bacon. >> saved your bacon? the pricing is just through the roof, though >> i know that >> i have to say we'll talk to dara about it tomorrow, but i got stuck with a bill over the weekend that was something, i'll tell you >> good things aren't cheap, cheap things aren't good, you know that. happy halloween. happy halloween. >> i serve at your pleasure, joe. >> make sure you join us tomorrow >> wait, wait, wait. >> put those on. that's nice. >> happy halloween >> sq"squawk on the street" is next ♪ good monday morning, welcome to "squawk on the street." i'm carl quintanilla with jim cramer and david faber at the new york stock exchange. futures are red on this halloween. we close out october today with the dow on track for its best month since the '70s fed meeting, jobs friday eyeing these october records as futures point to a lower open,

but dow poised to clinch its best month in decades. >> plus, there are new china covid curbs and they are affecting apple, disney, gaming companies, iphone output from one of the world's biggest factories, in fact, could reportedly slump as much as 30% next month >> and emerson electric, doing a fairly large deal, selling a majority stake to blackstone the overall value of the unit now $14 billion. >> let's start with the markets this morning as we wrap up a strong october for stocks. the dow stack gets a lot of attention, but best october since 1901, barring some disaster today >> i sent a piece out to -- i do a sunday night piece for investment club members, and i said the tech tyranny is over. it's done. no longer will we be hostage to a dozen companies that are outsized in growth, and those are now share donors to a lot of companies that, frankly, buy

back stock and don't have stock-based compensation, so i think this is a pause, but bears don't get excited. and mike wilson's not excited for the bears. so, david, one of the things that's happening is, take your emerson deal that you mentioned. emerson doesn't have big stock-based compensation emerson doesn't inflate -- emerson is a lean team and something like this truly matters. particularly because if you take a look at inflation peaking, which is what mike wilson is saying, it makes a great case for dow jones stocks and the like >> and the like. >> and the like. emerson's the like >> and explain why >> well, because what we're having is companies that already knew how to fire, companies that ne never hired back, companies that really understand, like, when you speak to some of the

industrial companies like caterpillar, they have been waiting for this moment. it's very strange. the industrials have been waiting for the moment the tech companies have been caught completely blindsided they were still in hiring mode, going into this quarter. a lot of the hiring, just so we know, was not done in the months of june, july, august. the hiring was done may, april, and now it's very hard to fire people that you just hired, but that's what's happened right now. >> coming off what was not a good week, carl, for the earnings from most of those companies you're looking at. netflix was a couple weeks back. apple was fine those other three, all last week, not well received, and yet the market powering ahead anyway >> we're about halfway through earnings, a little bit, maybe two-thirds if you're looking at reports by s&p earnings in dollar terms, and missing by about a percent. it will be about the third quarterly miss since the great financial crisis >> again, heavily influenced by

tech particularly by big cap tech, and i think we'll look back and say, it was the twilight of the -- of, you know, the idols you had these companies, $500 billion to a trillion dollars, with the exception of apple, we'll go over that in a second, that frankly got very overvalued even though we thought their pes were shrinking, david >> some of the numbers, though, to be fair, like an alphabet, the multiple, which, of course, many had said prior to the latest latest earnings, was very low. remains very low >> i'm glad you mentioned alphabet, because there, i think they got caught. i think they were hiring and they realized, wait a second, things are slowing >> they hired 12,500 people during the quarter those are not warehouse jobs, by the way. no offense to amazon, which hire hundreds of thousands. these are high-paying jobs >> i think you're going to see a level of discipline, of these ones, that i do think amazon's going to get religion.

i think alphabet's going to very quickly get religion and that's the one that you should not sell i think they did buy, you know, they hired a lot of people i think they regret it and people are selling it now. carl, they're selling alphabet because others are selling it, and they're deciding that they didn't make inroads in cloud i think cloud does cost a lot of money. youtube is good. strange piece about roku today, correlation with youtube, but i think that alphabet is a company that is -- that's got the ability to switch to discipline and will do so amazon, i think, wants to, but holy cow, they have to have a firing squad i mean, they have 500,000 too many people. >> they hired a prodigious number of people during the course of covid. >> prodigious. >> yeah. >> right >> hundreds and hundreds of thousands. >> and it's very hard to lay off -- carl, if you want to lay off 25,000, you can do a reduction in force it's not good. but if you try to -- this --

amazon's very much like when my dad was in world war ii and they had, you know, you had millions of people all over the place, and they were suddenly not in the army anymore, except for they're not the army they have to deal with laying people off and there were 800,000 that they hired, which is an army, and i think they probably have maybe 600,000 too many >> well, maybe that's why off jobs friday, morgan stanley is looking at a one handle. >> i have to salute morgan stanley. well, a lot of that is, i don't know mike. he does really superior, rigorous work, and now, look, some people just said that he -- he even admitted, people said, will be, i know you think my call is from left field. there's a lot of technical analysis and yet i've got to tell you, all of these analysts who are pooh-poohing that, underneath, in their drawer, they have charts and they realize that mike wilson is a pro, and that's a very good piece. he still puts, of course, a lot

of emphasis on what the fed does >> it's a good note. he tualks about his call being double-breaking putt, meaning, we could go to 4150 but he's by no means bullish on fundamentals next year. >> some people think he's getting it both ways, that he's trying to get it both ways david, i think that this is a man who called a remarkable rally, even -- based on the fact that he just felt that inflation has peaked and is going to drop precipitously. but a precipitous decline means, to him, there's going to be bad earnings i'm not sure about that. >> that's where the debate comes down in terms of what the s&p 500 earnings will be for 2023. if you get 2 hundreds versus the $220 that many are out there with and the people i speak to who are not constructive on the market, that's -- they just simply say, we are not factoring

