relative basis is even weaker. let's get to what we're talking about. 4.67. >> that didn't last very long, did it? >> no. 5.15 basically on the two-year. obviously oil plays into all these things as well. we will be back in time square tomorrow. but for now, make sure you join us. ""squawk on the street" delivering alpha, more coverage. >> good thursday morning. welcome to "squawk on the street." futures are down in front of a packed session. four fed speakers today, including powell. cnbc is delivering alpha conference. ten-year yield. 4.67 is a fresh cycle. investors on edge. stocks searching for some direction into these final

trading days of what is shaping to be a weak month in quarter. >> high pressure this morning after it offered weaker than expected. sanjay mehrotra will join us later this hour. and a company named ryan cohen as ceo. >> let's begin with the markets. we mentioned what the yields were doing today. jim, 50 basis points. >> i said that we would have the d inversion and that you couldn't really be excited about the stock market until the 20-year, which is at 4.1. it is now at 4.98. crosses over the fed's fund rate. that would be where you can finally say this market is getting interesting. it is oversold. but we can't seem to find any supply of oil near 100. 100 is supposed to bring out

some supply and in the oil companies. but i don't want to give up here because this run has been so bad and it needs to consolidate. here's what i will come up with. we will have a test, i believe. i actually know the time, 1:43, 1:42. that's when we bottomed yesterday. actual time of day. >> that was yesterday, you're saying. >> i got to 3:00 to get this stuff right. of course, the dog relieved himself because he thought it was time to go outside. in the bed, no less. that's too much information. >> it happens. >> it should not happen. that should not happen. sorry. >> no, i was bad. can i just go back to what i was doing? >> yes. >> all right. so what happens is that you can't get bullish until we retest those levels. and i didn't like the fact that the futures bounce between four and five, their next ake-out.

can't buy the top. you have to see if that was a natural level that hold and sellers really stopped. otherwise, you're just coming in based on the fact that october is strong after a weak september, but it is not october yet. so that's what i'm looking at. i want to see a retestable low. david, i have to tell you. when oil spiked yesterday and the yields went occupy and then the market went down. and then with yields going higher and oil going higher, the stock market went higher. that has not occurred. so that told me that maybe the capitulation is probably in hand. we can't say, hey, we're off to the races. we have to go back to the level and find out what happened. and the levels, if you want to check, spf hit bottom at 0.63 at 1:41 p.m. and hit bottom at 14.43360. that was at 1:40 p.m.

if those hold, i think it might be a fun time. i'll get wegovi for all. >> we have to talk about wegovi. yeah. why wouldn't i just want to own -- i'm ready to take ten-year money and get paid for the next ten years. thank you very much. >> okay. >> that is a yield that i could not have even imagined would be available. >> okay. let's say you were in that booth and you were ordering a grand slam, which is one of the great bargains from denny's. he talked about it, and he has this vision. would you say, i'm hearing this guy, but i'm getting 5.0 risk free. well, no. i don't want 500 risk free. i want -- i want nvidia. >> understood. >> there are always going to be great opportunities. and if you can take advantage of them, good for you. that said, a certain amount of my allocation is going to go towards this asset class. >> certainly.

the dollar sign is saying our viewers want more than 4.76. they don't get up in the morning and say, you know what, that will make up for how much money i have to spend when i go to bloomingdale's. they want to get rich. the head of uaw who wants to make everybody poor by the way he's doing this thing, i actually want more people to be rich. i don't want the rich to be poor. the rich are not cool acts, and i'm not lennen. we want more people that are rich. that's the problem. if you want to stay rich, you buy the 20-year because you only need to get rich once. but if you want to get rich, the 20-year is a passing fantasy. >> a lot of rich people do have their money right now. >> it's timing. >> a lot of rumors on the cusp of retiring. they might want to take a pass on nvidia and lock it in.

>> there are always a lot of people that will say, i'd rather be rich than not rich. >> that yield being able to me for the coming nine, ten years, being rich already and maybe facing some sort of a fixed income and/or living off a fixed income might not be the worst thing in the world. >> if i were a poor man -- what is the saying? by sunrise, sunset. >> these are not exclusive things. but the point is how many people are going to be allocating or perhaps not interested in allocating towards the stock market when they have an opportunity like that. >> i would say this is a balanced moment where you should commit to that, and i have not been in favor of it. but that does not mean to the ex exclusion of finding the next tesla stock that doesn't go down when the news is bad. i just think that everyone

should have a mixture. you are either watches or you're not. i'm not bringing in new viewers by saying this stuff. if you are kramer, you want us to help you make money, no. but you also want -- they're not flying. >> it's based off of that. it can spread to that and get a really good corporate. >> can you get a good ngo. >> that's two days in a row now. >> that is the holy grail if you are in a high tech state, is to have a lot of 5.0 ngos. >> right. >> as far as levels go, 200 days, about 4,200. do you think we need to do that far? goldman takes a look at what happens when you do dip below on a 3, 6, 9, 12-month basis forward? >> i'm betting on holds. you have to have a view that it holds or that you have to put more money in the 10 year, in the 20 year. at a certain point, you have to look at howthings stand. i really do think you have to

understand it. this is a historic run in treasuries. historic, quinnck run in oil. if one thing goes right. now jp morgan, you know, i suggest that you take away -- remove your shoelaces, get rid of your tie. >> is it that bad? >> this is like the apocalypse for two-thirds of the people, three-fifths of the people in the country. you got student loan. that's the cares act. they don't care anymore. you have the big five. of all the things that you have to spend money on, infrastructure, they're all up. so we're now like 2019 was a house of dion period versus now. 20% rates of credit cards. >> there are signs of inflation starting to abate. why isn't that a positive? meanwhile, sara comes on every

day and talks about the deficit and talks about supply issues. maybe they're real when it comes to the bond. >> no, i think that -- do we have any sound from the ceo of costco, which, by the way, is the third of the big three retailers. >> i think we have him talking to you about shrink. is that interesting to you? >> well, let me give you the shrink. sometimes you put toilet paper underneath the cart and forget. other times you are trying to get the watermelon spaceship on the self-check. they don't grease it ahead. you said watermelon is one of the things. >> they're not losing much money. >> yeah. inflation went from three-fourth the previous quarter to two-one. why do you think i said make a

stand? because of that. because i think that we're coming to a level where if we get more unemployment -- now we're back to the 18-month high in unemployment. you got low unemployment, you get a little more default, especially with student loan, and you get more deflation across the board, then jay powell could come up. as sara will tell you, it is the markets, the 10 and 20 year supply. it is not jay powell. but i do think that you can make a stand. i really do. we're going to do that for the club. >> there is a good piece this morning about t. rowe shorting treasuri treasuries. if the terminal is going to be five five, why shouldn't the tenure go to five five? >> i think it duoes go to five five. i don't know before that crowd. largest on record, you want to say, oh, i'll just go with those people? the record is usually wrong,

right? >> yes. you have to play contrary to that. >> okay. >> you also said just now you think it would go to five five. >> i said it would deinvert. that means recession. i said those people are charlatans. you still see them on air. i think they should be wearing placards that says i got the whole thing now. now we're about to deinvert. >> the scary thing, to david's point, what if data does start to roll and it gets weak and the issue is about supply and deficits and downgrades keep the long end high? >> i think what you have to do is say that all those things are going to cause the fed to hit the lower end, take the short end down. look, that's a disastrous scenario. i would come back and say there were four times in 1980 -- don't you give me this 2000 year. 1980 and 1998 where you made money exactly in that situation. quick rising rates going from

five to seven, and you made money in those. so they're four times historically. why should i say gain more? i can't because i traded in periods where you made money. sara could be right and you could make money. by the way, it wasn't even that hard. what are you doing? >> i'm looking at something. >> what are you looking at? >> i'm looking up something for the next block. >> chatgpt on how people felt about you. sorry. >> didn't go well? >> that's what i'm trying to figure out here because i was thinking about things that might fuel. i was thinking, oh, the internet bubble. oh, technology, oh, we have an ai. >> we do have to get out. >> i want to make sure when they added obviously voice and image to chatgpt, but they added a lot more and no longer limited to 2021. that's not unimportant. >> no. thank you.

