that's problematic, perhaps. take a look at the dollar for anybody that owns dollar denominated investments, and then the converse of that, some people would say bitcoin, which is closing in again maybe on 27,000. it's held above 26-7 this morning, almost 2%. join us at delivering alpha tomorrow. we'll be there. "squawk on the street" is coming up right now. ♪ good wednesday morning, welcome to "squawk on the street," i'm carl quintanilla with jim cramer, david faber. bulls trying to regroup after tuesday's selloff. yields are lower. the ten-year still pinned to 4 1/2. government shutdown and strikes remain in focus. we'll get micron tonight. futures rally after the dow's worst day since march. s&p's first drop below 4,300 this quarter. >> plus retails, theft risk.

target is looking to shut stores. costco said it's not a major problem. >> president biden urges uaw workers to stick with the strike while elon musk says the demands are a sure way to bankrupt the big three. >> we will get to costco in a minute. let's start with the markets looking to rebound from yesterday's selloff. jim, you have said this morning be careful, don't bite too soon. >> thank you. because you come in, now i have to tell you that when i was watching frank holland this morning, looked like we were about to have a breakout, then we go back down. what i want people to understand is october is a good month. i can understand you trying to position, but i also am more worried that interest rates, which did not go higher on the durable goods, the interest rates could reverse, and, david, i don't care what month we're going into.

this market, as we've indicated is really about interest rates. it's not about, as much as people might want to say, it's not about earnings. the earnings we have had the last couple of days is pretty good. if rates go the wrong way, then whatever we have there in the future is just erased. >> what about if they just stay where they are for longer than we anticipate as kashkari n indicated? >> i'm saying the long end. >> we're back to the ten-year or the 20. >> i like the 20 because in the old days, the 20 was king. how did the ten-year become king. >> it is the benchmark yield. i tried to get a mortgage. i got a mortgage for 308. now it's 8. a year ago, year and a half. >> is that a jumbo. >> it was from a credit union. those credit unions. >> so when do we stop having this conversation, then. >> when i say so! and when does the market move

on? >> not this conversation, the larger conversation. >> no, because i feel like we're headed for the end of the inverted yield curve: everybody claims it would it would be horrible with the inverted yield curve. i actually am stuck with the facts, and the facts indicate that there's still a lot of good out there, it's just that you have to pick and choose. retail tougher, industrial not bad, even though the stocks aren't out. look, obviously youth is bad. some of the drug stocks good, health care. i'm just trying to present it as in other time. you were around the 80s and 90s, i think. >> certainly was in the 90s. in fact, i was working here for much of the 90s, yes. >> so there were three rallies that we had during interest rates going higher in the 90s. three considerable rallies. >> we had a significant one called the tech bubble where rates were still quite high. >> you could get out before that. i'm just saying that we did have

rallies. there's a presumption, carl, you're fine, that you can have higher rates and have enough ma market. but we did, david points out correctly, we had irrational exuberance going into 2000. >> irrational kexuberance was '96. >> one of the examples i have of rates going higher. '98. rates went higher. i think there's this perception, all right, it has to go down. it's not empirical but it is based between 2000 and now. there was a market when rates used to go higher. we seem to only remember when things were anemic. i didn't mean to be mean. i feel bad about that. >> you should not feel bad. >> thank you. >> among the reasons to get tactically bullish here, a good earnings season we expect, positive earnings season.

better seasonality. q4 is the best. buybacks resume. a lot of these shorts on tech are going to be tough to hold, if, in fact, comes in with earnings solid. >> there's a considerable short base, the largest in history against the ten-year, and the other thing, oi have been workig on oil at 100. the saudis have to make a decision. do they want to encourage drilling in this country. drill drilling is up barely. our oil companies are doing more with less, but we haven't seen the rate count go up. at a certain point, someone is going to break ranks in the oil market. david is close to these guys and say you know what, here's what's going to happen. we got to take advantage of this price. no one has done it yet. it's amazing how disciplined they are. no one. no one. >> well, they have been disciplined for quite some time. they have a number of other areas in which they are putting

capital, including in efforts to try to lower carbon. >> if not cash or carbon. >> absolutely. that's very true. >> you're right, there's obviously continued capital going into drilling, but your point is not a lot of new capital as a percent overall of what could be available from these companies, which have a great deal, given where prices have been for some time. >> right. i had the largest natural gas company. they're going 13,000 feet into the earth. and they're doing it in no time. so you just say, why do i need more rigs, i can go down there and drill, and move to the next pad, but at a certain point, if i were an oil company, i would just say, you know what, we're committing a huge amount of capital. >> i don't think their shareholders would like that, jim. >> shareholders don't like this. >> even though we're founded every day with a message that the internal combustion engine has an expiration date.

>> i think if you're speaking to ford motor, you will not have enough money to take the revolution. and i like what musk said in his tweet, which is these guys, whatever it's called, the highway to the danger zone. >> bankruptcy in the fast lane. >> fast lane, the hov. >> i think that i have a better, you know, i'm not as curt as he is. the ftp being higher? >> there's been a couple. >> let's just say this one was the most twilight zones of the ones i had seen. she basically didn't know she had been hired until she was hired. >> let's get this straight, oil prices to oil patch. >> so you were asking me how we could get rates down. >> carl was making the point when you were saying about they should drill, drill, drill. i was saying, listen, they should not necessarily do that because shareholders will not

reward them, and the question is when do we actually have worldwide declines in demand for the underlying product, which could be a while. >> two of the most disciplined are scott sheffield of pioneer and jordan. they're incredibly disciplined. for all of their discipline, they stocks stink. they're not doing anything. just nothing. and pioneer, you could see if you go for longer term, it hasn't mattered one bit. cotura is off considerably. other than hall bert, you got to go longer term. these are like -- these companies are not up since the time when they started getting disciplined. you can show. >> there you go. >> there, look at that. >> don't necessarily put it in the ground. >> it means it doesn't matter. i think it's what -- i really think it's what carl said. >> people don't want these. these are like terminal

companies. >> we should make the point, of course, there are very few who expect there's going to be a diminution in demand for the underlying product. don't forget, it's not just gasoline. it's jet fuel. it goes on and on, the list of products that we use in this world, demand for which is only increasing, and so that's why you get people saying it's a 20 to 30-year transition. people won't argue about that. that is what you hear from the large oil companies. >> russia, brazil, my expert, he said the exploding nature of the natural gas, liquid, and our exports, to be able to make plastics, probably the hottest part of the entire market. so we tend not to talk about natural gas liquids, but the export market is fantastic. so i'm just saying these companies are doing much better and their stocks, people don't recommend. >> where do you want to be in this market? >> where do i want to be in this market?

>> i want to be a buyer because the negativity is so great that there are no shoe shine boys. that i recommend. everybody has been wiped out. >> all right, just after one kind of really bad day? really? that's all it took? >> everybody has been wiped out? >> everyone wants to be in the ten-year or the 20-year, that's what i find, how about that. i told you, david, when i did that thing, the stop trading and the mad dash and all the ten-year people loved that. >> i watched that again it was so funny. >> i think you have to understand that i have a huge number of friends who are stock jockeys and they're like saying, jim, municipals. g.o.s north of five. count me in, i want in. government obligations, 5%. >> take your entire cohort from here to the top.