effectively in the real slowdown that is yet to fully occur >> this is the 3,000 club, i call it. the s&p's going to 3,000 i think that's hard to do. i think that you can have part of the s&p diverge to an extent that we haven't seen, which is the large cap stocks, but i don't think that when you look again, let's take a t-mobile t-mobile is now investment grade company. t-mobile's going to do a buyback. david forever mentions the size of t-mobile, which i think is important. >> it is >> that stock's down today for wide reasons >> it was up sharply on friday after the earnings yeah >> that's not the kind -- i'm trying to pick stocks that i just say don't fit that thesis, that you could have an overall -- >> that there's going to be a slowdown in earnings >> exactly >> right >> so, i think that we have to recognize, first of all, that this is a profoundly different market this is a market where microsoft, i think you might agree with me, david, microsoft

is conceivably overvalued if cloud is in the sixth inning >> right >> and i think the people i talk to about cloud are very much aware that while there are new apps coming out, the whole idea that we're early in the cloud is now over >> yeah. we're going to get amd midweek we'll learn some more. >> i'll have lisa on, and i think that when you go back over intel, intel was a surprise last week, but i'm putting intel into the not as -- i don't know what the acronym would be here. not as horrible as we thought, so therefore it's okay maybe we can come up with an acronym. i don't have one on the tip of my tongue. >> that's a bit of a mouthful, that one >> meantime, david, the meme people are back. isn't that just great? >> what are they back on >> they're moving bed bath based on nothing, gamestop >> the old names >> and amc in particular based on nothing but you know what? they have their day in the sun, and it's today >> only today?

>> well, i mean, we're in kind of a brutal market fundamentals matter. >> it's not quite what it once was. >> exactly >> 4% on bed bath at a $4 stock is not exactly lighting the world on fire. >> it's not a gamestop up 10% on absolutely nothing, but they -- i think those people's ranks are thinning now, amazon's ranks are thinning, and the memesteres' ranks are thinning they should just go into cramer coin or whatever it is >> meantime, apple's lowering the premarket. reuters is saying that iphone production could slump as much as 14% at a foxconn factory next month. jim, we got disney, shanghai disney, shut >> the question was, and i was going to call them, but i liked them, do people spend? >> the rides do continue for those who are locked in. >> now, china continues with its

policy, obviously, xi cannot now admit that the policy is wrong and he doesn't have the reverse -- his own reverse mrna. china, when i spoke to tim cook on friday, was, obvious, pre the foxconn. he reminded me they have many different sources. doesn't mean people can raise price. people gives a lot of people 14s, verizon frantically -- verizon numbers were really horrible last week >> just changing course for a minute, as you mentioned t-mobile quite strong. at&t had a very good quarter and verizon -- and it's reflected in the stock price verizon is down 28% for the year as we pointed out many times t-mobile, with its 30% increase is far and away the leader in terms of market capsize, and at&t is flat on the year, which is a great performance, given the s&p. >> now, apple, let's just go over -- i spoke to tim cook on friday before the quarter.

one, he said, if you try to make any sort of judgment based on suppliers, you do not understand how we work, which i think would even be that and the second is, that was the one that delivered a great quarter. the trading after where the stock was down had to do with bad reportage, people who literally looked at the stock and then said, it's doing poorly and i want to warn people at home that the best way to lose money with apple is to trade it. >> well, trade it when it's after hours is what you're saying >> trade it at all >> the stock was up sharply on friday a bit of this may be a retreat from that significant gain it had on friday. it may not even be related to these reports of people fleeing. >> agreed. but at one point, the stock was down 9% and it was based on the fact that it had been down 8%. this is the kind of value subtracted i've seen with apple pretty much since it was at 5 and one of the reasons i always say, own it, don't trade it, is

because it's possible for it to go down 20 and still be good value. >> you've been promising me that the covid restrictions were going to go away once xi got his third term >> xi and i don't have that kind of relationship that i have with musk >> okay. >> you haven't gotten through to his people yet >> you haven't let them know your whole plan on the vaccines. you had like six different plans on the vaccines for them >> my guy was the guy who was escorted that was my guy. >> that was your guy >> i mean, he and i were tight >> what happens first? you get your disney park in new mexico or you get china to open? >> i'm going to wager anything that my new mexico disney park happens. anything i'll give you my tickets to tonight's phillies game. >> david's like, you can keep those. >> how about my tickets to this -- to the thursday night eagles game? >> no, you can keep those too. >> which aren't even at home >> it was back to normal for new york football yesterday. >> and back to normal for philly football >> yep

oh, that's right it turned out that the -- >> the jets don't really have a quarterback? yeah >> turned out to be a better team than we thought they have a quarterback, gino smith, and he's named after, i thought, gino steaks until this weekend. >> we never should have let him go >> i don't like to talk too much sports because it's all just to rub it into everybody's faces. that's not the kind of guy i am. >> you're not that guy at all. thankfully, those covid restrictions have really loosened up in china >> speaking of the eventful weekend in sports, an eventful weekend for elon musk and twitter as you probably know we'll get a breakdown on that straight ahead we'll get a breakdown when we come back. at pgim, the pursuit is on for outperformance. as active investors, to outdeliver with customized strategies, integrating esg best practices into our investment decisions.

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you know, with twitter no longer being a public company, one might have thought we wouldn't be talking about it anymore. but we will. we'll keep thinking about twitter, because, of course, we cover business, and business sometimes involves companies that are private >> i agree with that >> man people love covering twitter and they love every little thing that's going on right now as this key transition period is taking place where elon musk is obviously in full control of the company. it's his company spent a lot of money to buy it got a couple of his deputies trying to figure out exactly what the proper staffing level is and who should be there and who should no longer be there

and what the service should be and how it should change and there's going to be a lot of reporting, guys, on this, but none of it means anything at this point because we simply don't know and we've got to kind of wait. one thing we do know $12.5 billion in debt. you have a fairly hefty interest payment to make each year, and so he's got to make sure he's got some cash flow to be able to do that. >> look, this situation where you might charge people to be verified >> yeah, there's a report that they could charge as much as $20 a month. i don't know i mean, we're all fairly significant users of the service. i'm not paying twitter more than i pay netflix every month. >> no. no, i'm not paying them anything they should pay me >> exactly you've got a -- we've -- add up to millions of followers why should we be paying? >> america online came in and said, we'll give you $2 million for copy and then a year later,