you know, amazon has got no shrink, right? does that figure into her rockefeller thesis, standard oil number two? >> i don't know. >> what did she write in her first -- who was the journalist that kept coming after you? >> tarbell. i'm interested in seeing what she did the first year of law school. third year i killed it. i put a lot of calls on the gulf deal. i crushed it. what did she do in her third year. i said, is this still going to pass? >> she wrote the amazon thing in her second year? >> 2017. >> i mean, she must have been top flight. but who made money on anti-trust, her or me? i know who did, but wait a minute. i don't know what she made. >> jim is right. we have a lot to get to this morning. we will get to micron and talk about some of the obesity drugs this morning. there's meta, the airlines, gain

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on the quarterly basis, they're up 300% in less than three years. the maker of them up 30% this year. lily makes mangaro.

a good look here at the demand at least. >> yeah. i mean, look, when you look at novo nordisk, they do not have the copy. eli lilly does with mongorno. which is why the trust owns a huge amount of eli lilly. i will say the studies going on are far wider than obesity and far wider than diabetes. those considered heavy drinkers, which is two drinks a ight. there will be studies on smoking. there will be studies on what it does with the copd. now, the one thing i think people have to recognize is the insurance companies i think will end up paying for it because it is so revolutionary and it gets your bhlood pressure down.

can downside is all the stuff you liked. i don't know if we have the charter. this is a chart of wegovi upside down. there is a note this morning. they're way behind on this. there is a piece about nestle's saying people are eating less, they're wasting less. no. people are taking wegovi. there is a sense of unworldliness among the snack food people who never saw that you can't eat one. not just one but one. >> yep. nope. it's -- the impact of these drugs we have yet to fully appreciate. by the way, again, there are certain things. listen, there are side effects. older people when you lose 26% of your body weight in a year or one-third of your weight loss is muscle mass, that's not good. >> they have a new one that will just attack the fat. but you're right.

>> longer term impact, we still don't know. you know, this perhaps takes longer to digest the food which is why you don't have the increased appetite. but overall, these are seen revolutionary. >> the obesity epidemic in the country. and the people who are obese are very bad risks when it comes to insurance. so they will want to do this. and there is a constraint. it is not -- there is not enough on the marketplace. but i think they will separating people who are actually needing it because of medical and people just trying to lose weight. there is a real health crisis here that's met because there are a lot of drugs that gain weight for you. >> the humanity is issue is fuelling the sales right now and for people that have the excess income to be able to afford these as opposed to the broader

population where there would be a bigger health benefit. >> there are also people that say i lost all enjoyment in eating. i mean, if you eat an m&m and you like food, you will just say, this is like eating coal. i don't want it. >> i can't imagine that. >> a hershey bar. >> i will just keep exercising. >> the people who take drugs, this is for nondiabetes, people that take drugs that cause weight gain. >> the biggest drugs in this class. >> i have been saying this by far. but you have to understand, many drugs cause weight gain. so they want you immediately on these in order to keep you from gaining weight. >> fascinating. we're just getting our arms at it. the opening bell coming up in a couple minutes. one last look at the premarket here as we kick off a very busy thursday. don't go anywhere.

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all right. let's get to the mad dash. opening bell seven minutes for now. we're standing for the first time this week. >> yes, it feels great. >> i always like to refer to the market cap. i will let people at home take a guess before we tell them. i don't think it's up here. tell us what you know. >> okay. matt ross wrote a piece with jp morgan, probably one of the most passed around pieces i have ever seen. it is a lengthy piece about how the consumers just taking it to the consumer whether it be student loan, whether it be gas, whether it be the insurance, whether it be the financing charges. and so they're trading down.

so where are they trading down to? tjx. a little bit off. a little bit burlington. but i think that this comes out as the winner in this piece. one of the reasons why we have much big positions in tjx is because the macro head mounting versus 2019. the antidote is this. now, when you speak to retailers, they're very envious of these guys because a lot of people dump off. they're good merchandisers, but they like are shocked themselves at the price of the merchandise. so i think people should guy this stock. >> i don't shop, except i do go to tj max right here. and the answer is 1$100 billion. 1$100 billion, twice the size o market. >> they've got home goods, which is terrific. by the way, just want to be

clear, if you want to get the thanksgiving plates that i use, you have got to go now. one year i went a week before thanksgiving, and the clerk said, are you kidding me? that stuff sells out in october. now, costco is bringing in christmas trees now this week. >> i'm not ready for that. it's not even halloween. >> now, i got a pair of jeans two weeks ago, $14. i sold them for $30 at an online retail. >> it is the thrill of the hunt. >> they do not have ralph lauren that i have seen so far. >> we have opening bell five minutes from now followed by an exclusive from the ceo. sanjay will join us in minutes. stay with us.

the opening bell is brought to you by nuveen, a leader in incomes, alternatives and responsible investing. >> down in the premarket despite this fiscal q4. the chip maker current quarter loss that is wider than analysts have been expecting. but revenue guidance did receive consensus. sees recovery ahead for memory and storage.

we will talk exclusively with sanjay in a few moments. >> and the free cash. what bothered me the most about this was that a lot of people thought they would say this quarter wasn't so good, but the forecast was great. which is why the stock went from $68 to $64 at one point. this is where we have to grill sanjay. sometimes he's overly exuberant. sometimes he's downcast. we have to see where he is because this is not a typical ceo. this is a ceo who is passionate about his business, but sometimes he's so passionate is my critique. >> he's coming on with us shortly so -- >> meaning, this is what i want to know. by the way, this is not negative. you want people to be excited you are coming. but he is so bullish about the

bottom and so bearish about doing well at the bottom. so we have to find out this is a conundrum. it's an enigma. >> let's get the opening bell here. celebrating their 50th. here is the big order, equity residential celebrating its 30th anniversary. the wife of late sam doing the honors. we think about sam all the time. >> he was always a level straight shooter that let's say you put the sound up for him because they're fearless. they're fearless. >> also involved in 12 ipos at the new york stock exchange. involved with 12 different companies that went public,

which i think is a record at the nyc. >> i would love to see what he would have said today about return to work, turning office buildings into housing. i mean, issues that he probably would have given good color on guidance on. >> isn't it great to hear from someone who is not afraid to say something. he would say things that a lot of us had on their minds. >> yes. one of those guests you always want to listen to because they weren't worried about what they said. they didn't have a general counsel in their ear. mark cuban, elon musk, they will just no holds bar. always refreshing, regardless of whether you disagree with them or not, at least, you know they're speaking honestly. >> really miss. i always felt you first had to dress down. we were all wearing suits, and he came casually. i was in chicago visiting not

the bears, michael jordan, sam zell. where is nike? nike should have a zelle. bank of america has a zelle. >> we'll find out tonight. >> yeah. tonight is after the bell. i say the streak has been looking for maybe a reiteration of guidance, as opposed to any kind of guide up or down. >> look, this stock is so low that i -- they have to say that the chinese have stopped buying nikes and buying other companies. what i do worry about with nike is what i worry about with everything coming with china, which is that costco said china's business is just fantastic, a great value. but nikes are expensive. that's what i wear now. they're expensive. they cost a great deal. these people know more about their exchange at 10:00 when they buy the shoe.

