is a little bit of a normalization of this. but as we look forward, we continue to see the fundamentals strong in this business and continue to expect we're going to grow above the market in animal health based on what we're seeing from the livestock side of the business, as well as from the companion animal side and adding to that, increasing growth we're getting from our investments into the intelligence side, the digital side of that business. i feel very good about where that business is and the sustained growth we're going to see coming from it. >> if it's normalized, does that mean all of those people who adopted pets during the pandemic aren't taking care of them as much >> i don't want to speculate on

people's pet care. the business is good. >> obviously forex is a big deal for you all. stronger dollar that be a huge headwind for every multinational. internally, are you expecting that the dollar has kind of tapped out that's what some people are speculating lately >> as we look forward, i -- you know, i can't really say where i think the dollar is going. i will tell you, it has been a drag it was about 4 percentage points of negative impact in the quarter. our 14% top-line growth would have been 18 as we look forward and as we're projecting, i'm not seeing a turnaround necessarily i don't know if we're going to see a lot more strengthening of the dollar as we look at it right now, we're projecting rates like they are now into the future. as far as we're looking forward, i think you're going to see

foreign currency continue to be a drag into the foreseeable future. >> as far as the new idea that the government is going to be able to negotiate with the drug companies for medicare, with that kicking in i guess not next year but the following year, what happens if republicans kind of win in a red wave do you think that gets undone? >> well, you know, in the near term, i don't -- we're not planning on seeing it unwound. we're more focused on how do we work with hhs to make sure that we implement it in a way that -- delivers both on what it's trying to do and protecting innovation if you look at the tenets of what is in the act, part of it is a redesign of part “d” we think the ability to lower out-of-pocket costs for patients at the counter is the right thing and that puts a cap on those costs, it eliminates the

doughnut hole. the negotiation element, that continues to be a concern. it can have a chilling effect on innovation in the industry we're talking about how we discover and develop drugs, how we think about business development differently as a result of the implications that's going to have on the value proposition for this industry, which is important because we don't want to see patients impacted who are waiting for that next cure to not get it in the same timely way they would have. so that's where we're focused, understanding that in the near term, it's not much of an impact it's something about longer term in the future but important as we think about the sustainability of this industry. >> thank you for joining us this morning. robert davis is the president and ceo of merck and soon to be chairman of the board. >> thank you. it is just now after 7:00 a.m. right here on the east

coast. you are watching "squawk box" right here on cnbc i'm andrew ross sorkin along with becky quick and joe kernen. we got a little bit of interesting picture here with the u.s. equity futures. let's show you where things stand given all the earnings reports that we've just got and a couple we will be getting. right now the dow looking higher, 172 points higher. but the nasdaq down about 64 points on the basis of some of those tech news -- or tech companies reporting. s&p 500 up just marginally let's talk mcdonald's just reporting. get over to pippa stevens. >> it's a top and bottom line beat for mcdonald's. analysts were looking for $2.58. the number is down 5% year over year that entire decline was due to fx impact as foreign currencies weakened against the dollar.

store sales grow 9%. it was helped by menu price increases as well as higher traffic. same store sales for international operated markets rose 8.5% while analysts were looking for 5.5% the landscape continues to evolve and uncertainties persist. the earnings call is later this morning where i will be listening for more details around if there are any changes to consumer behavior particularly in recent weeks especially from those lower income customers andrew >> appreciate it thank you. comcast just reporting and the initial reaction in the shares are higher as can see. up 2%. company saying it's strong financials when you think about the different businesses it's in, ebitda is probably one of the most important numbers along

with free cash flow. ebitda up 6% to 9.5 billion. free cash flow, 3.4 billion. consolidated revenues down slightly to 29.8 billion but excluding the tokyo olympics, it was up 7% year over year the expectations just for the bottom line, almost -- the company says analyst expectations were exceeded nearly on every metric and earnings per share up 10.3% to 96 cents versus expectations of 90 cents we should point out that there is a noncash charge at sky of $8.6 billion due to the macroeconomic situation in europe, higher energy costs, interest rates, inflation, ukraine, but the business itself had solid operating performance and added 320,000 customers which is the highest quarterly

growth since the company has owned sky. cable, highest margin on record. 45.1%. ebitda up 5.4. i don't know if this connectivity business we're talking about broadband in one of the complaints about the stock was that it -- really rapid broadband growth during the pandemic slowed. 14,000 broadband subs. >> i didn't realize it had more broadband that at&t and verizon combined. >> if you want some interesting things, the theme parks, man, if you don't think people are going back after the pandemic, what is that i think it's up 40% or something -- >> theme parks. >> nbc universal growth at 25% >> record for the third quarter. >> i think the peacock numbers are -- >> up 70%.

>> surpassed 15 million. the company says they're just starting to benefit from new agreements they have sports that are key with the nfl, major league baseball, notre dame, big 10, wwe, that's one of the things they're pointing to. >> i would focus on the b2b side of this business which is growing and i think is a big business more than people would appreciate on the comcast size increasing 10% in you're seeing an interesting situation on the wireless business, reaching 5 million mobile lines best quarter but ultimately right now it seems to me this is going to be a story of can you continue to grow the margin on a lot of what is your current product? that's -- the growth is going to come from current users, not

necessarily how many -- i think for a long time it was how many -- what's the tam in terms of addressable market. now i think it's a story -- or will become a story of how much data can you put down these pipes and how much can you charge for it. >> and, honestly, that's what at&t has seen its growth with. not necessarily just adding new customers. it's getting existing customers to agree to pay more and i think that's the case with what they've seen with comcast with some of these issues too broadband revenue up 5.7%. they did say that video customer losses, about 561,000. but as they've said, they're not chasing unprofitable subscribers. they don't want to keep the business away. >> 5%. to 33. the highest. >> 60. >> above 60. >> a little above 60 i think of it kind of a blue chip a blue chip down 50% is

notable -- >> year to date, i think >> look, it's a cash machine it's a cash machine. >> some people say -- >> what kind of multiple do you want to put on a cash machine. >> i don't know whether that -- gaming, something like that. does a company need to do another acquisition. >> i thought this market may be coming to comcast. if you have great free cash flow and you look at it in a tough challenging environment, it's the time where you can buy something and buy it at a reasonable price when you go back and think about the acquisition of nbc, one of the great things about -- the reason why that was such a great deal for comcast was -- >> price >> yes it was the price -- no -- it's an opportunistic transaction that turned out both between how it was managed and then the theme parks, if you remember, was not -- nobody expected that -- >> the company that sold it to comcast didn't do so well with the price that they got for nbc,

obviously. they could have probably gotten twice that. >> but you want those opportunities. and the question is, whether the market is going to come to you in that way. and people have talked a long time about what ultimately happens to a warren brothers discovery. >> there may be assets available. >> netflix would be a big chunk -- >> and a quarter of what it costs. >> whether microsoft would want to buy netflix all of that is far down the line i think when you think about acquisitions, big acquisitions, what do you do >> in this vurenvironment -- >> and that's just media stuff what would regulators allow in this environment they said something about how quickly the mobile business has grown. >> that's what i was referring to it has about 5 million customers. >> strong earnings all through the morning, you had

caterpillar, honeywell, merck, all of them meeting expectations the dow is up 200 points continuing to fuel some of that. the nasdaq is the pressure point. that's because of some of the technology names we heard. >> let's get over to frank holland who is taking a look at some of the other big movers this morning i got to see frank in person yesterday. nice to see you. >> always great to see you good morning we're going to call this earnings movers this morning shares up 3.5% profit more than 50 cents above estimates. the company said dealers increased their inventories more than twice what they did in the same quarter last year moving on to honeywell, more of a tech company these days. you can see shares are up more than 2.5% after beats on the top and the bottom line, also raising the guidance aerospace where the company gets more than a third of revenue,

strongest performer. southwest airlines beating on earnings the company says it continues to be strong demand for travel. strong bookings into q-4 including key holiday time periods. they don't see slowdowns shares up more than 3.5% and the story this morning, meta shares, they're falling hard this morning on the back of earnings. disappointing guidance in addition to rising cost that is have a lot of investors raising their eyebrows meta down more than 21%. looking at the faang complex minus netflix. amazon and alphabet also down this morning something to watch after some disappointing results after alphabet and microsoft earlier this week. back over to you. >> who do we have this afternoon and tomorrow earnings-wise >> we have apple you are putting me on the spot it's early, andrew i'm not used to these hours.