bob pittman came in and said, we're changing you'll give us $2 million. and i said, well, i guess so so, no he'll pay us we don't pay them. >> it does point, though, to the challenges he faces for a company that makes almost all of its revenue in advertising >> that's a bad model. he's got to come up with a new model. the ad model, as we saw even from alphabet, is done, because the advertisers are frantically trying to figure out where they get the roi. the best roi, almost everybody misses amazon, which, by the way, had a good -- they did have good advertising. >> alphabet's roi is pretty darn good too >> it was not as good as expected for advertising >> okay. >> particularly for travel >> right and youtube was down 2% year over year, but crypto was a big part of their advertising, and they stopped spending. >> but i don't know what you -- twitter is nowhere near the advertising platform that alphabet or meta are >> yeah, but i'm saying it's got

to come up with a new subscription revenue that's sticky that people want. and i -- look, i'm not musk. musk has ways to think of things that i can't but right now, i mean, i thought that the best way to do things was to find things to do with direct messaging, which was something that marc benioff looked at when he was about to buy it, ceo of salesforce, he considered buying it at $29 because he thought that it would fit very well into a mosaic of where people are buying things and what they want and that -- in other words, it was part of a suite for a cloud-based service to help people figure out what people want, and that is what musk must do with it it has nothing to do with any of these things that's what he has to do he's going to do this, as a matter of fact >> he's going to do what, open a theme park in new mexico >> no. he's going to change covid in china. if you want to, you can make fun of me all you want >> we will >> it doesn't bother me.

>> all i want? >> all you want. can i just go back -- the idea was, okay, let's just be very clear. the idea was benioff wanted to -- let's say you have a software as a service model where you're trying to figure out what people want there's no better product than twitter to be slotted in, and when you wanted to find out whether there was something wrong, you could look at twitter and quickly adjust that's what musk has to do >> because the foundation of the product in the earliest days was about geolocation. >> exactly geolocation and where, you know, you have something, a keurig number for a while, segmeal was doing that jeez, they have h1n1 in williamstown, let's get them clorox but that went by the wayside, as did many, but that's what musk has to do, and if he does it, not only do i get no credit for it, but he'll charge me. >> we're going to talk about --

as david said, we're going to talk about it probably more than any other private company. >> most likely that is true. >> really? >> yeah. >> more than -- >> i wonder about his public companies, though, because he is so focused on twitter right now, and i mean, i would never underestimate his abilities, but man, tesla and spacex and -- >> carl asked me about gm, about car companies. >> on friday >> and i said, no. >> and then gm said, sorry, we're suspending our -- >> now i'm 0 for 3, but you know what >> won't stop you from taking swings, baby >> seven-game series >> you are still getting up to that plate, and you are not taking pitches >> cramer's "mad dash" and the opening bell coming up after a break. don't go anywhere.

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opening bell coming up in a few minutes. take a look at the premarket gainers. wynn is going to be at the top of the list. we'll talk about tillman fertita. back in a minute

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>> announcer: the opening bell is brought to you by nuveen. let's get to a "mad dash" with jim about two minutes before we get started with trading instead of a stock, you sort of want to talk more broadly here, and i think it's a good thing, about natural gas, particularly in europe, something we've talked about a lot as we head into winter. >> right rbn energy has been my go-to guy, just revered in the oil patch. he's talking about how if you think that the russians are going to have the jump on europe because they do -- there's going to be a natural gas supply the amount of natural gas that has been sent there, including by a company called accelerate energy, if you want to play it, is so extraordinary, they're now at 100%. they have enough natural gas to last the winter, so those who

think that once russia digs in, europe will capitulate do not understand the storage system that europe has, so take that off the table as a reason, even in cold weather, why the russians are going to -- >> so far, it's been warm, so there has been no need for it as of yet, which sometimes, of course, there can be at this time of year that has helped the situation a bit as well. >> greg hayes said anything that went over kyiv or any other place could be shot down by patriot. the u.s. has not authorized the buy of patriot, but there is a war going on, and we have to, one, remember that, especially because of grain issues. but two, that the big threat of, oh, they don't have enough natural gas, is off the table. >> pretty remarkable adjustment by the europeans in a very short period of time >> very short. we got to hand it to them. they did it right. >> yeah. opening bell here on the cnbc realtime exchange, at the big board today, celebrating is

perfect corp., and a.i. software of the beauty industry marvell technology on the week, jim, where, as we said, the earnings, we're going get a lot of airbnb and marriott >> airbnb will be really -- and the app isn't very good. i will have -- qualcomm, i will see them, and qualcomm is trying to diversify away from cell phones and switch to auto. very exciting figure so, i want -- this is a spac i want to alert people to a spac that went to -- went up dramatically and had been a public company that went private. called getty images holdings the symbol is gety people got very excited about it the stock went to 30 and it is now at 5 and i put that out not to dim the, you know, not to tamp the

hopes of anything. it just came public. but to remind people what can happen to a legitimate company that is actually profitable that's a spac. let's be aware that even profitable spacs have hurt our viewers tremendously >> jim, you mentioned nat gas, and you mentioned grain over the weekend. russia, obviously, not cooperating with the corridor. and also, there's a new round of sanctions that will make it tough to have an insured ship take oil from russia beginning tomorrow >> and that matters, obviously, president xi has been, i think, a bion, david, why putin has remained in power. i think it's a perilous time for putin, not just for zelenskyy. >> that may be the case. but of course, that also raises a lot of fears, because if you corner putin, what will he do? >> that's why i think the united states policy has been to play for a tie, not for a win

the idea that a win would produce some sort of nuclear -- small-grade nuclear, which i don't think there's such a thing. but i think we have to key an eye on russia, keep an eye on how china continues to do irrational things. if either resolves themselves, you will see the mike wilson 4,200. what goldman says is actually -- goldman's really come into the strong bear camp they're doubling down on bearishness. >> over the weekend, goldman is increasing they say 25 in february, which would take you to almost peak 5% in march >> and i think that one of the things that i like so much about mike wilson's piece was that he's saying that the stocks and the bonds have priced in too many tightenings now, that is the kind of thing that would make people say, once again, i got to get in i want to -- david pointed out

something. david, you really got to drill down on this the smartest people i say things are going right to 3,000 stop it, jim and i refuse to do that because the animal spirits are in the dow. we know that dow is atavistic, but at the same time, it is filled with the kind of stocks that are doing well, the ones that bit the bullet and know how to fire. and firing comes -- i'm not saying they're merchants of anger or, you know, they don't just sit there and think, wow, we got to fire people. i mean, they're not grinch >> it does remind me of what blankfein tweeted over the weekend. seems everybody on the market is negative positives may be lurking, though >> i've always been a fan of lloyd. and lloyd, let's get a porter house soon he watches >> sure, he watches. why wouldn't he watch? he's retired he's sitting home trading all day. that's what he does. >> is that what he does? >> yeah, that's what he does