they tend to talk about it. donna who speaks very broadly and is not a classic out. >> no. >> and, i mean, you always want to be careful. they don't want to take questions. they could have no questions about china, they would prefer it. i mean, an answer that might run afoul of the authorities there could always be a threat. by the way, we should mention evergrande. it's been reported by others, those guys are all detained. >> detained, yeah. >> but that stock has been delisted as well. >> right. >> this was the large property company that essentially went bust not that long ago, but a while ago. it's been followed by country gardens, which has a lot of concern about. i don't want to say it is in the same bucket, but it has worries about the fall there. >> i remember during the great crisis in our country, the justice department called down

to bankers. the one thing the bankers were immune from is, listen, we were stupid. you can't arrest us for being stupid. >> china you do. you get detained. >> for stupidity. when you are detained, what do you get to do? >> i was detained for three hours in china many years ago with our production team when we were doing the first walmart documentary. they treated us very nicely. they rounded us up. they took us in a bus. they took us to the local police precinct. they made us tea. they held us for three, four hours. the secret police came. they took our tape away. i had to write a letter of apology, and then they let us go. >> so it wasn't same, rank and serial number? >> no. it was my producer's birthday, and the police captain gave him his belt as a birthday gift. you never know how your detention will go in china. >> when my father passed away, the chinese company, they sent us the royalties.

look, the individual people in china are our friends, okay? forget the government. they're our friends. and i hate the fact that the government is in the way of all the people wanting to go to costco because it's great in value or all the people who like starbucks. and it is a shame because a country of 1.4 million, who i think many people would love to be here. we have so few trips. remember, down here, we had great tours. they want to come here. why? because we love each other. the people of china and the people of the united states would get along terrifically. the government of china made it so that's a hard thing to do. >> not many transpacific flights as of now. jet blue does guide to the low end. they site weather, air traffic control, softer september bookings. >> once again an try and david used to talk about it all the time that is no longer invested.

for many years it didn't earn its cost of capitol. then that's changed because covid. >> look at that. $4? the government allowed a lot of these companies to merge and this new justice department. >> these guys are still trying to get the spirit deal done, right? >> yeah. >>on the deal front, i do have a tiny bit of news but i want to share because we have been following this auction of u.s. steel. i mentioned it a number of times, characterized it. it is fairly robust with at least three bidders, it would seem. the key bidders, of course, in many views is people in cliffs which has been reluctant to sign a standstill, something that would not allow it to pursue replacing the board of directors if things didn't go its way. or then, therefore, confidentiality agreement. what i can tell you now is they have. they've signed a confidentiality

agreement, and they have signed a standstill as well that expires december 1. and that's a very short standstill. originally they wanted one that would go 18 months, obviously far beyond the window for dominating directors. now it is only 60 days, but it does allow them to participate in this process in which we believe also a bidder and a media company that is small, but maybe getting financial help to perhaps other parties in canada. and, so, you know, we're going to keep monitoring. as i said, early indications have been last week, don't have much there for you. but now it is fully a part of this process. i have been assigned a ca and at least agreed to this short, very short standstill that would still allow them to challenge for the board if they want, if they want to, if things don't go their way. >> i got to get one today,

lorenzo. >> by the way, talk about reading their minds. >> total visionary. yeah. an analyst doesn't really know or someone doesn't pronounce his name right or whatever, he's quick to comment. i will say this. he's turned around some real dogs into very good companies. a tremendous amount of steel for the auto industry. a lot of companies that were giving up one, horrible in terms of fentanyl and just the every day industrial company that closes and people just don't know what to do, this man has saved a lot of jobs. he is a very, very intelligent guy. i think he will treat them well. >> a deal to buy part of the egg. interesting. >> that is interesting. i have had them multiple times. i do think they are the most advanced -- dear, hold your ears. i think they do a lot of

technology. deer does too. you really want to use a joy stick on a track because you can't afford all these workers, so you can -- you ever been on a tractor and done work? >> no, jim, i haven't. >> i've done corn, wheat. i've done corn and hay, you know, just like this. it is very hard not to fall asleep. >> it's kind of like gaming. >> it is. it is. it is grand theft auto, except you are not killing anyone. >> do you keep your tie on when you are riding the tractor? >> how do you wear a tie? you would look like a jerk. this is a sebi. this might be steel wool for all i know. >> talk about thread count inflation. >> horrible. >> want to get to micron? >> oh, yes, i do. let's just see. before we go into this, it could turn because

we are bullish in tech. okay. the shares of micron are falling indeed. and that's despite estimates for this quarter. but they did issue weaker than expected guidance. this is a stock that trades on guidance. there is a lot of typical cross cards here i'm glad we have the ceo to join us now. sanjay, you know i've got some questions, and i think that you've got some answers. i want to know point blank why you say there is a bottom and then still talk about negative cash flow for the majority of the next calendar year, which i think is a shame given the fact that if there is a wbottom, i would expect to buy, not sell stock of micron. >> 2023 has been unprecedented in terms of industry downturn, security and duration. micron took decisive actions during the course of the year to

cut down on costs, to bring down or cap x significantly. so now as we are entering -- as we are entering 2024, we are entering from the down, from the lowest part of the cycle, ending in physical q4. and what's happening is that the supply cuts are there. demand is approving with adjustments we have made. and all of this is resulting in improving demand fsupply fundamentals. we have started seeing an inflection in pricing, and we think that the pricing will continue to improve from here on, particularly gaining greater momentum in the second half of our fiscal year. and demand and supply environment will continue to improve as the main reason the suppliers continue to improve as well. the key is that the supply cut action are touring the health of

the industry. given how severe 2023 was, unprecedented in terms of the downturn in demand in terms of oversupply, in terms of the pricing. it will take us some time to restore the full health to get to those levels of profitability. what we said yesterday was that you see the second half of our fiscal year will be stronger in terms of cash liquidation to be improved versus the first half. we are working towards getting to see cash flow positive by the end of our fiscal year. >> okay. you and i talked multiple times over the years. and i have been waiting for the moment when we're one-half a year away from where pricing can get better because you and i both know that that's exactly when you buy micron. so i see the stock going down. you are not a stock buy. i'm wondering whether, one, people are worried about china

because that is an issue. and, two, people are seeing you still have too much legacy product that is taking down some of the incredibly exciting, totally proprietary chips you have developed. at one point did the latter trump the former and we say this is the quintessential moment that you buy micron before the ramp up? >> so first of all, your friend on china, of course, the china aerospace position in terms of certain micron and certain markets our new data center and networking have impacted our sales in china. and, of course, they're a hamper to our business. focussing on allocating our supply to other global customers and parts of the segments of the address in terms of those that are not impacted by the

decision. we have been successful in mitigating some of that. and the net effect of that is the result shown in q4, as well as in our q1 guidance. and, of course, we continue to remain committed to our customers in china, to our operations in china as well. and we want to maintain our global revenue share, despite the headwinds that we are experiencing in china. and we are executing well in terms of achieving that. second side of the question around our technology position and versus, you know, legacy notes, micron is really proud. we are a diverse supplier, going to all end markets from data center to automotive and consumer and industrial markets. and they are a strong mix across this trend. we are leading the industry.