>> going to recommend a clorox dividend with a hack? how about macy's. >> talk about macy's. talk about the downgrade today. gets a lot of calls. as for autos, the uaw strike against the big three continues today. a day after the president joined union picket members on the picket line. let's get to phil lebeau with the latest today. good morning. >> good morning, and the talks continue. as we have talked about for some time, labor strikes are almost always about two things, who's got leverage and who's feeling pain. near term or long-term, the fear of long-term pain, and you take a look at the map showing the strike locations around the country. there's leverage on the side of the uaw, at least they believe they have leverage coming off the president's visit, and even though this strike is impacting about 12% of the big three's uaw labor force, you know what, it

isn't resonating with the auto makers. in terms of the president's visit, certainly gives a boost to the uaw. he was only there for about 15, 20 minutes, but they believe it was enough to not only embolden their folks who were on the picket lines but also send a message to the broader public that the white house is behind them. we've got public support. he told us to stick with it, and that's what we plan to do. how much pain could there be long-term for the auto makers on the ev side of the business? if this contract is semdaccepte right now. dan ives with wedbush, if the detroit three took the current deal, we estimate the average ev vehicle will go up in price by 3,000 to $5,000 to pass the costs on to the consumer and would be a torpedo to the future business models of the 313 area code. as you take a look at shares of gm, ford, and stellantis, jd power, we checked with them, the inventory levels you're seeing

in dealer lots, roughly where it was when the strike began. not feeling huge pain at this point. they are concerned about the long-term pain of signing a deal that they could could lock them into higher costs and that gets back to what you were talking about earlier with elon musk's tweet about a 32-hour workweek and a 40% raise driving them in the fast lane to bankruptcy. >> you know, phil, i keep, danger zone, i keep thinking, phil, that really, these countries have become whipping boys, every auto company, and i'm sitting here thinking jim farley at ford. his whole family has always worked at ford. they are ford families, and big ads about how they support unions and hire people, and now i'm hearing people don't get paid a lot. that the president is kind of caught up in whether it's 40% that should be given. when do the auto companies

strike back and talk about what's really going on in these talks? >> i think they're trying to, jim, right now. all of them have made it clear they have done a number of interviews. we have talked with a number of executives and they have laid out how much their costs will increase if they were to go with a full 40%. i don't think anybody's factoring are 32-hour workweek. that's not even a starter in terms of what i understand about negotiations. having said that, the big three do have a problem in terms of tacking the leverage off of the uaw. the uaw feels like they've got momentum on their side. their membership is adamant that they continue pushing the auto makers, and there is a sense that they will push this much longer. i don't get the sense here that, t okay, the president was here. let's move into a room and settle this once and for all. that's not on the table right now. it could happen with ford. i don't get the sense that it's

near term. >> i agree with you, phil. i see nothing on the horizon right here. great report. >> phil, we'll talk in a bit. our thanks. phil lebeau this morning. when we come back, the ftc n making its case for the its antitrust lawsuit against amazon. we'll get to ctcoso, marriott, marcy's, tesla, when we come right back.

the federal trade commission once again taking aim at big tech, the agency and 17 state attorneys general are suing amazon alleging the company wields power, and stifles innovation for consumers and businesses. in response, amazon says the ftc's lawsuit would lead to higher prices and slower deliveries for consumers. they also say it would hurt businesses. it's amazing how few people mentioned this to me yesterday as something that rose up to the level that they would care about, which seems somewhat shocking, guys, i guess perhaps because it's been so long in coming. but you think back to other lawsuits, whether it's at&t and modified final judgment from judge green. obviously that's a long time ago. even predates my time here. >> sure. >> or the fight against microsoft in the '90s. this one, we'll see. you know, no surprise having expected it.

jim, you have worked your way through some of the complaints. >> there's so much more that's redacted that's crucial that it's hard to read. it's hard. >> this was khan's point this morning that as she believes as more is unredacted, we'll learn more about what their complaint is trying to say. >> microsoft case started in may of 1998, finished in june of 2021. people are worried it's going to be a lot of time. that's when the appeals court overturned it. >> right, eventually, it didn't matter because they had actually already done the things. >> right. >> but i do think that one of the problems i have is, like, events have overrun her. there's a great note about walmart plus. how they're giving it away. wedbush puts walmart adopting hyper local influence delivery, free for walmart plus. i read that and i think is she up to date. how about the deal between shopify and amazon where they're

talking about how there's so many more opportunities besides amazon but we're hooking up with amazon to make it cheaper. overrun by events since 2017. i think it smacks more of fiction than of fact. >> the market is correcting outsideover of their complaints >> her complaints are steal. >> and lina khan would dispute that s that. >> i hope so. >> and he obviously answered questions about the strength of her case on "squawk box." take a listen. >> we're focused on bringing cases we believe we can win. we bring cases when we believe there's a law violation, and if we believe there's a law violation, we're going to fight. of course things don't always go our way, and when we suffer setbacks, we look at the decisions closely and figure out, you know, steps forward. but we think this is an enormously strong lawsuit on the merits and are looking forward to explaining to a judge how amazon has violated the u.s. antitrust laws. >> that's a broad explanation.

that was an answer to joe's question, do you just go after companies because they're big and successful. >> right. well, i do find that you have to deal with reality, and i know jonathan cantor is going to face the same problem with google and advertising. these markets grow fast. tiktok came up while they were working on the issue with google and advertising. not the issue with google and search. when i read her comments, khan's, i think, does she understand how much -- she was saying that online amazon was half. >> they're defining a market that few people define. >> i can define that market any way i want to. >> a super store online marketplace. >> how about the way america defines it, does that matter. >> which is what, just retail? >> walmart plus, yesterday i know that we could say this is anecdotal, it's completely not.

it's totally empirical. c confluent does the work, if you order a pair of trousers, they find out where they are, and there's not enough, and they can do it. walmart has the same technologies. dick's has the same technologies as amazon. it's about the tech stack and if the tech stack is equal, not that she would understand that concept, then you would know there is no monopoly. i would challenge amazon's technology with walmart's technology any day of the week. >> and the 17 states is just political follow through in your view? >> yeah, i mean, i got to tell you, i would be careful running against amazon. greatest bargain in history. what do they want? >> not always the greatest bargain in history. you keep throwing that out there. >> can i just say -- >> they're not. >> the american public is not sitting there thinking, yeah, let's beat amazon. that's the case, let's crush amazon. >> i can throw things.

i can't throw a baseball. >> neither can steven a. >> did you see that? >> it's a very difficult throw. 60 feet. >> you bounce it unless you practice. >> we'll get cramer's mad dash as we count down to the opening dash. stay with us. also, we're celebrating a landmark day for david davfaber cnbc. we'll talk about that in a moment.

everyone is watching levels, 4,300, 7% off the july lies, going to try to repair some of it at the open here as futures are definitely green. dollar index, 106.3 is the highest since november of last year going for 11 straight up weeks. opening bell is coming up in

just about four minutes.