>> oh, dave from the eagles, he wore a very funny wig. >> i'm looking through my notes here because i try and keep them demand destruction that's coming, it's not being -- it's being appropriately valued by the market at this point destruction from rates the lack of wage increases you know, pricing power is going to go away i mean, all these things, and earnings and guidance, therefore, have not yet been hit the way they should. 23 is going to be terrible these are just some of the notes from some of the people you're describing >> i know. >> they make a very strong argument at the same time, given the arguments being made so often, you do tend to wonder. >> i was at yesterday's game, and people come up to me i don't even know and say, you're way bullish and i say, i'm anti-tech. no, but you think the market can go up from here. and i said, no, you see, the market has gone up a great deal and you hated it the whole way so you've lost your standing to even be in my face get the hell out of my face, you

pittsburgh steeler joker >> well, we'll see we got 7% of the s&p, 7% now w a 52-week high that's the highest since april >> well, there are some companies -- look, can i just talk about a company, eli lilly? now, eli lilly has a drug that is for diabetes and obesity, and david, people are doing that game -- remember the game where you check the scrips every week? that's a fool's game the fact is, this maybe the greatest-selling drug of all time i'm putting it up there with lipicor, because you can lose 22 pounds >> that's a lot of weight. >> people who are worried about their weight, you should do -- you add this to the mix, and david, we'll all live to a hundred. >> okay. that makes me wonder about the entitlement programs but okay >> new mexico?

hundred. >> a hundred you're more likely on the hundred than anything else, probably >> you like that >> carl mentioned wynn, you saw it there in terms of s&p gainers. >> what do you think about tilman you know, tillman fman fertittas a roughly 6% position in wynn. it's a passive stake of course, that is the way that elon musk began in twitter remember that? remember that? >> you're too much >> which never should have been filed as a g in this case, what i'm hearing is, listen, he's not sure what he's going to do here, but i would point out, mccormick and schmidt and morton's both were once public companies that he took gs in, and then he ended up buying >> i think wynn's there for the taking, to be honest >> another question would be, well, if he did decide he had real interest, most likely he doesn't want anything to do with china, so do you split the business and then it makes a lot more

sense to a guy like him who's also spent about a quarter of a billion dollars buying land on the strip for what might be a new casino at some point >> this is the china for free option you're talking about. >> let's, you know, we'll wait and see. stocks reacting to this, again, passive stake from mr. fertitta. and we'll see. assessing doesn't mean he's going go in any one direction at this point >> weren't you surprised, though >> little surprising, sure >> i know steve wynn look, he's no longer active, obviously. maddox left. there is a tremendous -- the assets in america are really great. >> yeah. and it's really not a large -- it's less than -- it's a $7 million market cap. >> my trust held on to a piece of it, and we've been wrong, and maybe we'll be made right. stranger things have happened. >> we'll stay tuned. but for now, again, just a

passive stake, but nonetheless, given his history, certainly bears watching >> i think tilman's options and musk's actions are polar opposites. tilman does great things, is very self-effacing and musk is just crazy >> some people crave attention more than others >> right, and tilman -- have you met tilman >> yes, i know tilman. >> you don't think he's the a multibillionaire >> no, he's a pretty down to earth guy. >> yeah. i just enjoy him immensely >> you know, your conversation earlier about pricing versus volume reminds me of the downgrade of honeywell today, jim. they cut to neutral. >> specious downgrade. >> their broader point that margin improved this year came because of pricing, and if that goes away, the pricing part, all you're left with is the lower volume >> to be fair, it's a huge position one of the largest positions in my trust, so we did let some go.

i don't want anyone to think i'm being two-faced. but darius told a great story last week on our air about creation of new products and just of the shuffling. he is nonstop, as was his predecessor, dave cody, in getting the portfolio to be in keeping with the times i disagree with that pricing analysis i think that honeywell is doing a remarkable thing in climate. aerospace is coming back aerospace, people are looking for a way to play aerospace without having the fumbling nature of boeing, and i don't think that's wrong i mean, boeing's very hard to own as a stock >> and i assume related to it is the c.a.t. downgrade over at ubs on the heels of friday we got deutsche? >> just watch "mad money" analysts jim was on, the ceo. does anyone remember the u.s. government passed -- david, how many hundreds of billions of dollars did they pass in infrastructure >> a lot >> and it's going to caterpillar.

>> many hundreds of billions >> it's going to caterpillar so, i mean, those people are downgrading it are not looking at what congress did in the -- it was called the caterpillar act. what was it called caterpillar -- >> well, there was the infrastructure bill and there was also the inflation reduction act. >> those were both -- >> they were separate. >> one was for -- right. >> even the chips act is going to require some earth-moving >> without a doubt >> he said on the show, i can't meet demand. i find companies that can't meet demand are not the ones you want to downgrade because you'll look foolish. and i don't think anyone actually sets out to look foolish. there's a truism for today >> thank you for that. thank you for that >> we have stocks down today t-mobile, apple, these are profit-taking. >> emerson is also actually down, an industrial. we mentioned emerson earlier, but it's no merger monday. we don't get a lot of those these days, but there's a deal, and it's involving private equity

