good monday morning. i'm sara eisen with carl quintanilla live on the floor of the new york stock exchange. has there been enough pain to generate gain? tiffany wilding weighs in on how this market and how to get ready for the fourth quarter. a clean start. da davidson says enough damage has been done to clorox recently and the stock is ready for a breakout. he'll join us for that call. is the hulu drama getting closer to an end? look at what comes next for comcast and disney this hour. kicking off q4 and the month of october, dow down 140. s&p down almost 8. nasdaq up half a percent as we

get a lot of top ten pick lists for q4. some do include the magnificent seven. >> which sold off heavily in september. topping the tape, after a rough few months, two months, that have tested the market's up trend, the question, has there been enough pain to generate gains? cnbc's senior market commentator mike santoli joins us. we had a selloff. didn't feel panicky. >> it didn't tip us into outright panic. below the surface a little worse than that. the median stock off 15%, 16% from its high, not over the same two months. in general there's been a general retrenchment. equal weighted you're flat for the year. i think you've seen some areas of stress pop up. you've seen some positioning numbers suggest a lot more aggressive shorting, a lot of people cutting back on risk. that being said, we stopped short of some of the real tests that i think people were watching for. last week, everyone knows the

market was looking oversold. everyone knows the seasonal tailwinds start to kick in in coming weeks. maybe we're overanticipating that. people wanted a 20 vix. we got to 19.7. people wanted to get down to 4200, we got to 4238. there's a sense of maybe we got the minimal amount necessary, if we're still in a bull market, to say add on some risk. yields keep doing what they're doing and they're doing it for the wrong reason. meaning it's not about upgrading the economic outlook. that's with us. i think the walls close in on the upside macro case the longer that goes on. >> one of your big points in q3 had been the weak seasonality everyone expected masked the weakness we did get. that that continues into q4 when it's a different seasonal pattern, what would that mean? >> you've had damage done to the underlying strength of the typical stock. now, cyclicals are still kind of barely holding above defenses. that's because defenses have been so awful.

i mean, utilities are in freefall. >> worst sector of the quarter, right? >> staples have been terrible. it's largely a rate story. the companies themselves are leveraged and run with not great margins in the first place. it seems like there's a lot of that is happen. at some point, bonds look like they're due to get a bid, whether that requires economic weakness or not. we've been waiting for that and it hasn't come. >> yeah. why? >> it's a good question. i do think -- you have overshoots. you have selling momentum. you have a sense there's a ton of supply and always going to be another bond coming to buy if you don't buy the one today. so, when that psychology works its way through, by the way, as you know, sara, it's a global story. >> yes. >> it's not just about, you know, the federal budget in washington -- >> it's japan loosening up on yield curve control and negative rates which could push us to 5% on the ten-year? >> you see them pull the anchor up on yields. we'll see. >> mike, thank you.

staying on the economy and the fed, pershing square's bill ackman joining "squawk box" and his outlook for the economy and what may happen at the fed meeting in november. >> i think the fed is probably done. i think the economy is starting to slow. i think the level of real interest rates is high enough to slow things down. high mortgage rates, high car rates, high credit card rates. they're starting to have an impact on the economy. the economy is still solid. but it's definitely weakening. seeing lots of evidence of weakening in the economy. >> joining us now is pimco economist tiffany wilding. are you seeing the evidence of weakening in the economy? and to what extent? >> yeah. i think the bottom line is that the u.s. economy as well as developed market economies have been much more resilient than anyone expected in the first half of this year. nevertheless, we do think under the surface that, you know, monetary policy drags are starting to build. and that, just plus the fact

that some of these fiscal policy positive overhangs that we've had since the pandemic, you know, excess consumer savings and the like, those are starting to diminish. in our view, this does start to decelerate in the back half of this year. and in the united states. by the way, we're already starting to see that in other developed markets. yes, we do see signs that things are weakening. >> does that turn the bond story around? does that lead to a bid for treasuries? that has been the big headwind for stocks and now added concerns about a rate shock for the consumer. >> yeah. i mean, so i think the bond market right now -- just markets more broadly are kind of searching for a level of financial conditions that's tight enough to start to slow the economy. and i think that the markets were basically repricing to this outlook that maybe you need more financial conditions tightening in order to really slow things down. you know, but i think, nevertheless, what we look at