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all right, we got an opening bell about a minute and ten seconds away. let's get in a mad dash quick. >> okay. there are some companies where you can judge what stocks are doing for earnings, by how many price target boosts there are, and sometimes it's contrary to the way the stock acts initially. you take costco. there were six firms that commented on their earnings last night. all six raised numbers. the stock was down after hours. all six raised price targets substantially, you get an opportunity to buy this company. especially when i have craig jelinek in a rare appearance. >> why is the stock down at all if it was a good quarter. >> they didn't give a special dividend, didn't raise prices for members.

k people don't understand the way gasoline works. it was a beautiful quarter. very little shrink, and by the way, inflation going down from all of the different skus. [ bell ] >> let's get to the open and the cnbc realtime exchange. the big board, asia, celebrating the recent listings of five etf gz. a . >> the government, education, and health care, tenth listing anniversary. jim, the other color out of costco was that christmas and gaming are looking pretty good, but computers and notebooks not so much. >> that's true. but they are moving up christmas. they're starting christmas right now. talk about going early. that's what the customers want. i do think that when you think about what lisa su is saying at

amd, you talk about what micron might be saying tonight in the report, you're going to have a brand new pc cycle. it's certainly worth waiting at this point, given how the new pc cycle is going to be exciting and what's going to make it exciting is ai. lisa hinted at that, but i think that we're all going to want to change pcs if we can just talk to our pcs. i would like to talk to my pc. i have reservations, i would like to tell them exactly what i'm allergic to. i'm allergic to sardines and an c anchovies. king oscar in a can, better let him out. >> it feels when it comes to ai, we're at a low moment of excitement of investor interest or excitement right now. >> i totally agree with that. >> by the way, we're not even in -- i hate to use the baseball

analogy. >> are you really going to go there, ahead of the playoffs? >> we are in the earliest days. the earliest days. >> look, i think that when you're at dreamforce, and marc benioff is talking about how major banks are looking at how to do it, they will figure it out, and that's who i think can save the most because of efficiencies. they don't need as many people. a lot of companies can't necessarily figure out who to lay off. goldman, in terms of monetization. copilot released in about five weeks. and by the way, lisa su did talk about the industry wrestling with the trajectory here. they may not be perfect. take a listen. >> we're going to make mistakes. i mean, the industry as a whole will not be perfect here. but i think there is, you know cl cla clarity around it's important, and we need to do it together, and there needs to be

public/private partnership. >> meantime, we're dealing with reports that johnny ives and sam altman are talking about a hardware a ish i device. >> i think that lisa is being a little circumspect versus what could be out there. i think that when you speak with hp, you get a much more bullish story. >> in what way? what are you referring to when you say -- >> microsoft amd partnership, it really is kind of a -- we're a little more informal, it does have the possibilities of banking so that the wind tail, so to speak, pc, has got real excitement to it, and it's an amd cbu chip. not a gpu. >> that's the one where you're talking about talking to your computer and asking it -- having it become your assistant, essentially in many ways. >> right, my copilot. what i would point out, and i think this matters is that we had this big refresh cycle

because of work from home, and they were catching pcs, right. i do think you're going to say, wait a second, if i can get a pc that i can talk to that gets to use my own data, then enrique is going to sell it to you, and it's going to be an interesting opportunity to buy hp, down from 33 to 25. kind of interesting. big cash flow, remember, warren buffet was in there. >> although the near term opportunity is in the data center still, and it's largely filled by one company. amd is expecting to be able to compete in certain areas. and would argue, i think, that the pie is big enough that it's not like a winner take all situation. >> and i proposed that to her, that it seemed like it's renee haas. >> well, that's arm. >> right. that it's arm, and jensen, which, by the way, they commemorated. >> i know you love that story. >> at the booth when he started. obviously had a grand slam. that is the best thing on

danny's menu. but you've got nvidia, and you've got arm. that's the gpu and cpu. they did not pick a and d, they certainly did not pick intel. >> this is where jensen and his cofounders cooked up the idea of this revolutionary chip. >> just incredible. trillion dollar company, and by the way, i have to tell you that in terms of cafeteria food, nvidia, the best i have ever had. >> really? >> one star michelin, i think. i mean, i would give it a star. >> that's good to know. very important. nice to see them celebrating the trillion dollar club in the denny's. >> i can be as dry as you would like. would you like me to talk about the cloud fair and i can fgive you that, you want that? i have cloud fair on tonight. >> in addition to costco. >> i'm bringing it.

>> you bring it every day. >> what guest do you have? >> i got nothing. >> that's about right. >> i have matthew prince. you got nothing. you got a whole lot of nothing. you got to know when to fold them. >> i'm trying to think overall, the markets jim i want to get you on oil while i have you here. >> i think the shorts and the ten-year, the largest short position in the history of the trading report that we get, right, highest in history, and they would be forced to cover, i think, if crude were to go down, but i have no catalyst other than if the saudis change their mind and go against their own obviously incredibly successful move to get oil to go higher. but they're so far not worried -- they have always been worried about united states. but as david says, there's tremendous conviction among our oil companies collectively. >> yeah, well, but you're making

a point as you did earlier that they're not being rewarded for not -- they're not being rewarded for returning capital to the shareholders and not going to be rewarded for putting capital into the ground for developing a new resource. >> they gave huge special dividends last year at this point, because oil was up. that didn't work, the stocks went down. the giant buybacks, that didn't work, stocks went down. do they switch back to the big dividends. >> it's not like exxon didn't have a great year last year, not '23 but '22. >> his stock is still below. i thought mike werth was excellent. >> we do also, by the way, upgrade of oxy today. our b of a top pick. talking about not just capital efficiency but the backlog and the berkshire put in their words. >> oxy has been a fan favorite ever since buffet got in and they are very levered and they bought a lot of permian, david.

some people say at the top, and it turned out not to be at the top. i remember when chevron walked away from that. >> yes. i do of course. of course. and oxy faced a difficult time there. for a period, however, they came through it unexpectedly. >> you followed up, you didn't just nod your head. >> i do remember that well. >> we do have to, look, if you're a bull, you need some break in inflation somewhere in the chain, and you didn't get it with durable goods, and july ho housing, you didn't get it with that. you're not getting it with autos. i don't know where the break comes. now, costco is the only situation where i heard that there's deflation. only situation. >> 1 to 2% is their view for q4. they said it trended down throughout the quarter. negative year on year in nonfood, which was encouraging.

>> yes, i thought that the costco was perhaps, when i read it, i was gleeful, here's an operator. >> you made the point, you said all the reasons why the stock perhaps was opening down but it quickly turned around and all the price target increases. >> i have been working on the theme about why it was down. i've come up with this term. idiots. they're idiots. in the sound and fury, which signifies what. >> absolutely nothing. >> let's talk about target, though because we haven't actually gotten to a bit of that news. nine stores, many on west coast. one in new york city up in harlem citing, well, there it is, violence and theft. do you believe that? >> i believe the retail crime rings are real. there's a lot of home depot in-house product on amazon, i checked today.

but home depot doesn't sell online. that's organized crime rings. >> right. >> now, when you talk with any of the big companies with the exception of costco, they keep relying databa relying -- they want to rely on the feds. i would tell you, if you close one or more stores, you would get a lot of bears to go a little right. like when i met with the mayor of san francisco, she's very very troubled by stores pulling out. >> that said, target seems to have borne the brunt to a certain extent. we talked a lot about shrink where theft is the largest component so far, and we talked about target the most, they have given us the highest numbers. >> 120% increase in theft incidents, involving violence and threats of violence. there were cross currents about why they closed these stores. i continue to believe they are worried about the safety of the

people who are at the rengister. in april of last year, somewhere at the register at home depot was killed because they tried to stop theft, and that's what brian cornell is worried about. brian cornell in many ways is not about eps. he's trying to protect the workers. you can't protect them in the stores. walmart has a police precinct in one of their stores. >> that ought to do it, right? >> you would think. meanwhile, the stock is down 26% over the last 12 months. >> costco when they were asked about it, thefts a little down year over year,costco. >> and the theft, by the way, is at the self-check, which is a little more like, you know, people just kind of leave. do you use self-checkout? >> i do at the whole foods around the corner here. >> i do too. it's a very good self-check there. >> it's not bad.