emerson and blackstone, "the journal" had that story given to them, but it's a press release climate technologies is what we're talking about. it's a business with about $5 billion in annual sales pretax earnings of a billion dollars. sure, let's give an ad to the "wall street journal" there as well why not? and you can see, blackstone, though, stepping up here it's a large deal. being financed through, in part, direct lenders we've talked a lot about them. also a note being taken back by emerson. they're going to own 45% of what will be this new spunoff, stand-alone business that will be owned by blackstone, majority owned by them, 45% by emerson, and then they're also taking in about $9.5 billion in total, selling it at 12.7 times this year's ebitda. so, let's call it almost the 13 multiple, guys market, not particularly -- it's

kind of nonplussed >> can you go over the financing and how it doesn't have traditional banks? >> well, that's been the case for some time in certain private equity deals we've talked a great deal about these direct lenders and how they can fill the gap oftentimes this is a very difficult time in leveraged finance. we've mentioned. think of the twitter deal. the banks are not selling down their commitments there, because to do so would be to book a loss they'd rather wait at this point and just keep it on their books. and so, you do not have a lot of banks participating in the non-invest grade leveraged finance business, but you still have a lot of direct lenders, you know, funds that have been set up to get some sort of a return, we're talking aries and so many others 21 of them that participated in the avalara deal, the go private there. >> have you been following what the s.e.c. has been doing with the cross boards people are on boards >> what about it >> the s.e.c.'s examining boards to see whether they have, let's

just say, too tight relationship with other companies because of board members something to watch because you get these private equity guys, and people are always suspicious that they're talking to each other. i imagine they have to be, to some degree. the s.e.c. has mentioned it twice. >> a lot of them were private companies. i'm not sure if that makes a difference >> i'm not sure either i just know that the justice department doesn't like it anything that looks like collusion. because collusion means higher prices, and justice department wants very much to be involved in lowering prices jay powell needs that. because there is -- i don't think there's massive collusion in the system, but i think there's what's known as signaling, where one company in an industry raises price and that's the signal that everyone should raise price, and jay powell has to break that, and i think he is sophisticated enough to know that's really at the heart of non-wage inflation. >> interesting yeah movie business, jim. we're going to get imax tonight. this downgrade of paramount

making some noise at wells >> the paramount noise it's done too well it's time to go. david, it's time to -- how have you done in paramount? >> yeah. our call, i know we can't -- no longer justify its premium multiple it does have a premium multiple. >> to what premium multiple to what >> warner brothers, discovery. it's got a premium multiple. >> i know, but i'm saying -- >> you're talking here, i mean, free cash flow is basically just equal to the dividend payment, which, of course, the dividend has to stay in there because national amusements wants their dividend >> amc, right? premium multiple >> they're not in the same group. >> no, i'm talking about -- i'm broadening the group >> you are really from the people who make the content to the people who show it >> best buy. >> best buy? >> part of the group >> premium multiple to best buy. >> it's amazing that best buy is doing so badly, the stock.

and dick's is doing so well. it's this outdoor -- people want to do cool things. >> the pricing in electronics right now is very tough, right very tough >> very, very tough. i think we had one call downgrade a couple weeks ago based on deflationary trends >> that's very big deflation, which should be good ultimately, you have matt boss's excellent piece about all the companies that are doing well that are discounters the fed is winning in retail fed is losing in wages fed is losing in industrial price increases, but it's just not -- the strong dollar is not benefitting them at all. i don't know we're all trying to figure out, david, where the fed is in terms of winning versus losing where do you think they are? >> i don't offer opinions on the fed. i just listen to you >> we'll get a press conference on wednesday we'll learn a little bit more. >> yeah. well, you have an opinion -- >> i did have opinions on inflation some time back, and you and i disagreed on that, but i won't go into that either.

>> he's mostly -- his prognostics are about how i'm wrong on things. i can challenge you on things, but otherwise, i won't >> thankfully, i don't -- yeah, i don't take opinions. that's why you can't really -- >> that's why -- >> you challenge me on my ties and on my choice in clothes, which you often do >> my father said, he offers opinions all the time. you just don't realize >> that's good good for pop backing off 3,900 this morning let's get to bob pisani. >> happy monday. last trading day of the rather extraordinary month, two-year yields up, the dollar is up. that's usually a headwind for stocks we started three to one, declining to advancing stocks. we were up on friday despite the headwinds but that was unusual the problem today, it's really tech, if you had to look at it most things are down 1% but tech's a little bit of a problem. semis are a little bit on the weak side. metal's holding up better. there's your other risk-on grew here energy is up fractionally.

you see a little bit of a split picture here, but look at the mega cap tech names. apple is down. microsoft. meta some of the semiconductor groups kla ten corps, amd, all down that's really the problem prt mar for the markets here, continued profit taking. united health and the dow only wanted a new high. met life, washington federal, there's a whole smattering of small and mid cap regional backs like washington federal hitting new highs. i wouldn't say there's a lot of direction in the new high list the question on the earnings is, is the reevaluation of growth versus value finally occurring because we're really seeing some moves here if you look at the fourth quarter earnings estimates, not third, fourth quarter, we see similar trends generally, the growth sectors are the ones where the earnings estimates are coming down,

technology, consumer discretionary. people think it should be down a lot more the estimates for value sectors, usually associated with energy, industrials, healthcare. generally a holding up a little bit better, so nsenergy has bee huge for many quarters it's going to be a little lower this quarter only 62% put up the next one. industrials up 43% this is from the third quarter and you see healthcare and consumer staples down a little bit. but generally still holding up better than the growth sectors people have been seeing this, the estimates of growth at -- earnings growth for the -- for technology stocks starting to slow down, so they have been moving money into these value groups so if you look at what's been performing this month, what's been outperforming, it's been energy, industrials, small cap, 600, doing really well in the s&p. technology's performing in line with the s&p 500 but again, value is outperforming growth this month, and the value guys are ek cstat

and hopeful that the long-awaited rerating of growth stocks is finally happening. as far as where we are for earnings, a lot of people thought we'd be negative for the third and fourth quarter by now, and we're not. so, we are still up. in fact, 4.1% for the s&p 500. and that's better than expected outside of technology. if you want one sense for how the quarter is looking, better than expected outside of tech is probably fair. energy is pushing up the average, and if you exclude it, it's up 3.5% so, the big question is, are the worst of the cuts over or not? that's really the source of the debate if you look at the fourth quarter, still up 2.6% 2023, still estimates up 6.2%. so, carl, this wholesale rerating has not quite happened. the big question, of course, is whether the fed's going to keep its interest rate hikes continuing into 2023 carl, back to you. >> thank you so much, bob pisani chicago pmi was out a couple

moments ago. we'll show you that at the bottom of your screen. october coming in at 45.2 compared with 45.7 last month. about a two-point miss, although prices paid was higher take a look at yields there. two-year, back to 4.5% dow is down 180. we'll be right back.