apple after the bell. >> we have amazon and intel. steve from intel was here yesterday. frank, it's great to see you i like the tie i saw frank yesterday. we were celebrating the great bob pisani and we were talking about thick ties versus -- >> you're a thin tie guy. >> we'll do a fashion show another day. >> by the way, meta getting downgraded across the board. morgan stanley downgrading meta today. coming up, credit suisse out with its turnaround plan geoff cutmore spoke to the ceo what do you have coming up for us >> it's a major restructuring plan they're going to break up the investment bank, they're going to raise $4 billion and they think they're going to cut thousands of jobs and rejuice

the cost space by 15%. we're going to talk to the ceo about that we'll play you the clips when we comeac bk. stay with us, everybody. you're watching "squawk box.

♪ ♪ no more waiting. no more running. [ screaming ] we finish this tonight. ♪

good morning, everybody. welcome back to "squawk box. i'm geoff cutmore on the river tims with canary wharf behind me credit suisse out with a major announcement this morning. big restructuring program. they're going to raise $4 billion partly through a rights issue, partly through the saudi national bank. they're expecting 1 1/2 billion dollars to be thrown in by the saudi bank, although that may be controversial with shareholders who will get to vote on that issue on the 23rd of november. so $4 billion to be raised they're going to cut costs by 2 1/2 billion partly through cutting staff and ultimately they are splitting up the investment bank into separate investments into cs first boston

in the united states let's listen to what the ulrich korner had to say about the saudi investment. >> number one, a radical restructuring of the investment bank, number two, a significant reduction of costs, and, number, three, and further strengthening of our capital base. with that, we have all the necessary ingredients to go where we want to go. one of the strongest growth regions in the next ten years, we felt very much supported by, you know, this new shelter coming in and support our transportation going forward >> a big gamble by the new ceo of credit suisse that this restructuring program will deliver, but it's not a great time to be selling assets and it's not a great time to be looking for fresh money,

particularly as you look at the nine-month performance of the investment bank. revenues down 51% and perhaps that partly explains why they are splitting up this business because maybe they don't feel they can compete with the american bracket banks any longer andrew, back to you. >> thanks for that report. beautiful shot, by the way coming up after the break, we're going to talk about mark zuckerberg reiterating his commitment to spend billions on developing the metaverse a concern about the company's overall health down again right now in the premarket. we're going to talk about all of it in just a moment. in the meantime, get a quick check on the markets as we had to the break you're looking at the dow powering higher, but the nasdaq off about 52 points. back after this.

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meta reported a miss in earnings expectations citing a slowdown in ad spending. apple's privacy policies and competition from tiktok as the main reasons for the slowdown. here's the ceo and founder mark zuckerberg on the call last night trying to reassure investors. >> there are now more than 140 billion reels across facebook and instagram each day

that's a 50% increase from six months ago reels is incremental to time spent on our apps and we're gaining time spent share against competitors like tiktok. >> i didn't work so well for the media reaction that stock is down another 22% today. down 67% for one year. join us is mark mahaney, head of internet research. and i know you've been positive on this stock for a very long time, maybe almost back to the ipo. that was a smart call for a very long time. but this year it's been a different story. what the heck happened and what you heard yesterday, what do you take out of that is that a big dark cloud or are you still looking for silver linings? >> i'm sticking with the buy on it what i found interesting listening to the call last night was the more that zuckerberg talked about his investment plans for the metaverse, the more the stock traded off in the

af aftermarket. it looks like it start today stabilize. us growth in the june quarter and the september quarter and probably against this next quarter. as reels monetization starts to ramp up, you're going to get revenue growth acceleration and this quarter i think was probably the trough margin quarter. i think fundamentally, things get better the question -- the investor question is, can you buy meta the stock if you don't believe in the metaverse is that fundamentally disruptive to the investment pieces that's a hard question to answer i think you can. i think there's a there-there to the metaverse. i think meta is worth more because they invest in the metaverse. would i prefer that they invest 5 billion, yes but the business is -- the stock is cheap enough that i'm willing to give them a little bit of

pass on all that investment spend. that's really the make-or-break on the stock and that's why investors are revolting today. >> they don't like the name, the amount of money being spent on it they don't like the returns they've seen to date or lack of returns. we talked about this earlier this morning, mark, and i kind of look at it -- i think if zuckerberg and company were allowed to buy something else, they probably would have obviously that hasn't been the case for a long time regulators aren't going to allow them to come in and make a big purchase they have to build it themselves now you're talking about investment levels that are getting up there if it's 9 1/2 billion or whatever it's been to date so far and you're planning onramping up that spend, you're talking about numbers that start to look like what it would be for a major acquisition or for the capex numbers of something like an at&t or a verizon or union pacific. you're looking more and more like a slow growth company and not necessarily a company that's

going to be a really fast growth company. >> you're right, becky you've set it all up correctly except, remember, what did we learn about the advertising business today versus yesterday? the advertising business looks like it's stabilizing rather than deteriorating both of these -- if you're in advertising now, these are the dark days. at some point, we're going to get the get beyond this. revenue growth is almost certainly going to reaccelerate. we think it gets to 20% in the core business margins rise that's attractive. it gets back to the question about the metaverse. there is no metaverse acquisition to be done facebook is the leader in this market >> i mean, if you were making an acquisition, you could say, instagram is really hot, i want to buy it. this is -- i think the metaverse is going to be hot, maybe we can make something that people will eventually want to go to just the risk-reward scenario if

you're buying something that's hot versus building something and hope it gets hot. >> they're the leader in a nascent space. the question for investors if you don't like metaverse can you buy meta stock i think you can. the engagement is the real bmake or break that's why i'll stick with it, but i get how controversial the investment is in the metaverse but i think it's a pace or a scale. most investors would want them to spend some amount of money, they prefer 5 billion rather than 15 billion. >> and change the name to meta if you think that the score business is really something great, maybe you wish they were spending more time focusing on fixing and improving and really putting some effort there. not to say that they can't wal and chew gum at the same time and not to say that mark zuckerberg hasn't invented