it's fine. >> works out. >> that is a fresh three-year low on target. >> target is challenged. >> and gordon . >> have they not been to the one in coney island? they're crushing it. burlington to me is exactly what you shouldn't downgrade when it's down 35% and they've got terrific items, but it's tjx has pulled back from 93 to 88 that i think is really sensational. i really like that one. the one that, david, a lot of people are talking about is tom kings bury going to turn around kohl's? great operator. >> i don't have an answer for you on that. >> yes or no will do. >> oh, will it? >> so i can hold you to something. tom kingsbury, going to turn around kohl's. >> he's a great operator. >> then i'll go with yes. >> levis is getting a little bounce, jim, as td cowen

outperforms. >> worldwide pants. >> early innings of a favorable denim cycle . >> oh, my god, the denim cycle, i took that denim cycle to the moon with true religion, remember that? >> i remember jordasche. >> remember the inventory. >> levis is down a great deal. chip is retiring. we've got michelle goss coming in there, and i do think it's got a good yield. my problem is i don't want to be levered to pants unless it's lululemon, they can buy mirror for a fortune, write it off in a couple of years and the stock doesn't blink. >> great piece about how it's managed to be cool to parents and teenaged kids. not easy to do. >> it is. stores are packed. they've dgot great looking stuf. i think you, david, would shop

lulu. >> i have. i've been in there. bought a few things -- >> phillies looking good in the playoffs. >> phillies are coming in hot? >> clinched last night. braves are shorthanded pitching-wise. >> i stopped paying attention to baseball quite a while ago. >> i'm curious to know your thoughts about this master basic agreement out of the writers where we got some language on ai, at least. >> we did that they say is favorable, of course. figuring so prominently in terms of what it's going to be in future earnings. they want to make sure they have control over the product they create over time and they won't be replaced so to speak. the actors may have a bit more to worry about in that regard. certainly an important component of the negotiations they have in terms of using likeness and the like and what you have licensed or not. by the way, we should be thinking about these sththings frankly. nothing says 20 years hence, couldn't create the trio.

>> we look the same too. >> not nearly as entertaining. >> and chat is a yes man. you can get chat to say what you want it to. >> 20 years from now, it will be doing much more. two years from now it's going to keep increasing in effectiveness. >> i mean, look, chat is obviously not working hard yet. >> no, we're on four. you know, they're working on seven. i mean, it's going to be -- by the way, that's chatgpt, and then you've got baird and other efforts that are underway. it's going to become such a more powerful tool. we know that generative ai, there's no doubt about it. it could be five years we're fully recreated. full image of you. >> it's going to make us better. all it's going to do is make us better. >> you're in that camp, the better camp? >> i am in the better camp. why shouldn't i be? >> the copilot makes you better. the copilot makes you so much more productive, david. >> listen, i think that's great.

i think we will be incredibly productive and then we will be replaced. >> someone from the radio industry, it didn't take chatgpt to wipe that industry out. >> artificial general intelligence, let me know when i get there. >> who just joined us on set, sara eisen. >> i heard we had some breaking news. >> always good to see you. as we mentioned, it is a special day around here, actually for our own friend, david faber. today marks 30 years since david started his remarkable career here at cnbc, and now normally we would do some sort of look back. we would have a lot of people going on saying i really like david, david's terrific or talking about david's hair, which is something everybody is jealous of. we've done that already so many times it's painful. we decided to reach out to someone, might be the most influential business person on the planet, for thoughts on

david's illustrious career. take a look. >> i don't care. >> so you just don't care? all right. one way to look at it. i don't care, just like you didn't kill your wife, did you. >> we want to bring on someone who actually does care a great deal. maybe the most important chief executive in your life, okay. can we bring her on? >> yeah, where. oh, my god, my mother. i knew it. i said it earlier. i'm like, don't bring my mother here. >> oh, my god. will you give her a hug, please. >> hi, ma, i finally made it to the promised land after 30 years. >> you look fabulous. >> five years ago. >> you look fabulous.

>> i think she loves jim more than me. >> well, i mean, you know. whatever. >> how long are we going now, five years ago -- >> i busted every commercial. >> five years ago, we kept going and i ran out of things to say. >> you look well, ma, i just saw her the other day. >> 30th anniversary is pearls. she's got pearls. >> 30th anniversary, you were going to give david pearls. >> i was going to go to bart's next door but they were too expensive. >> do you remember when david said i have this new gig at cnbc? >> yes. >> and did you think it would last? >> i didn't know what cnbc was, you know, and at first he was doing news. he didn't start off. and i was once away in a foreign country, and i somehow, the news came on, and david was there, very stiff reporting, and i realized how far advanced things were that, you know, cnbc was

in, you know. >> we were global already. >> already. >> but i know you watch. >> i watch every day. >> she watches this show, right? >> and again, we're very proud of that. >> she loves me. >> i love her, she knows that. i wanted my dad to go out with you, but it was late in the game for him. >> i think so. >> she's still on the market, so, you know, right ma? whatever it takes. >> you look good. >> and you look good. >> i've been here ten years. >> it's an amazing thing to think about your life's work, which this obviously is for me. and has been for these 30 years. and working with people i love every day who work so hard and i have such great respect for, and well beyond that, obviously. i'm looking at todd, our wonderful executive producer, and my god, so many of the people i have been privileged to

work with for so many years, and people i'm no longer working with and who i remember so well and went on to other great careers. my first appearance was with bill griffeth and neil cavuto on the market -- it was called "the money "the money wheel". >> and then there was bull session. >> a lot of sessions. >> a lot of failed shows, no doubt about that. >> and yet a lot of great historic scoops. >> yes. >> i remember being on set with you when news corp. -- >> i remember world kcom. >> broke the fraud at world com. it's been gratifying, obviously the documentaries through the year and our team there. >> which is your favorite? >> probably the one on the financial crisis. >> the school district. >> "house of cards" fantastic. i've been so lucky and privileged to work with such

great people in front of and behind the camera for so long that i'm going to keep doing it for a little longer. >> another 30 years. >> i don't know if it'll be that long. >> i won't be watching. >> you never know. >> you should be proud, a great year. >> yes. it was a great year, obviously i know elon doesn't care but sitting down with him. and the iger sperinterviews. and the pga li v. from the early days when you and i started together when you were a hedge fund manager, watching the internet being created, the tech bubble through the global financial crisis we dealt with that was the most overwhelming time i can remember as a journalist. to now the advent of a.i. which we talk about all the time. >> i'd like to know what belle thinks is probably the greatest moment. >> what's the most thing --

>> i was fascinating with the elon musk interview. i thought that was a singular moment. >> wasn't that fabulous. >> i couldn't take my eyes off the screen. but then all -- you know, anything he does, of course, i love. >> do you know that david was the first person to reveal that amazon violates the 13th amendment. remember when you did that piece and they were slaves. >> you mean the documentary, yeah. that your dad liked. >> my dad watched it over and over. i love amazon but -- >> that one, i think about those documentaries and never having sat down with bezos, that was great but not what i -- you always want more. that's why i'm doing it, you want to get better. >> that's what i love about you, every interview, i could have done better. >> you're the least self-ag self-aggrandizing, most self-denigrating person i have worked with. >> thank you, jim. >> so humble.