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welcome back migrant workers in central china are fleeing the world's largest iphone factory amidst a covid

outbreak eunice yoon is live in the country and she has the latest for us eunice >> reporter: thanks, david fox con has remued its pledge in local media today to improve the lives of workers at their factory in guangzhou living under the covid curves there the taiwan company said their canteen services would resume by november 1st they said anyone infected or suspected of infection would get better medical care and transport to quarantine facilities those who decide to stay will be able to take advantage of getting a bonus of up to $14 a day, potentially earn an extra half a month's salary. these pledges have come after videos emerged of the foxconn workers crawling over the -- out of the factory

and then also marching by foot in order to escape those covid curbs and get themselves to their hometowns. the company itself has said the production will not be affected. they say they're coordinating with other facilities in order to make sure that doesn't happen however, there is obviously a lot of demand for workers these days heading into the christmas holiday season other companies have also seen their businesses disrupted shanghai disneyland said they had to temporarily suspend operations because of a covid case concerns there and everybody there was tested at the theme park. and unless you tested negative, you could not leave. guys >> eunice, it's david. there had been an expectation, at least among some, that the covid restrictions, perhaps, would be relaxed a bit after the party congress has that actually occurred or was that, you know, simply a

belief that is being proven false? >> reporter: i think that that is a hope, but that is being prooun false in fact, on the ground here, it feels like the covid restrictions are tightening after the party congress and i think a lot of that is because local authorities have been very concerned about making sure that they fall in line with what the leadership wants. it's been very clear from president xi jinping himself, who has been very closely aligned with the sfzero covid policy that zero covid is the way you move forward and that you show your allegiance to the leadership and so, the crackdown on all of these various covid cases is really, really strict. in fact, shanghai, for example, had only ten reported cases. guangzhou, the iphone city, 40 cases reported, but then all of --

>> okay. eunice's shot froze. you basically heard her answer there. so few cases and yet very broad lockdown, so to speak, in key metropolitan areas as we head to a break, let's take a look at wynn, up 10%. tilman fertitta owns 6.1% of the company. golden nugget, he has owns those kinds of assets. he also spent quarter billion buying land on the strip with some speculation he would build a new casino this is notable. in the past he has filed 13gs on companies such as mccormick and schmidt and morton's he bought both of them so, that is why the market is paying close attention here. the real possibility this g were

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welcome back i'm bertha coombs. here's your cnbc news update at this hour. officials in major ukrainian cities are reporting a massive wave of russian attacks. the mayor of kyiv says that supplies have been knocked out for more than 80% of the city. russian authorities say they attacked military and energy targets. in brazil, a mixed reaction to da silva's narrow win in yesterday's presidential election incumbent president has not

reported newspapers are reporting da silva's victory. in seoul, the investigation of the crowd surge that killed more than 150 people is under way. police are being criticized for assigning just 137 officers to an event expected to draw tens of thousands of revelers here in the u.s., the powerball jackpot has hit $1 billion for tonight's drawing. the lump sum payout is just under $500 million it's the fifth largest lotto prize ever in america. there has not been a powerball jackpot winner since early august and i've got my ticket on my phone now because otherwise i would just lose the ticket >> you're going to be able to afford a lot more leather jackets, bertha. congratulations in advance. >> thanks. it's the last trading day of october and the markets, of course, have stuck close to the historical script recently our mike santoli is looking at what you might expect the rest

of the year. mike >> yeah, carl, it's been true to form a weak september, s&p down 9%. with the weakness loaded into the second half of the month, that's pretty much what the historical patterns would suggest. in october, an important low on october 13th and a rally. midterm election year seasonality, i think, is a pretty significant component right now of the short term bull case as many have repeated, from november through april after midterm election year since 1950, the s&p has never been down now, that sounds impressive. on the other hand, that's only 18 instances these things are just broad tendencies you can't really rely on them. the fact that people are reluctant to just throw in with the seasonal patterns is why they work more often than they should there's always a little skepticism around them what else does the market have going on around them i would say resilience to bad news the cpi numbers, the mega cap tech shortfalls, showses there's a little traction. not to the june lows, so far

that shows we may be making peace with fed fund rate we've been here before nice bear market rally the fed says they don't like to see the financial markets celebrating prematurely. we'll hear on wednesday whether, in fact, there's going to be an overt effort to maybe stop this in its tracks. so far, by the way, the soft landing scenario is not a zero probability. they think a lot of the data are supporting that notion >> el erian called it maeger in his last appearance with us. goldman has a proprietary sentiment indicator. the first positive reading in 34 weeks, which will go down as the longest negative streak in the history of our data back to '09. talk a bit about how you think sentiment has gotten overstretched, if at all. >> sentiment absolutely is pessimistic to cautious and has been consistently so since the spring that sentiment indicator is picking up a little bit of

increased exposures by hedge funds, who no doubt are cognizant of the seasonal strip of the technicals and basically trying not to fight the market too hard and it is interesting because while negative sentiment is a contrarian indicator, you need it you have to have bulls come back to some degree and rebuild some kind of conviction in the long case >> we'll see if that reversal can continue, mike great report card of where we are today. mike santoli. let's turn to home builders, set to close the month in positive territory but the outlook for the rest of the year is still cloudy. diana olick has more on that. >> the home builders that have reported earnings so far, not too terrible thanks to very strong backlogs. it's what's ahead that has them worried. cancellations for pulte homes rose to 24% from q3 from 15% in q2 i spoke with the ceo of thrive home builders in the denver area which was red hot barely six months ago he said his balance sheet right