we are managing new technology in most efficiency. we are included in terms of managing our supply and maintaining the supply. so we talked about yesterday that our latest technologies leading to high bandwidth memory, which are key to again raytive ai solutions and we will have our candidate 24 and the qualification of those that micron said nvidia is receiving well. so this is an exciting product. it is an example of how we are leveraging our leading edge technology to deliver the market needs in terms of performance, in terms of low power, in terms of high bandwidth technology. >> i'm sure you know in the auto business, there has been an effort to domestic production, reshore, and that's being met with wage pressures regarding the union. some would argue in the auto

business at least it is degrading the incentive to domesticate that production. is that going to happen in the chip business as well? >> i will tell you that we have actually a large manufacturing facility here in virginia, and we manufacture our technologies and products that are needed for auto worker markets and industrial markets in that facility. of course, as you know, with the chips we will also be expanding our locations here in the u.s. for leading this technology. and memory is a key element of the semiconductor investment as will be a key neighbor of supporting the chip's objectives. do you know that we have the support of chip's plans and investments in syracuse as well as in boise, idaho for leading edge manufacturing. so, of course, we look forward to the chips program in terms of bringing leading edge manufacturing here for the u.s.

for memory while continuing to support legacy manufacturing as well, which is very important. and let me just point out that in the autotive market, micron has been the market leader for several years. we continue to have number one market share position and the most diversified portfolio progress. here you have a very important partner to the global automotive industry. >> some of your investor may feel whips on predictions over the years. when you talk about pricing in particular into the coming year and seeing further improvement on that and the volume leveraged in the business in the second half, i guess, how confident are you? and what are you basing that on? can you explain to our viewers who have perhaps seen these things in the past and just want to understand what underlies those assumptions? >> micron has been good at projecting the industry trends. i mean, middle of last year,

ahead of everybody else, we had started projecting the weakness of the consumer markets. and, of course, we took corrective actions in terms of starting to curb supply utilization. so we will stay focused on continuing to monitor the market trends and making adjustments in our forecast as well as business administrations as necessary. pricing has bottled because the industry has made supply cuts. and these supply cuts have come in the form of cap x as well as utilization in the factories. that's putting a share of profitability on the industry, including that of micron. however, the supply cuts that have been created and improving -- improved eases on demands and production in supply, that's what it needs to

improving the pricing in the industry, which is very, very important for our industry. and we have seen a reflection in pricing. frankly, the prices that industry experience in 2023 is unsustainable. it is not a price that can result in the ability to continue to invest in r&d and manufacturing, and that's why the supply cuts made in the industry, pricing has to return to normalized levels because that's where it is very much appreciated the value of memory. memory is a key in all the trends as we look ahead. >> but, sanjay -- >> more ai means more memory. of course strong supply is important. and we are confident and continuing to drive the trajectory of pricing. >> okay, i understand. >> given the supply and demand

values. >> i understand. but i'm not going to let david's question go idle. this stock was trading down, then up and then mark murphy, who i adore as your cfo, point blank out of nowhere says based on the share count, we expect earnings per share to be a loss of the stock drops. the narrative was positive. that's what people are complaining about. you give us over and over positives and then nail us with the loss. this stock becomes uninvestable. david, that's what you were saying. >> well, jim, i too, have a great team at micron. we're very much focused on driving the profitability improvements in our business and as i highlighted here, in 2023, downturn was severe in terms of severity and duration and takes

a while to return from deep level of low pricing and that is why we are focused on continuing to drive the improvements and profitability. as i said it will take us a while. we did guide to positive gross margins off our fiscal year and even in the second quarter of our fiscal year that means that the february quarter guided to potentially growth margins there and that will start leading to the continuing improvement in performance. we really do believe we have here at least a couple of years of cycles. in recovery in terms of improvement for micron. >> that is very helpful and there were cross currents in the conference call that i did find positive, positive, positive, and then i just felt myself in a great -- in the trench of loss, and i'm glad you gave us more to chew on.

thank you so much. kr ceo of micron always tells it like it is. good talk. >> that you, jim. >> let's get a look at bonds this morning. 10-year still elevated. a lot of data today. we've already got goolsbee on the tape and we'll get cook, powell and barkin tonight. you may know 2.04, pending homes in eight minutes.

time for jim and stop trading. >> sometimes you have a guest who can explain a dramatic drop in the stock. work-day they did guide, shaded lower for some of the products and neil bush who will be on with the new co-ceo. i have to tell you something, work day is a really fabulous company and the stock has been straight up. what we have to do -- ashton will be on at the same time --

find out whether this incredible enterprise software company has stumbled. enterprise software has been the juggernaut until recent. >> broader sign. sorry for the economy. >> we didn't mention this duke cfo survey looking at cfos interested in cutting expense. your b2b story has been solid until now. >> confluent was on and was very good. cloud flare was good business to business. i don't want to give up on the thesis. i did find what was said on workday's call worrisome. when we talk, there are nuances being missed in this case, with sanjay it was confusing. we talk about how the bottom is in, that usually means buy. bottom is constantly being put in. this company has been straight shooter. so maybe we can feel whether that stock is an overreaction to the downside.

salesforce traded at 238 and the high it got. enterprise software is in the cross hairs of everyone right now. >> he yeah. >> just horrible. >> jim we'll see you tonight. >> oh, yeah. >> a long day ahead. "mad money," 6:00 p.m. eastern time. a little bit of chop at the open. dow up 40. fair amount of sectors are higher including financials this morning and health care. we're back in just a minute. move to the cloud. - so, the question is... - cyber attack! as cyber criminals expand their toolkit, we must expand as well. we need to rethink... next level moments, need the next level network. [speaker continues in the background] the network with 24/7 built-in security. chip? at&t business. ah, these bills are crazy. she has no idea she's sitting on a goldmine. well she doesn't know that if she owns a life insurance policy of $100,000

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how you can help. the more you know. good thursday morning. welcome to another hour of "squawk on the street." i'm carl quintanilla with david faber live at post nine of the new york stock exchange. sara eisen live at our delivering alpha conference. we'll get to sara in a moment. in the meantime equities wrestling with elevated yields. 10-year close to 4.67. news cycle high as we weigh both the strikes, potential shutdown and delivering alpha today. >> yeah. we've got pending home sales out moments ago. diana olick has that for us. >> david. pending home sales dropped 7.1% in august from july. the street was looking for a 1% drop. a huge miss. 18.7% year over year.

these sales are based on signed contracts during the month people out shopping when the average rate on the 30-year fixed was solidly over 7% and hitting 7.5 towards the end of the month. home prices started rising over the summer due to tight supply. sales were down across the nation with drops in the south and west where home buying has been the most active. the west the most expensive region, but the south has seen the biggest surge in demand since the start of the pandemic. this week has not been kind to rates. $7.65 according to mortgage news daily. the realtors mentioned the government shutdown in the release saying it will disrupt home sales. just one more note, i spoke yesterday with the ceo of freddie mac at the latitude conference in miami, and he said that for the loans freddie backs on its books they are at a 4% average rate and that's why sellers are frozen. who is going to trade 4% for 7.65?