>> it's a pleasure. it is. >> you are the best. >> did you take the subway down? >> no, i got picked up in a car. i didn't walk. >> you didn't? >> no. i may walk home. >> my mom walks 7 miles a day. >> that's why you're so young. you did a lot of great things in your life and career. >> it's in the past. >> still a lot ahead. let's not make it morose. >> we're not. >> do you still call in with tips? your hair is out of place. >> the only thing she says is to tell jim she loves him. that's what i get. >> i've loved you for years and years. surrogate mother. i mean it. >> my pleasure. >> david, congrats. so proud of you. >> thanks, guys. thank you so much. thanks to all of my amazing colleagues out there and to my incredible producers throughout

years. >> glad to know there's more to come. david faber, guys, 30 years. back in a moment.

jim, what's tonight? >> cloud flare just announced deals with meta and nvidia and barely doing anything at all. i have costco finally reversing now up from 20 when we first talked about it. >> see you at 6:00, jim. >> thanks. congratulations, dave. sticky tape, dow is up 20. see new a moment.

good wednesday morning. welcome to another hour of "squawk on the street" i'm sara eisen with carl quintanilla and david faber. live for you as always from post nine of the new york stock exchange. look at stocks this morning, a rebound after yesterday's 400

point selloff. dow is up, strength in energy, real estate, communication services. weakness in the staples, utilities, health care, and financials. here are three big movers, costco in the green after beating estimates. breaking down the quarter later this hour. and tesla, deutsch bank trimming the price target to 285 per share citing limited volume growth next year. and regional banks some of the biggest laggard as the street weighs the higher for longer story and what it means for the banks. that's the mantra du jour and driving the ratings. let's dig into treasury yields and what's happening there. interestingly we're not seeing a tick up in inflation expectations and a lot of this does hinge on inflation. that's why the fed wants to stay high or go higher for longer.

it's delivering alpha season here at cnbc. we have our big conference tomorrow so we have the survey out from investors and strategists that we poll in advance and i thought the response on inflation was interesting, because we asked over the next 18 months inflation will do what? so 59% majority say fall from this point. but it's not that. it's kind of split. 41% say hold steady. 0% say it will stay worst. i think the 41% hold steady is partially what is a worry for the fed and for investors. and what that might mean ultimately for policy and whether it gets us into a stagflationary environment where we have lower stagflation but lower economic growth. >> today j.p. morgan said the yield surge has not been matched by a rise and break evens they figure half of the move is not fundamentally driven chlk.

>> they think it's technical. we've heard supply issues and worries about the deficit. it could be factoring in many there. the odds of rate hikes have moved up a little bit but not to the extent yields have risen. i thought costco was notable. pulled this one out, because they always comment on inflation and the consumer and they say their estimate for q4 is 1 to 2%, that's okay. and it's trended downward. so these inflation trends will continue, meaning downward pressure. we have to see. that's what you want to hear. >> it is what you want to hear. you mentioned the deficit and supply a number of times as of late. those are issues if they are having an impact it's hard to imagine they'll go away any time soon, even as fed policy perhaps changes over time. is that something we believe is in part at play here or is it lai layered on? >> it's layered on, and we won't

know until we see the fed come down or the economy start to fall. but i know this, yesterday we got consumer confidence that missed. h home sales that were weak. that should be positive for bonds, and they reversed the other way. so there is something going on out there about whether it's the deficit, the supply that needs to happen, or whether it's technical in nature. we'll have to wait. because it's your 30-year anniversary on cnbc i made for you the fed balance sheet because you asked me about it every day. there's the peak, right, during covid. $9 trillion. i'm glad you asked because last week something funky happened, the biggest weekly draw down we have seen so far. that 75 billion. part of that is paying back from the regional bank crisis loans and part of it is the qt. the fact that the fed is trimming the balance sheet. why it's important it's de facto tightening and why the rates are

rising. right. that does also put upward pressure on yield. >> that puts into perspective what we're talking about. >> it's 8 trillion instead of 9 trillion. but the direction is important it could be a headwind for stocks and bonds. >> no doubt. simple percentages say going from 7 to 6 it has more of an impact as well. if we get to that point. >> if we keep going down. so far the fed hasn't gone there in terms of using the balance sheet as a tool for offsetting weaker economic growth but we know they will if they have to because they have done so before. that's maybe comforting to the market but i'd watch it. it could be part of the reason we're having some discomfort in the market. kind of a mike santoli way to put it. the economy is doing well our next guest says, thanks to c consumers defying the gravitational pull from the fed rate increases. what are you worried about?

>> i'm worried about everything that everybody else is worried about. the number one issue for me is inflation. if inflation continues to come down as i think it will, it'll offset a lot of the problems out there. a government shutdown, if if it occurs won't last that long. the uaw strike is going to be settled at some point. but the key is inflation, i think supply is an issue now all of a sudden with regards to the deficit. i think ever since the government debt was downgraded on august 1st, people have been focussing on the deficit issue. and if inflation comes down, then i think we can live with the deficit issue. if inflation kind of stays sticky here, i think we'll have a real problem with the deficit issue. and the bond vigilantes may need to come into the horse here to really convince politicians we have to do something more

fundamental about reducing the long term outlook for the deficit. >> we're fortunate to have you because aren't you the coiner of the term bond vigilantes back in the early '80s? >> yes. >> that's your claim to fame. >> my claim to fame. >> are you saying they're coming to the u.s. >> it'll be on my tomb stone. >> exactly. that's major. that's like bricks. are you saying the u.s. government should be worried about bond vigilantes coming here? >> absolutely. the biden administration should put james carvel on their pay payroll and talk to him. he said in the 1990s, he should keep the deficit down or the bond vigilant es are coming for him. and the bond vigilantes have been sleepy for a long time but they're waking up, that's a

danger for the economy and the stock market. but if inflation continues to moderate as it is and will continue to, i think that gives us -- buys us some more time on the supply issue. >> so inflation comes down, you think the fed won't have to be as aggressive. >> right. >> and that calms some of the fears over fiscal? that's the best case scenario. >> that's the best case scenario. that's my baseline but i'm worried about everything the way everybody else is these days. >> can the market continue to rally because the stock market story has been the soft landing we've done this and so far gotten away with lower inflation and not a recession. that has to happen too, right? >> yes. i've been in the soft landing camp since early last year. argued we were in a recession but it was a rolling recession. but right now i think the issue is whether the economy can continue to grow and i think the answer is yes. i don't think -- i find myself in position arguing now that the

economy is going to slow, whereas since early last year i was arguing that here's why it's not going to fall into recession. but yeah, i think all in all we have an economy that's pretty resilient. in terms of the stock market i thought we'd get to 4,600 by year end when we basically got there at the end of july i concluded we were going to stay around this level, the second half would be tougher than the first half. i did think we might redestest 200 day moving average, and then i think a year end rally getting us back to 4,600. why? because i think the government shutdown will be behind us. the uaw strike will be behind us. and if i'm lucky, if we're lucky, we'll see inflation coming down and the economy slowing. >> yeah, ed, i know some people were pushing you to hike your target for year end more to 4,800 you resisted and that's paying off at the moment.