lightning in a bottle before if you look at the focus, you think the ad market is bottoming out. is that because the apple privacy issues are going to analyze and kind of go away? because i wonder how much of the ad problem is because of the changes that apple did with its privacy policies and how much is an idea that we're heading into a global downturn and companies aren't going to spend like they used to. if we head into a really big downturn, maybe we haven't gotten through the worst of the advertising issues. >> and there's the third issue which is competition from tiktok it's impacting facebook's ad revenue. i'll look at the numbers and this company sustained low single digit percentage growth google went negative back in 2008/2009 and facebook may do that if we go into a financial crisis you'll start getting reacceleration and revenue growth as you go through next

year, then i think the stock re-rates barring a dramatic negative surprise out of the metaverse. we know they're spending aggressively in metaverse. the market should see the ads basis -- the results still may get worst. what's priced in is a modest recession. and it's a highly profitable business that's the last thing to point out. it's a lot of spending but the score business still allows this business -- still allows the company to buy back 25 billion a year in stock because it's a 30% operating margin business. online advertising can be highly profitable and that's where facebook is. they have the resources to keep investing in the core business and the business looks like it's stabilizing. >> that amount in a stock b buyback will go further. thank you for your time this morning. >> thank you. coming up, tom fanning is going to join us on the nation's energy policy. also talk about the impact of

the jobs act and the inflation reduction act. the midterms and tax ramifications for millions of households what you need to know. "squawk box" will be right back. beautiful shot of the capital right there. >> announcer: time now for today's aflac trivia question. in 2008, what documentary explored the company's fiscal condition and featured investor warren buffett and former fed chair chair allen greenspan? ap!!! is that a goat?! you talkin' about me? gaaaaaaaaaaaap!!! i think this goat is saying “gap.” must be talking about the expenses health insurance doesn't cover. so who's talking about the money aflac pays to help close that gap? gaaaaaaaaaaaap!!! aflac! aflac! gaaaaaaaaaaaap!!! it's about to go down, baby! aflac! aflac! stop that goat! get help with expenses health insurance doesn't cover at aflac.com

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welcome back to "squawk box. take a look at the futures right now because we got a lot of moving pieces right now. we've got the dow up about 228 points on one side of the board, and take a look at the nasdaq, it's getting weighed down by meta this morning with its earnings report. that's off about 50 points right about now. let's talk about the various movers, different chess pieces that we're seeing. earnings, a big focus for investors. let's talk about it. you're looking at caterpillar,

honeywell, mcdonald's. c caterpillar up more than 5%. a little bit of a tale of two worlds right now. >> technology has been difficult. everything else has been doing pretty well. >> nasdaq has been the problem. the global energy crisis putting more pressure on the american consumer. joining us now to discuss energy policy and possible solutions, tom fanning, chairman, president and ceo of southern company which posted quarterly results earlier this morning adjusted earnings, two cents shortly. we may have some difficult times this winter, but it's all relative compared to what might happen across the pond, tom? >> yeah, joe, gosh, you know, i've been joining you guys on this program for over a decade now and i can remember about a decade ago when fukushima happened and there was this

question on whether we would continue to build nuclear. we had an exchange and i said it's important to understand europe energy policy because watch what they do and then do the opposite you know, anybody that didn't think putin would weaponize energy i think was sadly misguided. here in the united states, we have the ability to be energy independent. and so we need to continue to promote all of the above in terms of fuel sources. if you just rely on natural gas, we are going to see a tough time gosh, i think to date household energy prices are up over 20%, southern has been able to keep that number less than half of that >> yeah, you loaded fuel into a new nuclear plant, that's -- is it reactor three, is this the only one -- the only one being built in the united states in decades and it's yours

>> yeah, in a generation of americans is what i like to say. and, joe, the two benefits we see out of that, the energy coming out of that nuclear plant will be at the equivalent of about a dollar per million btu we know that in 2020, for example, gas was around two bucks per million. since then, it's doubled, almost, and doubled again, almost that plant looks awfully good right now. and when you think about this transition to net zero by 2050, we know that renewables will play a big part in that, renewables don't work when the sun doesn't shine or the wind doesn't blow that nuclear plant will work 24/7, 365. >> has germany called? maybe they can get something on line by 2050.

>> well, as a matter of fact, i chair the self-regulating nuclear organization here in north america, and i'm on the board of the world area nuclear organization we were just in prague two weeks ago to work and think about how to advance good nuclear operation. particular focus on the zaporizhzhia plant and some of the things we could do to help that situation. >> tom, you're -- >> you know, it's -- >> sorry, we got -- i wish we had more time. your stock is down and the 4% yield, i can get that on a two-year now even the utility -- you can see right there on the chart even utilities have suffered from -- maybe the end of the tina, there is no alternative trade. >> oh, listen, i think that's temporary. i think when you think about the

demographic of america, this idea of reasonable growth in attractive yield is something that will persist in thrive as an investment thesis as america ages and i think when you consider that we're finishing the nuclear program, look forward that the southeast has tremendous economic growth relative to the rest of the u.s., our numbers show that again this quarter i think southern company is an awful good bet going forward >> you sounded earlier -- kind of sound like a politician at times. you were fed and all that. but whould you say near term we need to drill more, long term, we need to keep investing in an -- all-in sort of an energy policy that includes everything and that in a nutshell is what i think you want to say today. >> joe, i think every american gets this on energy policy

let's take advantage of the blessings of natural resources that america has and not go to people that may be not so friendly to us let's get rid of the red tape and bureaucracy that slows down our ability to build infrastructure, like pipelines to support that future let's make sure that we consider energy as a place for the government to get in the boat with us, to promote innovation and drive research and development. >> tom, i don't know if you saw the story yesterday in the "the new york times" about how there was a secret deal apparently with the biden administration to -- with the saudis, for them to effectively put more output out there. they did a little bit and then they seemed to go back on it the question is, whether they were doing that for themselves or whether they were doing that because of some kind of relationship with russia what do you think? >> yeah, i've been thinking a lot about this, andrew, and the thomas freedman idea, the world

is flat, the world is not flat it appears on one side of the divide we have an emerging union between china, russia, north korea, iran and now maybe saudi arabia, we really need to rethink as a national security matter supply chain, industrial manufacturing capacity, fuel resources. these are things that i think are obvious on their face. >> tom, thanks good to have you on as we do every quarter and take a good look into what is so essential, the utility sector so especially as we're going to find out with each passing day this winter, tom. >> no kidding. >> always great -- >> come back when we can talk more deeply about some of these other issues, tom. business on the ballot in the upcoming midterm elections heidi heitkamp and judd greg will join us to talk taxes plus, is a recession looming we're going to get the latest read on gdp.

we'll break down what it means for the markets and try to get some clues on what you can expect for the next quarter. dow futures up by almost 220 points 185 of those points are coming from caterpillar, honeywell and mcdonald's out with better than anticipated earnings today the s&p is flat, the nasdaq down by 54. i remember when i first started flying, and we would experience turbulence. i would watch the flight attendants. if they're not nervous, then i'm not going to be nervous.

financially, i'm the flight attendant in that situation. the relief that comes over people once they know they've got a guide to help them through, i definitely feel privileged to be in that position. ♪♪ when you work in it complaints are part of the job. bill says the coffee is weak today. but since cdw helped us switch to mac, everyone's happier. dan from finance likes getting performance without a big price tag. bibi digs the power of the apple m1 chip. mac is easy to manage, compatible with all our apps and came preconfigured by cdw. now we're even getting compliments. that was bill again, says he loves his new mac. he's right about the coffee. thanks to avalara we can calculate sales tax on almost anything, anywhere, automatically. avalarahhhhh. what if tax rates change? ahhhhhh.