>> yeah. i mean, that trade keeps going up. thank you very much. diana olick. as we see treasury yields making news cycle highs as we speak. i am here at the delivering alpha conference as we talk to all of the biggest name investors from around the globe about their best ideas where they're allocating money, how to deliver alpha in the rising rate environment. right now on the stage there's a conversation with the incoming co-ceo of oak tree. we'll talk to him on this show after he gets off the stage in a few minutes. that's armen pinnosian. about $180 billion assets under management and taking the stage to talk to some global investors including the head of ubs asset management. i wanted to share some new comments from another event i did last night. it was the managed fund association lifetime achievement award ceremony where i moderated a fireside chat with investor

ray dalio, founder of bridgewater. he's pretty dark and pessimistic, as usual, talking about the themes he sees developing right now to face off between world super powers like the u.s. and china. the populous rise in the united states. what he sees as a bigger and bigger and predictable debt problem in the united states, which is topical right now with these higher yields and questions about the debt and deficits. i asked dalio whether he thinks the u.s. is facing a debt crisis. >> we're going to have a debt crisis in this country. >> soon? >> how fast it transpires i think is going to be a function of that supply-demand issue, and i'm watching that very closely. but i think -- >> government issues a lot of debt next year. >> it's a very risky situation. >> what about china, ray? you have been an investor in

china for decades. >> i started to go to china in 1984. i was invited by a chinese company sidic, the only company that they called it a wind mill company. the only company allowed to deal with the outside world, when it started opening up. then they opened up china in 1978 and so in 1984 it was there. i didn't go for money. i went for curiosity. i got to be -- help them build the economic system, build wonderful friendships. i think it was 15 years that i went to china and i was doing this without ever making a dime. and i did it for the pleasure, the interest, i liked the people, and so on. i have evolved all through those years, and i've -- i've had that

intimate understanding and, you know, that kind of relationship. and, of course, it's, you know, it's a tragedy how all this is happening. >> right. people are wondering whether china is even investable at all for an american investor. >> i think the question is, there's a lot of reasons to question that having to do with the nature of the dynamics. i can enumerate the problem, some of which will pass, but this issue of conflict with the united states, is a big issue, and when you see in history foreign exchange controls, you can see the united states impose foreign exchange controls and capital controls, so you're not allowed to invest there. they have their internal issues. they have a debt issue that's an important issue that requires a debt restructuring. i won't go into that unless you want me to. they have then this -- this

internal issue about what shi shin ping calls the storm on the horizon, the -- and everybody is lining up and you have a command situation. you don't have the same -- it's -- ping said it's glorious to be rich. you won't hear that said as much in china now. these dynamics and then we have -- we all have our own issues. it's -- the most important thing for the united states is to be strong, to do well, be strong financially, to be good with each other. >> it's always happening in an interesting time for our economy. we're coming out of covid. we're facing these higher rates and some of these debt problems. do you think we're going into recession? >> i think you're going to get a

meaningful slowing of the economy so that you come to something like zero growth rate plus or minus, like 1 or 2%. if we don't the supply-demand problem with treasuries. if you have the supply-demand problem with treasuries you're going to see a whole different dynamic. i'll tell you what it will look like. >> bad one. >> it's a bad one because when there's not enough demand to deal with the supply, you also can have selling of treasuries. there's $31 trillion of treasuries. if those want to sell, then the supply-demand imbalance can become very large. when you have a very large supply-demand balance it puts the central bank in a very difficult position. it means interest rates have got to go up a lot to ration that. the way that happens, when

interest rates go up, it curtails capital formation. you know, a lot of higher interest rates means because of that supply-demand, something has to give. new capital creation and new borrowing and you have a contraction. that will force the central bank into the position of thinking do i have to come in there and buy and buy again. if they go and buy again, that will have a -- it will depreciate the value of money. that tradeoff becomes more difficult. the move debt you have the more tradeoff and difficult it is for the tradeoff. you have to think about it, one man's debts are another man's assets. if you don't have interest rates high enough that the creditor gets a good return, but have them not so high that the debtor gets in trouble, which that balancing act is difficult when you have a lot of debt, then you're going to have a problem. we're getting closer and closer to that type of problem.

so i think it very much depends on the supply-demand condition for the treasury market. >> carl and david, we talked a lot about all sorts of things there and all of his principles and big ideas, but i really wanted to share with you guys and with the audience that bit about the treasury concerns, about the debt concerns. i do think that is becoming more front and center for investors right now and the idea that there isn't going to be enough demand for all of our supply, something we have not faced in the country in a long time, and whether you buy into sort of the pessimistic views that dalio shares, it is something that is increasingly part of the conversation and investors have to figure out what is safe in that environment. i followed up and said is the dollar safe in that environment, and he said no, 10% allocation of gold. the best thing you can do is diversify. >> i find him usually frustrating inarctic clats, but

that part i understood. you have been talking about that lately. we look at a 10-year hitting 4.68 today. i haven't taken a look at it in the last few minutes. you bring up the supply chain issue in recently shows regularly, what did it mean to you when you heard it coming out of his mouth? >> it meant that it -- first of all, it's happened historically. ray's philosophy is that history repeat itself. the book is pretty fresh. he wrote it three years ago about things like the changing world order the face-off with the u.s. and china, the populism that we've seen and he's worried about the election by the way in 2024 and the acceptance of an election result, something that's happened in history to these great powers and the debt problem is one of them as well. he elaborated, david, on what could be some of the problems. the geopolitical concerns around financing our deficit from places like china. the fact that they are under -- that they could be under water

when they're buying treasury bonds, places like japan and china, which we are heavily dependent on as buyers of our debt and guess what, there's a lot of debt that has to be issued in the next year because of the administration policies, we have higher interest expenses. these are things happening and bubbling up and it's unclear whether it's having a huge -- it's a huge impact at this point because we're in the higher for longer mode, but i think we'll find out if the economy really starts to weaken which should be bond positive and we'll see if treasury yields start to go the other way. it will be a big -- you know, it's everything is tied to it, right. higher real interest rates could be a headwind for stocks. >> what happens if weaker economic activity doesn't bring you the classic cycle signals. great stuff. thank you. sara eisen. talk to you in a minute. q2 gdp did come in as expected and our next guest says the economy is holding firm. the strength might be

unsustainable. mark zandi joins us this morning. love to get you to reflect on sort of dalio's long-standing view and whether or not that is coming into focus. >> well, i got a kick out of frustrating inarticulate. i hope david doesn't say that about me. >> i never do, mark. you are the opposite. >> you're kind. that was a good term of words there. yeah. my sense is the economy is resilient. the consumers hanging tough. businesses don't want to lay off so hard to see a recession. but there are slings and arrows here and the higher long-term interest rates is kind of at the top of those concerns. i thinks ray dalio has a point. we have fiscal problems. look at the congressional budget office forecast, the cbo, the folks that do this for a living, nonpartisan, the debt to gdp ratio is 100% if we don't change