>> so far. >> some argue, the desks are out saying there's a backdrop going into earnings season but last night you posted a chart of earnings expectations ticking lower for the september 21st week. that's not great. >> it's not great but it's one week. we watch it -- it's kind of my responsibility if i'm going to watch all these things to update people on what's going on. and it is what it is. i think some of this concerns about the government shutdown, about the uaw strike may have affected the latest week's earnings. but as you know, the analysts for the past several weeks, which i think is more relevant is, they've been actually increasing their earnings estimates for this year, next year, and for 2025. so i go with that trend of the past several weeks rather than suddenly conclude that this latest one week weakness is an issue. but i'm watching it. >> ed, bond vigilante father i

guess we can call you. thank you very much. >> thank you. as we head to break, our road map for the rest of the hour. leigh khan takes aim at adam kinzinger. what it -- at amazon. what it means for tech. we get a top pick from one of the fund managers big show ahead don't go anywhere.

so this lawsuit is fundamentally about protecting free and fair competition. and the u.s. anti-trust laws prohibit firms from using their monopoly power to punish or preclude or prevent competition. that's what our lawsuit lays out that amazon has done. >> that's ftc chair lina khan earlier this morning discussing the lawsuit against amazon. our next guest said the complaints are, quote, plausible doug melman joins us now, he was a top attorney in the doj case against microsoft in the '90s. great to see you again. thanks for the time. >> nice to see you. >> hard to read into it with the redactions and not knowing amazon's defense. you're not dismissing outright it sounds like. >> no, this is a serious complaint i think. it alleges like the microsoft case, the u.s. case against google, it alleges that amazon

has am monopoly. we were talking about the 17 states and whether that's inertia or is it significant? >> it's a big number ordinarily but it's quite a smaller number -- substantially smaller than a number of states that joined the ftc's case against meta and the justice department case against google. so there is an interesting question of where the other states -- why aren't they joining the complaint. possible they have political reasons possible they have concerns about the complaint. >> how important is the definition of the market itself. the on line super store? >> that one, it looks a little bit contrived because they're

comparing amazon to walmart and just a couple of others and eliminating other kinds of online sales. it's important. but they alleged two markets. if they can prove either of them they can probably move that amazon has monopoly power. >> these things stretch out typically i remember microsoft over years. is that your expectation here as well? >> yeah. this is going to be a fog, i think. a lot of difficult factual issues here. we don't know amazon's defenses. this case won't be dismissed right away. it states a claim, if you accept the facts as alleged, but it will take time to litigate it and resolve the allegations and defenses. >> doug, this ftc under lina khan hasn't had a great track record when it comes to defending the cases in court and prevailing. you see this one as different? >> i think they've had problems

in the past not because they tried bizarre theories, but because the facts haven't supported their claims in the cases they lost. here the question is, will the facts support the claims? they alleged two kinds of anti-competitive conduct, one i think is weak, that has to do with requiring vendors who use amazon prime also to use amazon fulfillment centers. but the other allegation about efforts taken by amazon to suppress price competition. if the facts support them could be a substantial claim. >> sorry, i -- you know, i forgot my question. i was answering some texts. >> i'll pick it up and ask whether or not you think there is some deg gre designation in

integrity in the agency given what we've heard about the staff and what they we've seen in court so far. >> chair khan has had difficulty winning over the staff, a lot of people have left and they left because they don't like the way she's running the agency. to some extent she's come in with an agenda saying what we've done in the past isn't right. you want to change course. you're going to shake people up and have people who say i don't buy into the new agenda. so that's to be expected. i think the problems maybe have been a little more serious in the past than they had to be. but it -- you know, they're -- i think they've gotten the ship a little bit righted. they hired some good people in the last several months. so i think you have to look at this case standing on its own merits and not dismiss it because of problems the agency had in the past couple of years. >> doug, i remembered my question. it's about the movement of

markets in technology. they don't stop. there's an argument to be made that things continued to evolve in a way that's perhaps more competitive. does that figure in at all to how a judge will decide the merits of the case? >> i think, of course, anti-trust laws always look for the goldilocks spot you don't want too much government intervention to interfere with the market but on the other hand if you have too little, allow the big guy to extinguish competitive threads before they have a chance to get off the ground and mature then you intein interfere with the process you're talking about. that's what this case is about. if the facts support it, there's a claim that amazon has been suppressing opportunities of others to compete against its platform and perhaps shake things up and make some new evolution and new improvements in online marketing. >> i know you're waiting, doug, to hear from amazon on their rebuttal and their facts.

but for investors, what's the upshot? what's the worst case scenario for amazon as a result of all of this? >> i don't think this is going to lead probably to any kind of major structural change. i think, as i said, i think the stronger of the two claims has to do with the behavior regarding competitive pricing, and if the government were to prevail would probably lead to a remedy that would say don't do this or anything like it again in the future. and whether that would have a big impact on amazon's business, i don't know. i'm skeptical frankly this is going to be huge importance to amazon's business but it might affect the market a little bit. >> finally, doug. does the complaint act as yet another deterrent or suppressant or are corporates in that realm used to this? >> i don't think this has to do with m&a, the proposed

guidelines and the activities the agency has been taking and threats they've been taking in the merger area probably have a deterred effect. but this complaint is one of those one-off complaints about a very substantial company. these days those companies that track this kind of litigation, i don't think that changes the calculus. >> doug, really good read, eye opening on this and we'll look for your help in the future if you don't mind. good to see you, thanks. >> thank you. still ahead, check out this mystery chart. it's plunged more than 30% this quarter but named a best idea by one top tech fund magenar. we'll talk about what it is and why he's bullish on it when we come back. called you first but i was ♪ ♪ trying to get to you ♪ ♪ i was dreaming while i drove the long straight road ahead ♪

♪ i drove all night to get to you ♪ the distance is nothing when home means everything.

been a tough quarter for chip stocks, unperformed the s&p despite big gains earlier in the year. kristina partsinevelos joins us. she has the results from micron. >> yes. i'll be covering that. we see that prices may be changing the corner but micron has an overhang, china. that is in may, they moved to

ban micron products. they estimated half of the china and hong kong revenue exposure were at risk. that's 13% of total revenue sre. this quarter that we'll talk about at 4:00 p.m. is the first to show the ban. despite the ban, analysts are expecting an improved environment for micron. the stock is up 2% from the june. why is that bullish call coming? firstly all three memory makers have been cutting supply to undership demand. and that's helping dynamic memory prices. this past august, micron management said the pc and smart phone inventories are in good shape. although they pointed out data center revenue remains challenged but nonetheless we're seeing the return and another

potential driver has been bidding on a higher guidance and that has to do with a.i. of course. micron is working on new bandwidth mecmory. they expect meaningful revenues in 2024 and has already received strong feedback from customers. and pivoting to amd, because the ceo spoke last night and weighed in on the timing of the current a.i. cycle. listen. >> we're in such the early innings of how a.i. and especially generative a.i. is coming to market i view this as a ten-year cycle we're talking about. not how many gpus can you get the next two to four quarters. >> so not a flash in the pan when it comes to a.i. despite the mixed commentary that maybe we're not going to see revenues from the a.i. push. it's all nvidia that's only going to benefit. but we do know that amd is