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welcome back to "squawk box," everybody. we've got some stocks to watch today. mcdonald's reporting a top and a bottom line beat earnings per share came in at 2.68 rech was $5.87 billion versus $5.69 billion. that stock up by 2.8%. a dow component and that's part of the reason the dow is up by 200 points comcast reporting adjusted earnings of 96 cents a share that beat the estimates by 6 cents. revenue also better than expected ebitda better than expected. and check it out, that stock is up by 7.5% and then there's honeywell also with beats on the top and bottom line and raising top-end

guidance for revenue and the bottom end for guidance for earnings per share the stock is up by 4.6% and honeywell's ceo will go in us on "squawk box" tomorrow morning to talk about this and much more. we're going to have more on the earnings reports in a couple of minutes. we have a couple other dow components that beat expectations and that isea rlly fueling things at least for the dow. "squawk box" will be right back. looks nothing like it did yesterday. while it's more unpredictable, its possibilities are endless. from paying your people from anywhere to supporting your talent everywhere, we use data driven insights to design hr solutions and services to help businesses of all size work smarter today. so, they can have more success tomorrow. ♪ one thing leads to another ♪

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box. the biden administration set to go on the offensive to try to reframe the democrats message to voters with less than two weeks until the midterm elections. some of the president's top officials canvassing the country today to regain momentum for the country. here's the white house's congre. ylan mui joins us with the white house's strategy >> the president will attempt to sharpen democrats' economic pitch as the white house goes into full campaign mode with the midterms just around the corner. his goal is to contrast his party's plan to build the economy from the bottom up and middle out with what he's calling republicans' mega maga trickle down economics okay, so what does that mean senior white house officials say biden will highlight democrats' work to bring down cost on prescription drugs, health care, gas prices, and student loan debt he'll deliver his speech in syracuse, where micron has announced a 20-year, $100 billion investment in chips that's projected to create 50,000 jobs. and that theme of lower prices

and domestic investment and manufacturing will be echoed by his top lieutenants across the country today. treasury secretary yellen in ohio, commerce secretary ray mundo in maryland, hhs secretary becerra in texas biden is also expected to attack republicans as pushing to extend tax cuts for the wealthy and threatening to cut social security and medicare. a recent poll shows themy is front and center for americans the lates anastment from fivethirtyeight says 53.3% compared to 44.9% for democrats. there's not much time for democrats to get their message through to voters but they're betting even the slightest move in the needle could make a difference >> thank you i want to welcome heidi heitkamp, a former senator of north dakota who is also a cnbc

contributor and grover norquist. heidi, i'm going to start with you, as the administration and democrats try to shift the narrative, do you think it's -- that's a winning narrative given what we're seeing happening around the country, and given some of the recent debates that have not been favorable for democrats? >> well, i would tell you, it's about time it's about time that they start talking about the economy. i think that this summer, they thought it was going to be a values-based election. on reproductive rights and i think they woke up when you started to see people come home to the issue they always come home to, which is the economy, and i think here we are at the last hours of this campaign, talking about something we should have been talking about a number of months ago. so it may be too little too late >> grover?

curious as somebody who thinks about taxes and lowering taxes, how you think about what kind of message the gop can offer at a time when we have seen what happened, for example, in europe or in the uk specifically, given the sort of push/pull of the bond market right now. >> well, if you look at the united states, not at the europeans which have not been doing terribly well, you have seen across the country in the 50 states red states cutting taxes and doing extremely well five states have moved to a single rate tax. in illinois, in 2020, when biden was elected, same day, the people of illinois voted down a graduated income tax the whole envy thesis of the democratic party voted down in illinois it's on the ballot again in massachusetts this year. five times the people of massachusetts have voted down going away from a single rate flat tax towards a graduated or progressive tax. we'll see what happens this

time, but the message across the states is one of states announcing they're moving towards phasing out the income tax. take a look at the whole idea of inflation where it is, we're bringing back the idea of ending the inflation tax on capital gains. we don't tax inflation on your wages, but we do on capital gains. this is an idea that's passed the house in 1978, the senate in 1982, and the senate again in 1992 with schumer on the floor praising it as a must-do bill, ending the taxation of inflation in your capital gains. there's a bill ready to go ted cruz on the senate side, warren davidson on the house side this answers the question of how do you deal with biden's inflation. the list of projects that biden said he wanted to talk about or you listed, he's been talking about those for two years. those are losers stan greenberg, democratic pollster, said biden's thing is killing his own message. >> heidi, real quick

can you lower taxes at a time of inflation? >> first off, every state that is bagging about their surplus should send back the money that the federal government sent them because you cannot divide a state revenue from federal revenue given how intertwined they are secondly, i think it's always so interesting, no one ever mentioned kansas as an exact experiment that failed miserably, and no one mentions we have sales tax on consumers that is regressive at 7%, 8% in this country if you want to give people a tax break, why not cut the sales tax? and finally, even the american enterprise institute said that a tax cut at this point would be inflationary and not a good idea so there's a whole lot to unpack in what just got said, and we don't have a lot of time to do it >> grover -- >> you see a democratic governor cut the sales tax, that would be

great. >> i don't know if you think what happened in pennsylvania, there's now an idea that the senate moves red what do you think that would mean for the government over the next two years given you still have the president in the white house. i don't know what you think is going to happen in the house and what kind of tax policy or not, and i don't know if we're talking about tax policy, regulatory policy, or not would emerge >> this happened with clinton, spent too much, lost the house and senate obama spent too much, lost the house and senate what happened with clinton republicans went in and negotiated welfare reform, which he lined on the third time they insisted on cutting the capital gains tax, which he signed they stripped almost all of his spending plans down so we balanced the budget. go to obama. he took two years and said i'll give you all of the bush tax cuts continued for two years hoping he could take the senate or house, but when he lost those, he said 85%, i'll sign to continue 85% of the bush tax

cuts $2 trillion he wanted the debt ceiling increased. republicans said fine, but you get $2 trillion in debt ceiling if you reduce $2 trillion over a decade and they had the sequester. it happened. we now go to the same thing with biden. going to not get any corporate tax rate and we're going to end this tax >> grover, want to thank you for your perspective, making us all smarter. heidi, want to thank you as well for an important, informed discussion of these issues that are facing the whole country >> coming up, we're just over half an hour now away from third quarter gdp. we'll bring you the numbers and analysis as soon as it hits and take a look at the futures ahead of the data. solid again. a pretty solid week since last thursday "squawk box" will be right back.