spending policy, 115% a decade from now, 180% three decades from now they don't do forecasts after that, but look at the trend lines. we have to make progress there. carl, the key reason for the run up in interest rates right now are two fold. one is the shift in thinking around fed policy that kind of happened with the last fomc meeting, more around the rate cuts down the road here. they're not going to be as significant as markets previously thought. people need to take a step back and realize, obviously, this is a market, a financial market, dominated by speculation and momentum players and people, you know, driving, you know, things higher. you know, i think things are getting a little over done here in terms of the long-term rates. they will come back in. in my view, the 10-year yield around 4% is where it should be

at this point. >> really? >> yeah. >> 4 on a 10-year and what about the 20 or 30? >> 209s 30-yaer-year bond? i don't have a strong view on the 20. on the 30, closer to 5% in that ballpark. i think that would be appropriate. look, 4%, you know, just for context, that is the economy's nominal potential growth rate. that's 2% inflation. that's the federal reserve's target. 2% real growth. that's the long run real potential growth. 4% in the long run, the 10-year yield should equal the nominal potential growth rate of the economy and that's about 4%. i think that's the anchor, you know, to long-term bonds. it can go up and down and all around because it is a market buffered by business cycle conditions. if you're doing long-term planning that's the interest rate you should be using.

>> let me get your take on the government shutdown, impact from it? >> seems more likely than not. i would be surprised if we don't have a shutdown. two or three-week shutdown that would be typical. no big deal. for the furloughed government employees not great, but for the economy not a big deal. if it lasts a month, kind of what happened in 2018-2019, the longest shutdown in history, it starts becoming a problem a nuisance. any longer than that, it's going to be one of those headwinds to push the economy over in the context of stuff going on in the economy, oil prices student loan payments and so on. i don't think we're going to get there, but here's one thing i will say. i've seen lots of government shutdowns over the years. folks in the trenches have a good vision of how this will play out. i don't sense that in the current context and that makes me nervous. >> conference board is at a four-month low. credit card data says september

had a slowing, bofa, post labor day mark. are you looking for the weakness to get more acute as we get closer to year end? >> i think consumers will soften their spending in part because of the run up in oil prices. they're going to be paying over $4 for a gallon of regular unleaded. the student loan payments kicking in. if you tell me growth starts to slow, i wouldn't be surprised. the consumer is showing amazing resilience. you know, they're hanging tough not spending with abandon, but hanging tough. good reasons for that. lots of jobs, low unemployment, wage growth is now stronger than inflation. leverage is low in aggregate. people locked in. even though asset prices and stock prices are down. people are lot wealthier than prepandemic. at the end of the day the consumer will do what they need to do to keep the economy moving forward. >> yeah. we will see. we had jobless claims to hang on at 204.

mark zandi. >> thank you. >> as we head out stocks on the move today. peloton up premarket up double digits after striking a partnership with liululemon. gamestop, ryan cohen steps in. bakowuse's chief will join tore dn the numbers. it's gonna be sweet! what? i'm 12 hours short. - have a fun weekend. - ♪ unnecessary action hero! unnecessary. ♪ - was that necessary? - no. neither is a blown weekend. with paycom, employees do their own payroll so you can fix problems before they become problems. - hmm! get paycom and make the unnecessary, unnecessary. - see you down the line. - this is jabra enhance select. it's more than just a hearing aid. it's a smart hearing solution that makes hearing aids more convenient and less expensive. with jabra enhance select's premium package,

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accenture down about 5% this morning after the company did miss revenue system due to weak bookings. consulting firms revenue outlook a bit weaker than expected. joining us to break it down as accenture's julie sweet. always good to have you. let's start off if we can. the stock is down as i said. the macro economic environment and your 2014 outlook you come out had 8% revenue growth you're not looking for that for the current year. tell us a bit about this slowdown. what are you seeing in the environment right now and perhaps how is it affecting cios decisions in terms of the things they do with you? >> thanks, david. i think the important thing to start with is the fundamentals are really strong still. our clients have more reinvention ahead of them than behind them. they're nav digating a macro. i was with three ceos they have

three messages, tech is critical, they have a lot of programs under way, and they know they have a long way to go, and the third was, right now they're cautious and how can you accenture help us save money so we can fund that we need to do in the coming years. that's where we're uniquely positioned because we can help them save money and digitize faster through our services, the industry and functional expertise, but no doubt about it, there's a cautious macro right now and as we look ahead we see ourselves building over the course of the year. >> of course when you have a cautious macro everybody is looking for opportunities enhance productivity. you perhaps as much as anyone on your calls have mentioned generative ai as a real opportunity for your clients. i'm curious to get a bit more from you on that. what are you seeing -- you've announced $3 billion in gen ai capabilities. what are you seeing in terms of

what your clients using it for and what are your expectations over the next 1 mon2 months in s of the use case technology? >> one of the areas we are excited about is exactly is generative ai. we've taken an early leadership position. while we delivered in fy 23 another strong year we also were working to pivot rapidly to take advantage of the early demand in gen generative ai over $300 million in sales. that's about 300 projects across our industries. we're seeing banking, public service and energy take early leadership. a lot of activity there. the use cases are ranging from customer service, i gave an example, for example, we're working with a public service company enterprise in europe that's serving all of their people through calls on a broad range of topics, helping a

telecom provider in latin america. more exciting is a lot of interest in how do you change the core of their operations? it will take longer because maturity is lower but, for example, can you make capital projects in oil and gas shorter and more on budget? lots of excitement for near term productivity as companies start building it into their application, but more excitement over what might happen longer term. >> from delivering alpha, you know, building on that question, what sort of jobs will be replaced? what sort of productivity enhancements companies will see? i'm wondering if call centers have become sort of the poster child, call centers will go away. generative ai will replace that. do you agree and what other industries are vulnerable and have to rethink how they're hiring and who and for what? >> call centers won't go away

but some of the tasks will be automated. others will be augmented. right now a lot of what we're doing with productivity and improved experience is delivering knowledge and fact to the operators faster so they can cut down on call times and increase the quality. so there will absolutely be a shift. there's no doubt that gen ai will help drive productivity which will mean some jobs are automated, lots augmented but also creating new jobs. one of the focuses of our clients is help us train for the new types of roles. at accenture we have 12 roles that didn't exist a year ago because of gen ai and we're training 250,000 people on the fundamentals of gen ai over the next 12 months while moving from 40,000 people to 80,000 people who have deep technical skills. it's going to take an

adjustment. it will depend on the industry and roles. there's opportunity, particularly if you know how to skill your people. >> the numbers you shared for ac sen treasure a reminder of how enormous your workforce is. you employ 7 huz00,000 skilled folks. i'm wondering what your read is on the job market, hiring, having as much trouble finding tall sentence what's happening with wages? as we figure out nationally where the labor market is going and how tight it is. >> sara, the labor market is eased from the height of the pandemic. during the pandemic we grew from 500,000 to over 700,000. we've always been able to navigate a tight market. we absolutely have seen in many places in the labor market it's easier to higher. there's hot skills data and ai it's important to us that we're really able to re-skill because as you think about where ai is