launching their chip in q4 of this year but really ramping up next year. they're going to benefit, maybe that's why she's pointing to this being a longer process. >> the argument is the pie is big enough for so many to benefit. >> exactly. and the price point is supposed to be cheaper. still questions on the specks on how they compare. i think the main selling point for nvidia is going to be the software. so let's see how amd stacks up to that. >> expense is important when you're outfitting the data centers. >> exactly. so many companies were not factoring in the cap x that goes to powering the infrastructure. we can spend $20,000 on, you know, x amount of gpus and maybe have 100 in our unit but to power the entire system is to expensive, which is why we're going to start -- or companies will start renting, you know, the gpu space in the cloud and can benefit but that's a factor

in the coming year. >> micron, nvidia, amd is in a.i. are they in different stages or powering different parts. >> powering different parts. micron hb 3e and they're working on the memory part of the chip. that's separate from the graphic processing unit that nvidia is working on. amd is known for the central processing unit but they too will come out with the graphics. the graphics chip with nvidia is visuals, images, all that and they process quickly versus cpus that's a little bit slower. getting a little technical. >> gpus over cpus for sure. >> yes. >> do you have a question, david? >> no, i'm good. >> i never know these days. >> i haven't phased out. i'm good. >> after 30 years you're forgiven. >> i'm not answering texts too. >> i thought you were choked up

because of your mother. >> she's still here. i don't know she's not going to leave. tomorrow ceo of micron sanjay mehrotra joins us at 9:30 a.m. eastern. and next, the tech fund manager making the call on this mystery stock make joins us next. can help you build the future you imagine. t. rowe price, invest with confidence.

welcome back to "squawk on the street." here's your cnbc news update. new jersey senator bob menendez walked into a federal court this morning in new york to respond to corruption charges alleging he. >> his wife used his influence to pocket hundreds of thousands of dollars in bribes. he's expected to plead natural gas. u.s. soldier travis king is

back in american custody this morning. north korea said they would expel king two months after he intentionally ran across the border into the country. state media confessed he bolted to north korea because he was disillusioned about the ration discrimination and treatment in the army. and israeli citizens will be able to enter the u.s. visa free soon. the biden administration accepted the key al lie into the visa waiver program starting on november 30th. it means all u.s. citizens will be able to enter israel without a visa as well. silvana, thank you. stocks are on pace for the worst month of the year now as higher yields continue to weigh on things. but that said, some tech has been holding up. meta up triple digits on the year. let's get to mike santoli with

the breakdown. it's interesting to see meta go against the grain. >> earnings e mats are surging, up 30% in the last six months and alphabet their estimates are rising. a lesson how tech is multiple things. not just the inverse of a bond yield not just safety although sometimes it has that aspect to it. and it's not just pure growth. if you look from a little over two months ago in late july when huh the ten year at three and three quarters, that's really started the surge. it was july 19th. the nasdaq, equal weighted s&p and the discretionary from that period. you see the real impact of higher yields is about what is it going to mean for the real economy, for the consumer as opposed to the arithmetic as what it means for growth valuation. this month tech has backed off a little bit more but in general

megacap growth as a category has held the outperformance since june 1st. so it's gone flat versus the market since june 1st. a lot going on the. the yield sensitivity on the market is extreme right now. tech is not immune to that but it's a more nuanced picture. >> goldman points out 10% draw down is about as bad as we've had for, say, the past year. >> in a bull market that's usually when you get. people feel like it's gotten overdone. everyone's gauges had that read out as yesterday's close was coming into view. which was we're startling to se the washout conditions, doesn't mean you buy but you have the recipe for a balance. on the flip side, everyone focused on the structural short-term fragility where you have the selling by trading firms. and i think the more important

of the flows is the knowledge of those flows and those levels that everybody has at all times on their screens. so it creates a greater awareness and maybe a greater, i think, nervousness around them. that's how you get the market oversold. it happened last october. not saying we have to go that deep but seems like that's the process under way. >> equal weight versus the s&p, top ten are 30% of the s&p index. >> absolutely. it's become more extreme. i was less concerned about this when you see both of those lines going up. if the equal weight is going up less than the mega cap rate, okay. both in up trends okay it's where you're making more and performing. now you're seeing breakdowns. you see small caps no longer in an uptrend and creates, depending on your view, that's where we hunt getting a big market snap back or the underpinnings in the market has

not been great. no matter how you think about things this has all along been an underperforming bull market. if we call it a bull market, since last october, an unimpressive one. why? since then it was not a comprehensive washout. you didn't reset valuations that much. you didn't set the market up for multiple years of amazing returns which is usually what a bear market does. but this is a 20% drop usually you get 30% on average. we got it at the highs, 30% in the s&p. now we have to figure out what's happening in the really economy to decide the next move. >> i would only add oil prices to your first chart. that's why the consumer has been so weak not just yields. >> it's all of it. i look at every direction you look, it doesn't look like you have daylight. and that has been energy prices, it's been yields and a dollar. >> although the share of disposable income -- >> it's not critical. >> yeah. >> psychology.

>> i also feel if -- i can't imagine we look back and say the bull market of 2023 ended when the economy was great and the fed was fine with higher for longer but rates got too high. that's not how it ends. the economy has to succumb or we're okay. how are investors positioning into q4 let's get to leslie picker. >> i'm joined by gill simon, thank you so much for being here fresh off of your presentation in san francisco which i want to get to in a moment. but maybe if we can kick off where they left it in the last conversation with mike santoli about the broader market. as a tech focused investor i'm sure you have seen some volatility over the past few years or so. the nasdaq rebounding a bit today. sliding yesterday. investors grappling with the idea of higher for long erwhat that means for tech valuations.

how are you screening? is it profitability, growth, owe factors you're looking for? how is your portfolio positioned for hedging and cash on the sidelines to account for all the uncertainty out there. >> hi, leslie. thanks for having me back on. nice to be back. so this year as you have spoken about quite a bit, has been led by the biggest companies, a flight to safety. a flight to a lot of the megacaps as you talk about the magnificent seven who have been cost cutting, who have scale. people want predictable in this market. we've been looking for, optimizing for, duration. where the market has lost duration with the rates going up the last couple of years there's been opportunity in companies that are maybe earlier in the life cycle, maybe aren't currently profitable. or just have some more complexity to kind of their story and profitability. so a couple of names we're going

to talk about fit that bill and there's definitely a lot of opportunity right now in the market as we see it. >> i want to see an example of that. your pick was road blocs. how does that fit into your solution, this stock hit a post ipo peak nearly two years ago, been essentially range bound at one fifth that high for the last 18 months. what cat liezs this stock? >> the stock is down 60% or 70% since they ipoed a couple years ago. it was a darling stock, direct listed, a play on the idea of the metaverse, which everyone was excited about a couple of years ago. we think there are aspects people don't appreciate about the company or fully understand. one is the scale they've built to. so it's now a 17-year-old company. it has 300 million monthly

unique users. almost 70 million daily unique users. that's more than tripled since before the pandemic. they're engaged at higher levels than tiktok or youtube at an average of over two hours a day. so the scale engagement of the platform are unique. the other thing we think people don't fully understand it's a great business model. they don't create games themselves. they attract developers to develop games and publish them on the platform. what roblox gives are the infrastructure, the developer tools and their in the roevenue to attract those developers. but there's already an audience in the platform and all that should lend to high ultimate profitability. the problem is in the short run the company is investing significantly to catch up with some of the big growth they've seen in users since the pandemic. but also, several meaningful