now is great again due to backlog. but he said there's this, quote, cliff he sees in january and he says it's going to be ugly by the end of the first quarter. >> it is definitely a hard landing for housing. any hope of a soft landing really evaporated last spring when it became so clear that our customers who were accustomed to such low mortgage rates were going to go on strike. i think we're seeing the most abrupt change in the market in my career. and i've been around a while i've never seen sales just turn off. >> and arizona-based taylor morrison beat estimates last week, but ceo sheryl palmer said they are dropping starts dramatically because entry level buyers are struggling and deep concern is there among other borrowers hitting sales. >> even today, at today's rate, both our fha and conventional

buyers have a great deal of room, but being able to afford it doesn't mean they have the confidence given everything that's going on in the economy today. >> palmer added that what those buyers need is a clear understanding of what the fed will be doing with rates in the next year. of course, residential investment dropped 26% in q3, taking the biggest bite out of gdp in 15 years, david >> diana, thank you. let's get more on rates, state of the housing market. for that we'll bring in frank sortino. we were talking residential there, but your bank does a lot in commercial real estate. let's talk a bit more about that. >> sure. >> rising cost of capital, obviously, impacts it. what are you seeing particularly in the area here in the new york/new jersey area where you do a lot of your lending >> so, this market here that connect one is in in the new york metro market is certainly very different from denver or arizona or other places. much more constrained. supply constrained

there's still a lot of demand. connect one just reported earnings last quarter. we had one of the strongest pipelines ever in our history going into this next quarter i believe that there's still a lot of room here for additional work to happen a lot of construction is still under way. the process to get things approved here in the new york market takes forever so, that backlog still is there. there is also significant amount of demand for product, whether it be housing, commercial, apartments and other places. it's just not as frothy and as frenzied as it was three months ago or six months ago. and higher interest rates are starting to force people to think in a more disciplined way. you're hearing it with first-time home buyers, move-up home buyers. but it's moving into the business and the commercial space where people are looking at the cost of capital and saying, okay, i can get -- i can get a free market rate of return what is that it used to be zero

now it's not so, i think there's a lot of discipline coming back to the market in my opinion, this was also necessary. we needed some of this there was a lot of froth in the market in the beginning of the year as we know, no market grows -- >> are cap rates coming down dramatically then? >> cap rates are going up. so - >> i'm sorry excuse me. are values coming down dramatically and cap rates going up >> yes, they are i don't know about dramatically. there's definitely we passed an inflection point i don't know how many years, quarters or whatever, interest rates have been doing nothing but going down and cap rates have been following. cap rates for the first time, in a lot of people's memory or -- >> basically the yield on -- >> sa they're starting to go up. >> where are we? >> cap rates are probably in the 6% to 7% range today new york they're as low as negative or 1% or 2% not too long ago new jersey was in the 4% to 5%

th that's a fairly modest change. there's still a lot of room and great opportunity for business our business owners are seeing that let's not forget the back drop businesses have the most cash on their balance sheets that they may have ever had. there are a lot of market positives here the consumer is probably in the best shape they've ever been now, you've got to wonder what dollar are they fighting for are they going to buy milk and eggs or upgrade their home or whatever so, when you look around, hotel occupancy rates are at an all-time high. restaurant -- you can't get -- just an article recently, you can't even get into a restaurant without a reservation today. you can't buy an airline ticket. it's still a strong economy. i'm more on the camp of, i think we are headed towards a softer landing. the fed has a tough job, though. >> is there still a push to rezone huge portions of commercial for residential

is that a scenario that other cities will have to look at, too? >> there's a tremendous housing shortage across the country. but clearly here in the new york metro market it's so hard to get something zoned. the ways that zoning works today just doesn't -- it doesn't comport with what we need, what the needs are. single family zoning on very large lots, incredibly dense areas doesn't work so, i think there's a lot of room here. and i think communities are struggling with trying to figure out what's the right way to do that. >> you had deposits up on your last reported quarter about 10.5%. give us a broader sense here you already have, but even more so, about how you feel of the economy, not just in lending for commercial real estate, but more broadly speaking >> overall, i think we're in a decent economy i think it's a disciplined economy. i think people are going to think about what they do next. they have dollars in the bank. most people are working. jobs are good. they've good increases

they and their neighbors feel good i think there's a lot of uncertainty around this midterm election, which is -- obviously it will be over once it's over and i do think that what is starting to creep into the economy is this idea of am i going to have my job there are some layoffs being announced. it's not so much my job, it's my neighbor's job i'm mostly concerned about. so, i think the next three to six months are going to be telling. our -- our constituents, our clients, seem to be doing well they seem to have, again, great balance sheets and they are able to take advantage of what i think are going to be real market opportunities as we move forward. prices are starting to come down on things. the availability of things is there now. there's no more line three blocks long every time a house goes for sale or a building goes for sale you don't need the cell phone number of the broker to get in on a deal. there's time now to think about what is the right next move? and i think for businesses,

we're counseling our businesses at connectone to think about that and take advantage of the opportunities. we don't think this economy is going into some depression or recession. we think it's going to level off and the froth is going to come off. >> all right a fed job well done then if you're correct frank, thank you >> thank you always great to be here. as we go to break, take a look at the biggest gainers on the dow for the month. a illustration of how much we have leaned on the industrials caterpillar will lead you, chevron, honeywell, travelers, and goldman, boeing, merck, sasoorth be right back. with my student . the interest was costing me... well, us... a fortune. no matter how much we paid it was always just... there. you know? so, i broke up with my bad student loan debt and refinanced with sofi. turns out we could save thousands. break up with bad student loan debt and refi with sofi. you could save thousands and pay no fees.