going, there are not enough skills in the market and so companies able to train themselves are going to win. it's one of the reasons we're now starting also to help our clients train using our ai academy. >> julie, there was a part earlier in the year where at least on the tech giants, they went through few rounds of layoffs and this was supposed to be the time period where you would enjoy the benefits of better operating efficiency. does it sound to you like there will be an echo of that period? >> well, carl, i know if you look at our own results, we did a business optimization, we're a little ahead of schedule, and, you know, we're therefore going to have the benefits of those. what's been happening in the -- as you said in the technology market where they're taking out costs it's affected our results because those are clients that we serve. but overall, what we continue to see is that across industry, you're going to see a big focus on cost reduction, in large part

because clients need to fund all the technology and reinvention transformation that's coming ahead, so i think you're going to see more of the same in terms of companies want tock more resilient, cut costs to fund investment, which will be important. of course over the long term what is absolutely fuels our growth. >> julie, finally to end on the quarter given the stock is down 5%. communications media technology, that vertical for you is particularly weak. i think revenues were down as much as 12% year over year. what's going on there? >> you know, we've been talking about this for the last few quarters. we have enjoyed and privileged to serve those three industries. they have a lot of challenges. carl talked about we saw the layoffs. as you can imagine when laying off, you're not spending a lot of money on consultants. we've been hit by those challenges. what we're doing is pivoting to the higher levels of growth to other industries, to different types of work.

we bought advisory last quarter which goes into capital projects and $80 billion addressable market, brand new for us. so we expect to continue to pivot to higher areas of growth, to help those clients as they continue to navigate the challenges they have ahead of them. and that's reflected in what we see is a year that's going to build from q1 throughout the year. >> julie, always appreciate your taking time with us. thank you. >> thanks for having me. take care. still to come, nike is the second worst stock in the dow so far this year. but more than 60% of analysts holding on to a buy rating. we'll talk about what investors need to know ahead of earnings in just a few hours. we're ckft ts.ba aerhi

today's consumer statistic, 46%, nearly half, with student debt plan to cut back spending on footwear as loan repayments start back up. what does that mean for a name like nike which does report earnings after the bell. courtney reagan is here with what the street is focusing on.

couple surveys like this in the past few days. >> yeah. doesn't bode well for nike or sellers of apparel and footwear like nike and nike shares have shed 20% since the last reported. you talked about it being an under performer on the dow. the etf down 5% over that same period of time. bank of america says valuation, though, is fairly reflecting of the near cat ta list and those stl stloon payments will cut back on apparel and footwear spending and does present a worry for nike and others. consumers said they would shift to lower price points or a discount to buy and bank of america says data points from kwlathsic sports wear companies indicate the industry remains promotional. nike dealing with a choppy recovery in china. it's not its biggest market, but biggest growth opportunity so very important. jefferies points out the broader apparel slowdown remains a concern for nike there. nike continues its focus selling

directly to consumers in its stores and website but wholesale is a big piece of its business and many wholesale sale partners are ordering inventory cautiously because they are planning for potentially softer consumer spending. d dick's and cole's reported strong earnings in august. last year it had a gross margin and gross margin guide cut that sent shares tumbling and the september before the guidance cut because of the supply chain issues. the last two septembers not great for nike. >> yeah. we'll see what color they give us today. you'll be busy today. sara? >> i think the key chart is the nike versus lululemon chart. the growth story there. look at the chart. different directions. up next, oak tree's incoming

co-ceo joins me at delivering alpha to discuss where markets and interest rates go from here. we're back in two minutes with the dow down 6 points. the s&p a little bit unchanged. microst,oeg d m igng on the dow. ♪ explore endless design possibilities.

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welcome back. i'm silvana henao with your news update. the first hearing in the gop impeachment inquiry into president biden is under way this morning. the house oversight committee is hearing evidence into allegations the president improperly helped his son or profited off his business dealings. the white house has repeatedly rejected the claims and released a 15-page memo rebutting them last night. the u.s. soldier who intentionally ran across the border into north korea in july is back on american soil. travis king landed in texas overnight, just a day after the isolated country said it would expel him. military officials say king was taken to an army medical center

following his arrival to help with his adjustment back into the u.s. and actor michael gambon known for his portrayal of dumbledorf in six of the eight "harry potter" movies died. his family says he died following a bout with pneumonia. gambonn who was united by queen elizabeth ii, was 8 2 years old. back to you. >> thank you. i am here at delivering alpha conference in new york city, as stocks just turned positive but not moving a lot today. the nasdaq down a quarter of a percent. the focus on the rising bond yields. the treasury selling porch here with the take on the markets, we'll talk credits and rates, armen, the co-ceo at oak tree. thank you for being here. the first time we've talked to you since they announced you will be ceo. we usually talk to howard marks.

private credit, you stepped off the stage where there was a panel here at delivering alpha about private credit which shows how big and exciting this market is right now. how big is it for oak tree? you twicguys have been in it fo while. we have about $70 billion in capital dedicated to private assets on the credit side between the two categories. we've been -- we've had dedicated funds under management for over 20 years. the opportunistic side from our founding we were actively involved in privately negotiated transactions. >> it's growing. >> absolutely. >> raising a new fund. what is driving the demand for lending? does victim to do with what's happening in the banking system. >> we're raising performing private credit fund focused on large loans to companies that are owned by private equity sponsors, doing new deals. the reason we're approaching that area of the market because the banks have stepped away, and

we're able to get 11 to 13% yields on first lean top of the capital structure privately negotiated loans for very high quality companies that could weather a recession quite well. >> everybody is in it, though, now. even family offices on top of the hps and aris was on your panel and kkr and blackstone. what's the risk here around this? it's not a free lunch. >> right. well the risk is that there is capital flowing in both from institutional and retail and in retail the capital needs to be deployed quickly. if investment managers don't say well what is the best risk adjust and return should i be disciplined or chase this deal, it is possible make mistakes just given some of the flows that have occurred and also, for those investment managers that have historic portfolios put in place before the pandemic and even in 2021, there is risk in some of those portfolios as well because they were put in place

at a time when base rates were near zero. some of the capital structures never contemplated what we went through since the pandemic and inflation. there is risk of loss in older vintages. >> what about regulatory as well? you could argue that money moving outside of the regulated banking system into a shadow banking system is more risky? >> well, i think the regulators will have a tougher time going after the private credit managers. it is more diffused and isn't structural risk. however there is a part of the private credit or the growing part of the private credit investor base in retail which involves funds and retail investors. so the liquidity provisions that are promised to those investors, may become problematic if there is an outflow or significant outflows out of the asset class where regulators may take notice if that promised liquidity is not met. >> you mentioned the double digit rates. we are in this world of rising rates. do you at oak tree expect them

to take another step up? >> well -- >> i don't think that we have a crystal ball on when rates go up or down. i do think given what we're seeing in the underlying economy and markets we should expect higher for longer. also, as inflation is kind of trending towards the right direction of being under control that means that there are fewer rate hikes but not rate reductions. therefore if rates stay high for a long time, we should expect to see stress with or without a recession. we should expect to see stress. >> haven't seen as much stress even as you would think you would see with what, 525 basis points of tightening. >> yeah. it's coming. >> you're talking about a proper default cycle? >> i'm talking about stress and distressed through defaults. we're seeing it already in commercial real estate of certain asset classes. there is a maturity problem with commercial real estate. it's less so in corporate credit. but cash flows are shrinking for