initiatives, including layering in advertising onto the network for the first time. including layering in a.i. to help developers make games. as well as trying to age up the users of the platform, which are around 13 years old today. so a lot of initiatives, a lot of investment spending. we think they're at the peak of their investment spending now and the company continues to grow really nicely into this big kind of social media platform. not just i think what a lot of investors view as a gaming company. >> i hear what you're saying in terms of the engagement and the a.i. overlay. you say this is going to be a double from current levels. at what point does that peak investment spending ultimately filter through to the fundamentals and at what point does the broader market appreciate it? the stock is now up about 2%, and steadily climbing higher since you started describing your case. >> good i should come on more

often. i hope it's not my kids buying stock. if you look at their business model before the pandemic they had 19% ebitda margins. during the pandemic the usage spiked. kids were at home. and so both the growth and the margins spiked and they've been investing to catch up with the massive growth and usage. this year the margins are troughing around 10%. last year below that. we think the next few years is a nice trajectory for them to increase the margins by as much as 300 basis points a year. so we think next year will be an up year. this year will be the trough. and looking out to 2025 and '26 we think the margins could be back in the 20s. uber is your largest holding up about 83% year-to-date. are you crystallizing gains or holding this for a longer haul?

>> a great question. our largest position still. we bought during the pandemic so when people were not sure if we were getting back into cars with strangers again. it presented a unique opportunity to buy into this company. the company has done an effective job leveraging their structural advantages. if you look at lift stock. i think now uber is $90 billion, lyft is 4 billion. that's their biggest competitor, they struggled to make money, keep up with uber. so the stock is up nicely this year, but just starting to get respect on the streets. if you've followed the story the last few years it's been a headache of a stock. a lot of investors owned it before it was public and the last few years was a tough period of time to own it because it came out of the gates, its ipo with question marks if you remember the management turnover they had and then, of course,

the pandemic really threw a wrench into their growth. so in addition to also regulatory questions, which have always kind of circled around this company and driver classification issues. so we think the company is starting to get some respect finally and we see a path still for the stock to double from here. >> so you've got uber, which suffered in the pandemic and now up nicely. and now roblox, benefitted from the pandemic but now down you think has the ability to go up? >>? yes. after the break, the read on retail. target shutting doors and what costco says about consumers. but first time to register for the delivering alpha summit. you can scan the qr code on the screen or visit cnbc events.com/delivering alpha. we'll be right back. with comcast business... it is.

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we are asked often recently

about our inventory shrinkage results and whether it's dramatically increased in the past year. and the answer is no, our inventory shrink is a couple of basis points in part due to the rollout of self-checkout. so no, thankfully not a big issue for us. >> that was costco's cfo ieludig to this idea of theft noting not a big issue for costco beau it came hours after target announced plans to close nine stores across the country due to high theft levels. i do wornt how much of it is target's urban -- i do wonder how much of it is target's urban exposure due to the fact it's more heaviily weighted in urban cities. >> that's the point. we'll go through geography. where target is closing one of

those new york stores there's a costco in the same center. so shrink, or inventory loss, particularly theft, has gotten attention from retailers they're calling it out like they haven't before but it's not an issue for all retailers, there wasn't pressure on growth margins for that retailer or left the as a source of shrink. the membership model likely has something to do with it you have to have a membership to go in and shop there. costco beat expectations. but they did call out strength in food and weaker sales of nonfood, big ticket items. that weight on costco's online sales in particular, they overindexed. the cfo did said one ounce gold bars sell out in a few hours on the website, limit two per customer. but shrink is an issue with

retailers because they're pointing to it in varying degrees. theft was largely in line with past years, at least as a percentage of shrink in the retail industry overall. target has quantified the issue and is closing nine stores due tost, target will close three stores in the san francisco oakland area. one store in new york city, in the harlem area, two in seattle, and three in portland. and three of those areas, as you mentioned, are also identified as top cities for organized retail crime by the national retail federation. also, again, largely urban areas. target says, quote, we cannot continue operating these stores because theft and organized retail crime are threatening the safety of our team and guests and contributing to unsustainable business performance. when reached out to ask about more details, but target not disclosing anymore details at this time. it just oppose up a lot of questions, again, why is it happening at certain retailers

and not others? again, to your point, certain cities do seem worse than others. >> or even certain locations. you did mention, of course, that target, that i'm familiar with as well. the one on the far upper east side. >> yeah, around 117th street. >> yeah. but right off the fdr, where the costco is. again, are we going to get a little more information around the decisions particular to these locations? because you seem to be, at least others are raising questions as to how much is theft and how much is perhaps that they simply were not pulling their weight? >> yeah, i mean, again, that's kind of why we wanted to know some of the financial details of what was happening there. does it have to do also with customers potentially feeling uneasy, so then traffic is lower because there's crime. in some case, maybe it's the latest. but i think it was really interesting, david, yesterday, where they talked annually to retailers, asking them about shrink. and theft is one part of shrink.

it is the biggest part. but the one area that actually increased was the thing that retailers had control. process failures, other kind of forms of inventory loss or damage. so i just find that interesting, as well. i think there's just still so many questions. >> i also think it's harder to steal from a costco, where everything is like in ten-packs and -- i can't even fit that stuff in my apartment. >> good point, too. >> courtney, thank you. appreciate it. quick note as we head to break. this friday, do not miss an exclusive sit-down with jane fraser, fresh off of these new move she's made to restructure the bank. that is at 10:00 a.m. eastern right here on "squawk on the street." dow is down 91 and the s&p has gone negative as well. we'rba ia mee ckn mont.

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while latinos are the second largest population group in the united states, new data shows they're massively underrepresented on corporate boards. our contessa brewer is live from the latitude conference in miami beach with more on that. >> hi, there, carl. the good news is that there's progress. there are latino directors on 40% of fortune 1,000 companies.

that's a 5% increase over last year. up and 27% since 2011. according to a new report from the latino corporate director's association. but the bad news is that progress is ponderously slow, especially in the biggest companies. in the fortune 100, there's been only a 1% increase in the last year, or in other words, one more company added a latino director. and for latinas, the women, the representation is downright abysmal. the overall picture is one of profound underrepresentation, considering nearly 63 million americans are latinos. advocates say there is a distinct upside to having a latino director and a downside to not having one. >> the upside of having latino corporate directors on your board is you're more connected to the business case rather than the diversity case. which is substantial growth in a market that hasn't been tapped. the cons is that you won't make

money. in a new mainstream economy that is now 25% of the population by 2050, if you're not playing in the game, you're going to be out. >> and who's leading the way? here at latitude, they're highlighting bank of america, ulta, general mills, biogen, federal home loan bank of san francisco for having two or more latinos on the board. bank of america's ceo brian moynihan actually says that mir rowing the communities they serve drives responsible growth. david? >> contessa, thank you. well, that does it for this hour of "squawk on t see" otr g ur, straight ahead.

good wednesday morning. i'm carl quintanilla with sara eisen on the floor of the new york stock exchange. is october opportunity ahead as we close out a rocky september, will the next month bring back the bulls or is more pain ahead? young-yu ma will way in. >> and low inventory and record prices, can the housing market hold on or is a big downturn ahead? z zillou founder spencer rascoff is here. >> and why david rosenberg says