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good morning futures mixed on another big morning for earnings we'll get you up to speed on caterpillar, merck, comcast, and more meta platforms dragging down the maz dac.

the facebook parent looking at a market cap lost in the tens of millions of dollars. >> we're now less than 30 minutes away from the first look at third quarter gdp, a key metric the fed is going to be watching as it weighs the next interest rate hike don't go anywhere was the final hour of "squawk box" begins right this moment. >> good morning, and welcome to "squawk box" here on cnbc live from the nasdaq market site in times square i'm joe along with becky and andrew, and u.s. equity futures are up again this morning, up on the dow 191 points we should point out the nasdaq being hit a little bit by just tech concerns. meta is the tech sort of debacle du jour. today's debacle du jour, and the

s&p also diverging from the dow. some dow components are helping today, and the yield is not on the ten-year is not -- not presenting any problems as it could, as it has in the past, and actually earlier, looked like it might actually get the 3 handle that did not happen, but hope springs eternal. could. >> especially for anybody trying to buy a house >> gdp number could make a difference >> in the meantime, let's get to the hour started with one of today's top earnings movers. that would be merck. the drug giant posting third quarter revenue and profit beating street's expectations. its sales of the targeted cancer drug up 20% in the quarter as they found new ways to use that new types of tumors to go after. the company's ceo robert davis joined us earlier on "squawk box. >> top line growth at 14%. 18% if you adjust for foreign currency, and importantly, those

results allowed us to invest 22 cents in the form of business development to augment our pipeline to continue to bring in great science that's going to protect us for the future as well we feel really good about where the business is, the momentum we have, and really the fundamentals we're seeing. >> that stock up by a little more than 2% an important note about robert davis himself. he's going to be succeeding ken frazer as chairman of merck. ken frasier, the company said, is planning to retire after 30 years of service in various roles. most recently as ceo >> let's get to other top movers this morning frank holland joins us it's no surprise, it's just pleasing to me, frank. good morning >> good morning to you i'm glad you're happy to see me. good to see all three of you a big morning for earnings pushing the dow about 200 points higher four dow components report

you hit merck. honeywell, caterpillar, mcdonald's, all moving higher in strong earnings. caterpillar the best performer let's go down the line mcdonald's reporting a 10% boost in global sales. margin did contract. caterpillar seeing dealers doubling their inventory honeywell guiding for margin expansion. also a strong report from our parent company comcast they reported revenue growth in cable and streaming with peacock seeing a 70% increase in paying customers. always rising, the broader telecom and cable sector you see up 2.5%. it's just about tied for the second largest cable operator in the nation along with at&t which is fractionally higher disney also almost a percent higher jpmorgan reiterating disney as a buy on optimism for the park and streaming business a similar model to our parent company, comcast, and the story of the morning is meta those shares plummeting, down

23%. misses on the top and bottom line profit fell by 50% guidance was weak. spending surge, double digit losses increased at reality labs which is a key part of the transition into a metaverse company on the call, mark zuckerberg saying trying to reassure people but saying they would look back decades from now and talk about this metaverse play, you see the stock move right now. that part might be true. the question is will we say it's the right call or the wrong call back over to you >> okay. want to bring in a top investor on the key earnings reports we have seen and the overall market rebound. we're joined by peter krauss of aperture investors we're trying to make sense of what has been quite a market because we have a lot of companies, especially when you look at the dow there, that are not just holding up but powering through in a big way the dollar not seeming to impact things as much as you might have

imagined what do you see happening and would you buy this market? >> i think it's very interesting, one of the things we haven't talked that much about is nominal growth. we're going city that in the gdp shortly. inflation, while it's very high, is also driving the ability for companies to get price increases. and with not a lot of volume, even constant volume, they're having significant increases in revenues and that's contributing to higher income for some of the stable companies, the dow companies, that's turning out to be quite positive the technology businesses and advertising businesses, that's where it's been soft you're going to continue to see that divergence. >> let's talk about the divergence and whether that holds up over time historically, the reason why we're seeing tech get hit is actually a function of advertising. advertising unto itself has always been a sort of signal of where the larger economy is going. i don't know if you think they're related or not, but therefore, you would think if

that's true, that these other companies that we think have actually managed so well might not manage so well later or no >> i think it's possible, andrew you know, we might have sort of a two-step market here if i could take a minute to describe what i mean. first, we had an interest rate move that's almost historic in terms of not just in terms of size but in terms of the differential from literally zero rates to 4%. that's had a huge negative impact on the market, broadly speaking, and inflation had the effect that we talked about. now, we're going to see an economic slowdown created by that increase in interest rates, and that economic slowdown/recession, i'm not going to give it a name, that's going to have the impact that you're talking about, andrew, which is already being seen in the tech stocks and may be seen in the other stocks reporting well this quarter. >> what do you make of the political situation we're in we're ahead of the midterms,

fetterman, there's now a sort of expectation, i think maybe that pennsylvania goes to oz, therefore the senate goes to the gop. is that weighing in on this in any real way >> i think it's hard for the market to basically underwrite political outcomes so i would say generally not >> and in terms of what you think the fed is going to do at this point in the ball game, for the rest of the year, what's your baseline? >> baseline is the fed continues to increase rates but at a slower rate. that's the conventional view of the market the market's very sensitive to whether the fed is going to go not 75 basis points the next time, but what their next move is and what the ultimate rate is in the short end it was priced in at 5, now priced in at 4.50, 4.75. the market is extremely sensitive to that. moving away from that, the fed is not going to bring rates down until we see inflation really cool, and inflaig is not going

to come down as fast as people want it to this is a sticky measure and the fed is by definition not a leading indicator. >> but if you're right then, you would argue that the fed would overshoot and that would be bad for equities >> not fair to say the fed is going to overshoot because the fed can't bring rates down until inflation is under control and the inflation indicators are not at least coincident and probably lagging the market knows that. investors are trying to figure out where are trough earnings. they need to see a slowdown in the economy, they need to see management's forecast, slower growth, lower income, lower ma margins, and then they can get a sense of okay, i see where trough earnings are, and then i'll start to buy the market >> would you touch anything in the nasdaq right now does this look to you like a

falling knife or do you say everything is on sale? >> no, i don't think it's a falling knife. let's take away the idea of buying the bottombecause that' impossible the markets are down 25% to 30% in the areas you're talking about. are you two-thirds of the way right? absolutely are you 75% to 90% of the way right? don't know so again, if you're putting money to work, you would put some money to work here. no doubt i would add one other thing, andrew you're going to have to rebalance your portfolio at the end of the year. you have had significant declines in equities, significant declines in fixed income you want to look at your private assets, private credit and equity, and say they didn't move that's gnaw true they all went down they just haven't been marked. there's going to have to be rebalancing here and people should rebalance their portfolios >> peter, we have to run, but you made what i think is maybe one of the most important comments i have heard in the last two or three hours of the

show, which is p.e., private equity and the marks do you believe that private equity has properly marked its books? >> let's say it this way it is literally impossible for the entire global equity market to be down 18% and for every private equity firm to basically report no change in their assets that's impossible. so i expect that when they report, they will mark down the assets >> and do you think that creates any kind of real risk in terms of additional pressure on the public or private markets and the rest of the economy? >> i think it will be a foregone conclusion it's going to create risks inside people's portfolios and expectations of returns may shift, but if those expectations are not going to shift so long as those marks continue to stay, we'll say, at elevated levels. i think if you have extended

periods of time, six months, nine months where the marks continue to go down, which i think you would see in this kind of a market, that's going to create potentially investors' willingness to buy additional assets or other assets other than just private assets >> peter krauss, always good to see you, getting your perspective on where we are in the economy and where this market may or may not be headed. thanks >> see you thanks a lot >> when we come back, we've got breaking gdp data. that number coming up in just over 15 minutes. >> up next, though, the latest on credit suisse after the bank announced a major overhaul that stock off more than 12% testorn standing by f a inre ratestition by the european bank. ♪ it's our turn now we'll make it up again. ♪ ♪ we'll build freelance teams with more agility. ♪ ♪ the old way of working is deader than me. ♪ ♪ we'll scale up, and we'll scale down ♪