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bring on today with comcast business. powering possibilities. welcome back to "squawk on the street." i'm dominic chu. stocks are mostly lower today but in a tight trading range to start off the week consumer discretionary is among the worst performing sector so far today in the s&p within that group you have travel names like expedia, also amazon is in that mix, tesla and

home builders like lennar. newell brands is the worst performer after analysts at barclay's downgrade that stock the manufacturer of products from everything like elmer's glue to rubbermaid and yankee candle reported a decline in q3 sales this past week keep an eye on consumer names. i'll send it back to you at the exchange as we go to break, want to learn how to maximize your finances and invest in a brighter future? join us virtually tomorrow for cnbc "your money" and hear from top financial experts. you can register at c cnbcevents.com/yourmoney or point your phone to the qr code on the screen. we're back in two. this thing, it's making me get an ice bath again. what do you mean? these straps are mind-blowing!

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a shift away in a tightening macro environment. joining us to discuss is ragev gold good to have you here. let's just start off on this whole idea we saw whole idea we saw the numbers there is obviously concern of a so-called slowdown what are you seeing in the business >> hey, david. good to be with you. look, interest rates have gone up at a record pace since the start of the year, so it's no surprise marketers would be cautious in this kind of environment and adjust their ad spending accordingly it's important to keep in mind ad spending is still growing particularly digital typically what we have seen in times of prior economic stress is brands lean in and they use this as a market share growth opportunity. they increase investment to come out stronger why not when ad prices may be cheaper when others are pulling back and second, there's usually a lag between consumer behavior and ad spend behaviors have shifted quite a

bit during the pandemic towards video consumption, screening, online commerce and ad spend can take a while to catch up but stressful economic environments accelerate the long-term change because advertises are forced to think outside of the box to that point, i think walt gardens, social media likely part of the past not the future. >> explain what you mean by that >> yeah. so there's a clear trend of advertisers moving towards the open internet and away from walt gardens. just briefly in terms of definitions, open internet refers to publishers or media companies likes cnbc, or news corp. or the nfl and these are the types of publishers we work with to create the wonderful, professional content that consumers love and they use open standards for buying and selling ad inventory. in contrast we have the walt gardens, closed or proprietary platforms. many social media companies operate walt gardens like snapchat or twitter or meta. walt gardens tend to be mobile

app heavy and known challenges with apple's app tracking transparency framework the content is often user generate and advertisers don't like that. the open internet professionally created content which advertisers prefer third, video and tv growth is driving increase usage of the open internet and advertisers are following with their budget. lastly, consumers are increasingly aware of the toxic nature of social media the facebook files and associated revelations, francis hogan, all of that makes an impact advertisers don't want to be associated with that in fact -- >> that's interesting. >> yeah. go ahead sorry. >> i was going to say, just in terms of like the calculus, how advertisers think in an environment of softening demand, we've heard this from some companies like p & g there's an effort to keep stable to steal share. i wonder if you think that's why we haven't really heard warnings from the agencies, per se, about softening demand >> yeah. i think that's certainly part of

it we saw this again in the pandemic just a couple years ago where the stronger brands in a category would use a slowdown, use a shift in the economic environment to actually assert their brand power, their leverage and their balance sheet and gain share from rivals you think about automotive industry, quick dining, et cetera these are opportunities to get a couple percentage share, market share gain that might otherwise take three, five, seven years. the other dynamic at play with the agencies is that there's always a shift towards digital in these times of economic stress within an agency there's probably a portfolio of some budgets nondigital and some are digital to help to shift to more digital ad spends. >> appreciate your time and your thoughts thank you. >> thank you, david. coming up at the top of the hour, we'll check in on the chip stocks we have the ceo of on semi under pressure today despite a beat on the tom and bottom line down about 6% and a tape that's not great. s&p still down about 30 points

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welcome back to "squawk on the street." millions of american households will pay no federal income tax this year, but that number is on the decline. our robert frank has the story for us robert >> good morning, david well, the debate over who pays taxes and who doesn't always heats up around election season. and a new study finds that more than 72 million households will pay no federal income tax this year that's about 40% of the total, according to the tax policy center but the number of so-called nonpayers is on the decline. and by a lot in 2020, it was 59% of americans who paid no federal income tax last year it was 56% the main reasons for the drop are higher wages, more jobs and fewer government tax credits now, most nonpayers are low to middle income earners, especially now that that standard deduction is nearly 26,000 for joint filers, about 60% of these nonpayers make less

than 30,000 a year another 28% between 30 and 60,000 tax policy center said the people who don't pay income tax have very little income. now, if some of the 2017 tax cuts are allowed to expire in 2025, as scheduled, the number of nonpayers could fall below 35%. david, that would be among the lowest in history, but this is a number that's still going to be debated a lot, whether it goes higher or lower. >> we're always focussed as much on the highest side and the percentage there that perhaps don't pay as much as they might otherwise, robert. >> yeah. >> do we ever get any numbers on that >> well, we did. in fact, in this report i zeroed in on that so if you look at the number of people, let's say, in the top quint a making $190,000 or more, only 0.6% of them paid no income tax or will pay no income tax this year.

so, that's a very small number and the vast majority of those don't pay tax just for one year. so it's the result of a one-time capital or business loss or a large medical bill so, really the vast majority, nearly all of the non-payers are in the bottom 80%. very few, if any, in the top 20%. >> and the irs still moving forward with that hiring plan, correct? >> they are. they just hired 4,000 people to help with what they say is customer service big question going into this election and afterward, is if the republicans take the house and senate, whether they can block or roll back some of that funding and hiring to the irs. the irs is going to be front and center after that election >> interesting yeah robert, thank you, as always robert frank well, later today at 4:30 p.m. eastern time, president biden plans to respond to reports of major oil companies making record-setting profits. that's all we know at this

point. of course, we did get numbers from exxon and chevron last week they were close to if not exceeding previously high records that the companies had set. of course, given very strong overall prices "tech check" starts now. good monday morning. today the nasdaq is on mace to break a two-month losing streak despite pretty ugly results from the likes of amazon, met and others can stocks continue to rally into year-end? we'll discuss. right now the naz sdaq a quarter lows we'll look ahead to amd and qualcomm later this week finally, the street going opposite directions on roku and paramount today. julia will break down some of the sell calls we got earlier this morning, jon. >>