corporate borrowers as well that have floating rate liabilities they didn't hedge. therefore, if you kind of let the clock unwind a little bit or go forward a little bit, you will see stress, you will see the need for rescue capital that is creative, that fills the gap, that -- from a liquidity perspective from some of these businesses. >> where else would you be looking outside of commercial real estate? >> in corporate borrowers, whether privately negotiated loans or publicly traded debt, broadly syndicated loans in particular, we expect for stress to pick up and need for gap capital to step in that is creative and more long term in its focus. >> are you not a buyer of the soft landing thesis? >> heard to say whether there will be a soft landing or not. with or without a recession the soft landing relates to a recession and with or without a recession i think those defaults will occur because there is a tail in the broadly syndicated and floating rate borrower set

that is at risk and there will be stress of those borrowers. >> armen, good to talk to you. thank you very much for being here at delivering alpha with me today. and a quick programming note do not miss a star-studded "squawk on the street" tomorrow, i'll be coming live from citigroup's tmt leadership summit in pebble beach, california, speaking with the ceo of citi, ibm, arm, and nasdaq at the series of interviews you will not miss, it kicks off right here on this show 10:00 a.m. tomorrow. carl, i will see you from california. >> if not before. thanks. sara eisen. breaking news this morning. to eman javers in washington. >> that's right. the inspector general of the federal reserve board has put out a new report. in the report the inspector general is critical of the federal reserve board and san francisco fed in terms of their handling of silicon valley bank which went under earlier this year and says the federal board

and the san francisco fed didn't take the necessary actions to make sure that that failure didn't happen. quoting from the report here, they find the supervisory approach did not evolve with silicon valley bank's growth and increased complexity and the board and the federal reserve board of san francisco did not effectively transition silicon valley bank between supervisory portfolios and examiners did not scrutinize the risks that rising interest rates posed to silicon valley bank's investment. a lot of criticism about the relationship between the silicon valley bank executives and the san francisco fed officials. now some of that criticism is enshrined in a report from the inspector general. some recommendations here in terms of how the san francisco fed and the board can tighten up their game in terms of inspection of these banks and lessons learned here as well. >> i was going to say. implications for san francisco or for even daly herself perhaps. >> perhaps. the recommendations here are

fairly -- they're talking about speaking to inspectors, making sure they tighten up their operation, that sort of thing. when one of these reports lands, of course, there's sort of political fallout from that. we'll wait and see if any of that reverberates in terms of personnel as well. >> thank you. eamon javers in washington today. after the break coinbase shares up triple digits but only one in three analysts call it a buy. is there me omorro to run? we'll discuss that after a short break. ah, these bills are crazy. she

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the u.s. is severely behind, actually. if you look at the other g-20 countries, 83% of them now either already have crypto legislation on the books or it's in progress. it's being drafted implemented. the u.s. is behind here, and we've seen the share of the u.s. job market around crypto shrink

from about 40% to now it's about 29%. and it's due to this lack of regulatory clarity. the broad consensus view, it's common sense, let's get clear rules on the books, protect consumers, make sure things like ftx can't happen and preserve the industry. >> coinbase's brian armstrong talking regulation on "squawk." shares are up triple digits despite the fall in demand for crypto trading. shares are outperforming bitcoin, still in the green since july, while bitcoin is down double digits and did say he's somewhat impressed that bitcoin has been able to hold say 20 k in light of all the regs and everything else, the demand issues. >> still feuding with the sec. the biggest gainers on the s&p this morning. you can see, advanced micro among them, amd slowing life there. hewlett-packard as well. american airlines rounding out the top five.

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watching the autos here.

obviously we're well into the second week of the strike regarding the uaw. some flash heads today saying the uaw may seek 30%, where they were originally seeking 40% over four years from ford, gm and stellantis. one other flashhead says they expect 30% pay raise would satisfy some workers and woo some new members. for more on that let's get to phil lebeau with a check on the autos. phil? >> sure, i bet it would woo new members. i'm not surprised by these headlines. most people i've talked with close to these negotiations have said, we think, they think ultimately that a contract will be locked in somewhere in the range of 24% to 26% wage increase. now, that doesn't mean it couldn't be closer to 30% or closer to 21% or 20%, which is where the big three are at right now. but that's the expectation. so, we're starting to see it come together a little bit in terms of the potential deal for the wage increase. remember, this is over 4 1/2

years. a big chunk of that would be right off the bat. and then the expectation is, you go something like 3.4% over the next four years, whatever it might work out to be in terms of the final percentage. not a huge surprise. i'm not seeing a ton of reaction in shares of ford, gm and stellantis to this news. i think it's baked into the street that this is what's expected. the expectation is this is not close to ending. they may be coming closer in terms of percentages on potential increase in wages, but that doesn't mean that we are going to see this strike wrapped up any time soon. >> i guess the question, then, phil is, why not? >> a lot of other issues, david. cost of living and wage tooiers. those are two huge ones. there are specific ones within each automaker. take stellantis, we've talked about this for some time. they idled their final assembly plant outside rockford, illinois. the uaw wants them to reopen it.

repurpose it as an electric vehicle assembly plant. they are hesitant to do that at stellantis. they talked about repurposing the plant, perhaps, as parts and distribution mega hub, one possibility. that's not what the uaw wants. they want those final assembly jobs. that's specific to stellantis. that's a huge one. you saw what happened with ford earlier this week where ford says, we're going to pause our investment in an ev battery plant we are planning to build in marshall, michigan. immediately the uaw said, all we want is a just transition. that's their words. a just transition to electric vehicles. clearly, they would like to have a say or some stake in terms of the job within that ev battery plant but it will be a fully owned subsidiary of ford. those are some specific issues. and there are also specific ones at general motors as well. it's not as simple as, hey, let's lock in what the pay increase is going to be and we can wrap this up. >> do you think the timing of this particular headline might

save us from another expansion of the work stoppage tomorrow? >> no. i think if they don't believe there's enough progress, they will go through for calling for one, two or all three of the automakers to see more strikes. last week we didn't see a strike that was targeted at ford, an expansion strike targeted at ford. do we see one tomorrow? is it only ford tomorrow and not gm and stellantis or do they hit some final assembly plants? that's the whole strategy of the uaw. keep them guessing. i don't get any indication that if they don't feel there is progress they will hold back and say, we won't call further strikes. >> just would love you to weigh in on carmax shares. down about 10%. anything to tell our viewers in terms of what's going on? >> remember, part of the reason they did so well in q2 when they reported earnings, they were

very successful in the acquisition and then sale of vehicles with a price point under $20,000. that's the sweet spot. that's easier said than done. you know how few of those vehicles are out there. i think it's the residual values in terms of transactions acquiring and reselling vehicles. >> thank you, phil. phil lebeau on the strike, on carmax. you can ask the man virtually anything. "squawk on the street" will be right back.

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- it's polite to thank someone when they do something nice for you, isn't it? well, how about when they do something brave for you? let's show veterans our gratitude. ask your local veterans affairs office how you can help. the more you know. good thursday morning. i'm carl quintanilla with courtney reagan. mizuho hoe's chief economist breaks down why powell's 2% target does not seem credible. why and how to play it ahead. we'll hear exclusively from bridgewater's ray dalio with his warning on the bond market. an hour and a half into the trading day, major averages are higher