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all right, everybody the european central bank set to release its latest interest rate decision any minute now. markets looking for another 75 basis point hike let's get over to rick santelli. rick >> and they delivered. yes, the ecb with back-to-back three quarters of a point increases on the rate brings their deposit facility rate to 1.5% their marginal lending rate

moved from 1.5 to 2%. we see the ten-year in the u.s. yields haven't moved much from 4.06 the euro currency, though, is dropping, and do remember the euro closed yesterday above parity for the first time since september 19th, since its low on the 21st of october. not that long ago. it's up nearly 4%, but obviously, we're going in the other direction now. and if we look at what's going on with bund yields they were dropping they have dropped about eight basis points toward 2.11 their high water mark was on the 21st, the same day the euro made its low. 2.42 on a bund, so it has moved lower like many sovereigns, we're going to continue to monitor post press conference with christine lagarde

many want to know how this increase is going to affect the weaker economies like italy, like spain, that are going to of course have to potentially see some of their debt serviced and purchased by christine lagarde in a multi-pronged approach which is awfully confusing becky, back to you >> rick, that was what was expected at least by economists ahead of time, that they would do another 75-basis-point hike seeing the euro drop like that, though, was there some sort of whisper expectation that maybe they would do more or was there some sort of expectation there would be stronger language than they saw in the initial press release? >> i think we're going to have to wait for the press conference, but in my opinion, watching what's going on with regard to rates moving a bit lower and the euro moving a bit lower, most likely has to do with the recessionary implications and the slowing of the economy. we all know that there's an awful lot of natural gas all of a sudden that seems to be

floating around infrastructure and costs are still a major issue. and of course, we saw that germany is going to subsidize their high energy costs such an extent that they put the rest of europe at a disadvantage, and all these issues are negative for their economy, which is most likely trumping what we are seeing and what we expected that was delivered by christine lagarde and her committee. >> okay, rick, thank you we'll listen for what happens, and we'll see you in about 12 minutes for the first read on third quarter gdp in the united states >> 2.3 a developing corporate story out of europe, credit suisse unveiling a long awaited restructuring plan the ceo speaking with cnbc earlier this morning >> number one, you know, a radical restructuring of the investment bank. number two, a significant reduction of costs and number three, and further strengthening of our capital base with that, we have all the

necessary ingredients together to go where we want to go. >> let's get more on the story with our own leslie picker hey, leslie. >> hey, joe. good morning the market casting some doubt on credit suisse's turnaround plan with shares plummeting more than 12% right now on these announcements. credit suisse says it intends to raise $4 billion by issuing new shares to investors who include the saudi national bank, which is putting in about $1.5 billion, as well as rights offering for investing investors also, embarg barking on cost cutting measures however, analysts had said a capital hole between $6 and $9 billion would need to be plugged. it's a costly endeavor, plus nearly $3 billion worth of restructuring charges, and on top of all this, the firm reported a $4 billion net loss during the quarter now, cnbc's jeff cutmore, who

has been on air all morning spoke with the ceo about this gap in an interview earlier today, and he said the partnering with apollo and pimco on acquiring their securitized products business will help generate additional capital while noting the firm, quote, started with a strong capital base and it's important to, quote, leave the transformation even stronger. he also said the firm remained committed to the investment bank despite breaking it up the capital markets and advisory business will be placed in a separate entity as part of this restructuring, opening up to third-party investors. they said they have about half a billion dollars from a very credible investor. and they'll resurrect the cs first boston name in doing so. he added they have no intention to retreat from wall street, to retreat from the u.s., as reports had suggested earlier. still the transformation will involve a much larger pivot toward welt management, asset management, they swiss bank with

80% of capital allocated to those areas by 2025. now, the firm is hosting a media call in about ten minutes time i'll be tuning in to that. we'll report back with what we learn, guys. >> all right, leslie i like when names come -- i always like the return >> i still call credit suisse first boston and people look at my like i lost my mind >> i miss ef hutton. i do a good firm. when i was there i liked that that's not coming back good ads, remember do you remember those? >> coming up, we're going to bring you the first look at third quarter gdp, the all important number, and goldman sachs' jeff curry is going to join us with a report that a cap on russian prices may be looser than expected. check out the move in the euro in the last few minutes after the ecp hiked rates by 75 basis

points for the second straight meeting. we're back after this.

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(♪ ♪) recapping today's top movers, these are earnings stories that were better than expectations on every count. you can see the stocks up as a result caterpillar up 4.5%. comcast up by 6.5% honeywell up by 3.6%, and

mcdonald's and merck each up more than 2% caterpillar, merck, and mcdonald's all dow components, and those dow components are adding about 170 points to the dow, which is now indicated up by about 272 points. the real concern this earnings season has been technology you see the nasdaq futures under a little pressure, but the dow really hanging in there. powering higher. s&p has been about flat through most of this morning >> coming up, breaking economic data third quarter gdp, durable goods and more we have an expert panel standing by ready to dissect the numbers when they hit. stay tuned you're watchb "squawk box" on cnbc

welcome back to "squawk box" right here on cnbc we're now less than two minutes away from the first look at third quarter gdp. want to bring in our all-star panel. austan goolsbee served as economic adviser to obama, and now at the booth school of business joe is here with us, former white house economist under trump and currently chief economist at securities america. lindsey is here, stifel chief

economist. nancy davis, founder and cio of quadratic capital management, mr. goolsbee, what do you expect and what do you think the fed is expecting? >> i think the fed is expecting and everybody is expecting to see a modest number that's not zero that's positive that kind of answers the chapter one question, was it a recession for the first half of the year i think jobs were growing and if we get a positive gdp number, it wasn't a recession but i think the fed's actions already and thefact that core inflation remains above where they want it to be on a month to month basis means they're going to keep raising. and there's a lag so we'll have to see what happens in the future gdps. >> joe, long time no see what are you expecting >> similar to what was said.

consumption is expected to rise just 1%. we saw domestic demand up only one point. this economy is weak and will get weaker in response to the fed tightening we had and the tightening we're getting >> thanks, joe time for the gdp data. rick santelli has the number >> all right, well, the numbers are trickling out. let's start out with what we currently know, 217,000 on initial jobless claims that was a bit lower than expected and 217, well, in the rear view mirror, we have 214. you can see these are awfully low numbers. on continuing claims, 1.48 million. a bigger jump than expected and the highest level going back to, and i'm a bit surprised, all the way back to early april. now, gdp, first quarter, first look at third quarter up 2.6%.

better than expected and despite takeaways from inventories and trade deficits, 2.6% is two-tenths better than expected and better than six-tenths with a minus sign in the rear view mirror on the pricing index, 4.1% that follows 9%, the high water mark there, well 9% was and that takes you back to 1981 so that's a nice fallback. with respect to pricing issues, we want to continue to pay very close attention. now, i haven't seen all the other metrics coming through, so let's now jump to durable good orders durable good orders expected to be up .6, a bit lagging there, up .4. strip out transportation and you can see transportation boosted durable goods because they dropped down to half of 1% with a minus sign nondefense capital goods, proxy for capital spending by businesses, also a very, very

big disappointment there if we look at those orders, they're down .7%, and shipments are down half of 1%. finally we get the rest of the pricing. i see that the core pce is 4.5%. exactly as expected. and the rear view mirror's 4.7%. the high water mark was june of '21 at 6%. we have definitely come off a bit there. so pricing pressures have eased. we see that interest rates, well, very, very much dropped about five basis points from 4.06 area to 4.01 for tens we continue to monitor the entire curve yields are slightly higher but not dramatically higher. back to the panel. >> very interesting move in equities thanks, rick let's get to our panel for instant reaction i don't know how to interpret it lip lindsey, i don't know if you have weighed in yet, but is it possible that with the pce easing a little bit, and where

it doesn't look like we're in a recession, that's a pretty good. can we extrapolate to say maybe some people think a soft landing is possible, maybe we can raise rates, bring inflation down, but the economy can survive? is that why stocks are up? >> i think the third quarter number was better than expected, as rick laid out i would caution to say this is an indication of sustainable upward momentum. and more a reflection of static support, particularly to the consumer as we saw lower gas prices, as we saw additional state and local stimulus come down the pipeline consumers increasingly willing to draw down what remaining savings they have and turn to credit cards i don't think that we're seeing upward momentum in any of the components in the third quarter report and in fact, also as pointed out, durable goods, when we strip out those other components and look at the core of business investment, it's starting out the fourth quarter particularly weak so i do think this was a

welcomed reprieve relative to six months of negative growth at the start of the year, but this is hardly indicative of strength for the underlying economy that being said, it will be a feather in the cap for the fed who is focused entirely on reinstating price stability and with prices still near four decade high, there's no indication they will deviate from the current pathway to higher rates >> nancy, knee jerk reaction, when we get a strong economic number, bad because it means the fed has to do more work and go further. we have gone from negative gdp to positive gdp. why isn't the marking selling off if the fed has to do more? is it the pce that came in a little better? >> i think so, yeah, definitely. i think it was a little bit of a feather in the fed's cap to see inflation print actually lower and gdp higher i think the one thing i would say is that consensus across wall street is definitely very bearish. a lot of market pundits really believe that we are going to be

entering a recession, and i think you have to look at what's priced in to fed hike expectations we have another 75 basis point hike already priced in for the next one and then we have another almost 50 basis points priced in as well i think the market has really priced in the fed hikes, so i think you could see maybe a relief rally if the fed doesn't have to hike another 75 basis points twice in a row. >> is it possible a soft landing? is it possible >> i mean, anything is possible, joe. the point is, if you look at the last six recessions, four times the economy grew 3.3%, right before we went into the downturn so there's no momentum in the economy, and importantly, if you look at the yield curve and we normalize it for the level of breaks we have never been more inverted the yield curve not only predicts recessions, causes recessions because of liquidity and credit that doesn't get

created when the curve is so inverted we could avoid a recession, but very unlikely in my view >> what do you think >> i think recession -- i mean, the most common cause of recessions is the fed raises interest rates faster than the economy can handle where that would happen in the sectors you're already seeing that a little in this gdp. business investment, housing, consumer durables, the stuff that's interest rate sensitive that's the stuff that's going to suffer and we haven't said anything about the dollar, with the dollar as strong as it's been, you're likely to see even more hit on manufacturing in the u.s. because we're going to be facing import competition that's cheaper. so by no means are we out of the woods. it's a nice observation that the pce deflater was less. maybe we have peaked in that, and that's the main thing that the fed looks at it's a little bit of a better

measure of inflation than is the cpi. and decently strong growth, but our overall point is still pretty bumpy, so i think people should buckle their seat belts on this one. >> rick, normally, you have a couple negative quarters and then you get a positive one. even though it's only five basis points on the ten-year, we were at 4.30 on the ten-year, we were off to the races theoretically, possibly, and then we almost hit a 3 handle and now we're back down on a 2.6 gdp. why? >> my opinion is it's quite simple, that the market and many investors perceive a fed taking a path that they're not going to advertise before they move down that particular road and i would happen to agree with that now, i wouldn't say that we're completely out of the woods with higher rates or the effects of higher rates on the nasdaq or the other two sectors with

regard to equities, but i do think the probabilities keep growing that at some point in the future we're going to see not only an ebbing in certain metrics for inflation, but we're also going to see that we may slip into recession. i point to three months of tens yesterday dipped into negative territory on the close granted, it bounced a bit. i'm not saying i look at these yield curves and three months of tens is the recession yield curve. i'm not saying that it's infallible, but i'm saying if all you're looking at to remain out of a recession is what's going on in the jobs market, you could be really surprised in about one or two quarters down the road i continue to think that the fed, whether you call it a soft landing or a hard landing, i think that the economy and some of these pricing pressures are already starting to ease the ones that are going to be sticky, i don't want to be a broken cd here, but it's going to be energy and potentially

labor. we could all say labor hasn't kept up with inflation, now, but are we going to be able to say that exact same phrase a year from now i'm not sure we will be able to, and i think that really is what the market is focusing on. in addition to the fact that outside the u.s., most economies have much more significant issues to deal with. >> ten-year is going back to where it was, while you're talking. but you should call your friends, austan, an pennsylvania avenue i would be bragging about this today. look, if i were the president, because he said that last week, the week before, the economy is strong, and then you get the pce in line and down from 6. i would come out and say i'm doing a heck of a job. >> yeah, look, they might, but i always said you never make too much out of any one month's number so let's not get out too far in front of it. >> a quarter a quarter's number

>> that's true one quarter. >> so joe, i'm just going to go clockwise here joe, you still think what we were thinking yesterday, this number comes down. >> counterclockwise. >> no, i'm going to go joe, lindsey. >> you started with austan got it >> i would be going to me. >> it's 10:00 a.m. but you are talking. >> so joe, would you change what you were thinking from yesterday based on this? >> not at all. the forward looking components, durable goods orders are softening. all of the regional purchasing manager series are slowing and we know monetary policy works with a lag yet the fed is hiking rates into an index of leading indicators that are declining. that's never happened before it will be bumpy i'm not sure the recession will be mild, but no, this doesn't change my view >> lindsey >> no, it really doesn't we were expecting a positive

number in q3 as i mentioned this is likely a temporary boost, and not indicative of upward momentum, sustainable upward momentum for the economy. this is likely the only positive quarter we see for some time as we are able to check those recessionary boxes in nearly every sector of the economy, except for the labor market. but again, as it was pointed out, the labor market is already beginning to show some cracks or some signs of weakness and with the fed focused solely on reinstated price stability, we expect a continued backup in rates above and beyond what the market is currently pricing in, and that will force us into or further into recession as we go into 2023. >> i'm skipping you, rick, because i think i know you already kind of weighed in so nancy >> so i think the inverted yield curve is definitely a bad sign for the economy, but i am optimistic that the fed can use

other monetary policy tools beside just hiking rates we have an $8.2 trillion soma holdings which is a piece of the fed's balance sheet they brought during qe purchases. i do think as the fed gets more aggressive using their balance sheet, that can help normalize the yield curve to stimulate lending and stimulate credit extension around the world if you imagine an inverted yield curve, why would you ever lend money longer and get paid less as a lender? so i do think it's a really unhealthy sign, but i do think that the fed can use their balance sheet more after we get out of this year >> okay, we're going to leave it there. so austan, have you been back from the east coast at all >> yeah, a couple times. waiting for my dinner. >> you didn't call you didn't let me know did you see what happened when el-erian won a bet got to go to the jets game

got to sit in a box, got to meet joe namath if you come back here, call me >> now you're just rubbing it in now you're really just rubbing it in. >> so you were back here did i know >> i call you and you give me the oh, i'm on vacation. oh, i'm this i'm busy going to taco bell >> call me up. >> i still don't know -- >> you love hanging it over me call me and we'll go all right. >> okay. >> even to a nice mexican restaurant even though i would prefer taco bell we'll have margaritas maybe. thank you to our panel rick, i don't know if i need to thank you. you had to be here, didn't you thanks anyway. >> of course you should thank me, joe but i do need to be here and i'm glad i'm glad i'm here. >> glad you're here, too >> all right, when we come back, we'll get jim cramer's first take on the trading day ahead, and by the way, tomorrow, don't miss honeywell's ceo he'll join us exclusively to

talk about the latest round of company earnings that stock is up sharply this morning on the ns.ew stay tuned "squawk box" will be right back. ♪♪ ♪♪ be ready for any market with a liquid etf. get in and out with dia.

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palantir. data driven enterprise accelerator. . want to get to the new york stock exchange our good friend jim cramer, what a market this morning between meta on one side of the universe, so many other companies coming in with earnings better than expected. meantime, got this new gdp print. make sense of it for us.

>> all right, i think there's a tremendous amount of money coming out of technology in general. coming out of big cap. and going into companies that have cost control and see some light at the end of the tunnel there are companies that recognize what you have to do when you have to batten down the hatches and there are other companies that don't seem to understand that we might be in a tougher times. so i look at it like that. i also think that gdp number not as important, maybe durable goods. everything that i'm seeing really is an extraordinary revulsion to big cap tech. maybe apple can save that tonight, maybe amazon. but the notion of companies that can do spending that has no end to it, they're finished. they're finished >> they're finished? >> as places to invest >> as if the knife continues to fall there are people - >> i'm saying, looking at the money coming out

where is the money coming from to buy industrials it's not coming from new people saying it's time to put money in the stock market because they get such agreat rate on the two-year i think it's money rotating out of companies that have dominated this market for the last decade and into companies like caterpillar who know what they're doing. >> are you thinking that the tech companies that i think you're disappointed in are going to get religion, if you will, and get disciplined? what does discipline look like >> you know what they are? i would call them atheists they believe in nothing. >> i think that's a nighalist. >> we were also talking about elon musk earlier today, as he was walking into twitter holding the sink with him. looked like if you were arbing that, you're a winner today or will be later this week. >> you know, when you incorporate in delaware, you tend to get the benefit of the

doubt. i think that elon, i think he'll probably do a good job because he's masterful and he's got an idea that we probably don't know in our heads he's probably got something. i don't think he's going in there idly i would trust him more than anyone in tech seems to have a concept of making money, seems to like the concept of making money. >> you think five years from now we'll talk about that company ipo'ing at a valuation higher than he paid for it? >> yes, because it will look different than the company now i think that elon musk is edicted to doing commerce and making money which is one reason why he's so pleasurable. >> finally, you think you're going to be doing banking business with cs first boston anytime soon under michael klein? >> look, i think they're going to be in business. if monty is in business, why can't credit suisse stay in

business >> jim cramer, we're going to see you in just a couple minutes with the ginofg "squawk on the street." we're going to come back in a moment and talk to goldman sachs' energy guru ♪♪ i don't accept this. i can't do this anymore. impossible odds, save the world. i'm done. what do you have for me? a new way to transform our agency. strategy to execution. oh, looks my laces have come undone. a business card? yes, for ey. tech expertise? $2.5 billion invested. impressive.

okay, you've convinced me, i'm back. just gonna... get this...

all right. welcome back to "squawk box" everybody. third quarter gdp data show the u.s. economy grew at a slightly faster rate than expected. as you might expect, you saw a lot of different markets move including the energy markets which ticked higher. if there's more demand, that means prices should go up. wti is back at $89.11 a barrel that's a gain of 1.3%. bloomberg reporting that the u.s. and the e.u. may be forced to settle for a looser cap on russian oil prices than previously thought joining us right now to talk about all of this and more is jeff curry he's goldman sachs global head of commodity research. let's talk about the demand picture first. if you are headed towards a soft landing, what does that mean for energy prices? >> very positive that's why oil and commodities

are considered late cycle assets, because once the rate hikes began, it takes a while before you really begin to slow the economy so like tech stocks and, you know, growth names get hit first but it takes time before the rate hikes begin to slow growth. cyclical names, you know, like the shells, oil, copper, all of that continue to perform late in the cycle for precisely that lag reason now that doesn't factor in the structural story that revenge of the old economy we've talked about which i think makes them more resilient from a supply side through this cycle. bottom line, energy is a sector in the indices oil, commodities up 28% year to date this is all reflecting that nature and we haven't started to talk about the structural story. >> so the structural story,

let's get to that too. this has been your reason you're long oil looking at, what, a seven-year cycle, jeff? >> historically when you enter one of these super cycles, they last somewhere around 12 years the one in the 2000 started in '02 and ended in '14 this one started in 2020.

year 2000 microsoft was on top, exxon was nowhere to be found. 2010, exxon was on top, microsoft was nowhere to be found. 2020 microsoft on top, exxon no where to be found. what do you think is going to happen this is that revenge of the old economy cycle.

>> man, the differential of the two is more drastic than it's ever been. >> are we getting to where they're going to be redeploying for additional drilling or have they been beaten down. what price is it, you can't ignore this? >> you know, we all look at the cycle and want to blame it on esg and it's radically different. so far this one is lining up exactly what we saw in the 2000s. 2002 was when that bull market started. oil was trading in at 20 in late 2001 by '02, '03, we're already at $40 a barrel no one believes the story.

it takes three years before people believe the story and allow the companies to spend so it wasn't until 2005 that you really saw those share prices move and you saw them spending money. three years to get a track record they believed the story and persistency. they create massive pressure on commodity prices and years seven through 12 they debottleneck the system that's why the super cycles last somewhere around 12 years. >> where are we in the cycle now? >> year two. it started in 2020 year two that's the point microsoft trades up here exxon with the same free cash flow trades 25%, you know, of microsoft because no one believes in the persistency of those earnings and it will take another year or two and then people go, oh, wait.

i don't understand why they don't believe in the persistency of the earnings because there's an energy crisis going on. we've got to solve this. this is not going to be solved in two years, three years. this is a large amount of cap ex that's going to take five, ten years to be able to begin to resolve. >> now solve our global issues and dispute with saudi arabia and, by the way, you get 30 seconds. >> the dispute with saudi arabia look at the announcement, they did it because 90% of the ceos have indicated they're worried about a recession. the fact that opec cut production is really a reflection of what the other ceos of 90% of them are thinking >> jeff, thank you got a lot more to talk about with you since this is just year 2 of what you see is a 12-year cycle. we will continue to document it with you final check on the markets very quickly again, gdp number stronger than

expected up 2.6% versus 3% the street was anticipating the dow had been up 200 points before and that was because of very strong earnings with dow components as jeff was talking about, the restreng of the old economy. up by 322. the earnings stocks. we'll be back with you here tomorrow have a great day it's time to turn it other to "squawk on the street. we'll see you later. good thursday morning. welcome to "squawk on the street." i'm carl quintanilla with jim cramer and david favor futures solid with another letdown in megacap tech from meta u.s. economy continues and prices soften. apple and amazon tonight our roadmap is going to begin with meta. shares tumbling to six-year urge zuckerberg urging patience as he