and we see under the surface is that things are slowing. maybe it's happening with a little bit more of a lag at this point. but, yes, eventually, you know, that should shep create values or perceptions of value in the market as the economy slows. >> tiffany, one of the more difficult things to get our arms around has been the level of excess saving and all kinds of revisions and no one has a clean model on what is left in consumers' bank bank accounts versus pre-pandemic. i wonder if that's, a, important enough to concentrate on? and if it is, where are we? >> i agree with you. there is wide uncertainty bands around these estimates. when people look at this, they tend to look at it on a nominal basis. that's not really the way we should be looking at it when thinking about real consumption moving forward. we really have to deflate it. inflation has -- the price levels have adjusted quite a bit over the last several years. consumers, the bottom line is,

consumers can buy less with the savings they had. that goes for wealth as well. after you deflate it, the excess wealth we've seen since the pandemic, you know, also looks like it's come down as inflation has risen. so, we do think that that is -- again, this is not only in the u.s., but we do think excess savings are getting depleted across developed markets. at some point you have to have consumption that just comes into that new reality. >> tiffany, do you think this all means that the fed is done or will they go in november? >> yeah. i mean, you know, i think that the -- so, the fed has said they are very data dependent. when we look at our near term inflation forecast, i think there's a pretty good case to be made that they'll look good going into the november meeting. the next cpi report we get, you'll have nice tailwinds for the fed in terms ofdecline in used car prices. obviously, you have rents still

decelerating as well. i think the fed can look at that. they can say, hey, maybe we can wait a little longer. they continue to be data dependent. their newest s.e.c. forecast, which had inflation still running at 3.5, still looks high to us. maybe that's the catalyst for them to say, hey, we might take a rate hike out for the end of this year. nevertheless, even if they do do that, they'll continue to say they're data dependent. we think the fed is watching the unemployment rate here. until you get increase in the unemployment rate, they're probably still going to have this more hawkish rhetoric. >> speaking of which, what's your expectation for friday now that we know we're actually going to get a print? and do you see job growth going negative next year? >> yeah. i mean, i think -- i think that is -- that's the key question. obviously, any report can be noisy. but when we look at the trend in payrolls over the last year, one of the best predictors is really a linear trend down.

it's been decelerating, you know, quite -- there's noise, but when you smooth through that noise, it continues to decelerate. we're looking for 150-ish. that continues to slow. the bottom line is as demand in the economy slows, as corporate margins start to compress, you're going to see hiring trends that also decelerate. we see that happening. it's happening slowly, but again, it is happening. and i think, in terms of are we going to get some increase in the unemployment rate next year? we do think you will. we think the economy will be soft enough in order to get that. i think there's reason to believe that in order to really get wage inflation back to the fed's target, you probably need to see that increase in the unemployment rate. >> tiffany, thank you. we'll leave it there. thank you for hitting all the hot topics around macro. tiffany wilding from pimco. tesla is reversing early losses after q3 deliveries.

phil lebeau has more on those numbers. >> i think most people that went into this quarter looking at tesla's deliveries thought, okay, they might be light of expectations but is it the end of the world? we know there was retooling going on in the quarter in shanghai and texas. you saw numbers coming in in terms of deliveries, 435,000, justconse sensus was 448. you saw the retooling in shanghai and texas. people knew that would limit production. the company reaffirmed guidance for full-year deliveryat 1.8 million vehicles. if you go through the third quarter you're at about 1.3 million. they have to come in around 465,000 vehicles in the fourth quarter in order to hit that target of delivering 1.8 million vehicles. quickly want to shift gears to rivian. take a look at shares, reporting q3 deliveries.

these were better than expected. over 15,500 vehicles delivered in the third quarter. the street had recently lowered its expectations down to about 14,000. you've got production coming in or the company reaffirming its delivery guidance, i should say, for 52,000 vehicles this year. so, they saythey're on target for that. this will be one of the things we discuss tomorrow morning in normal, illinois, when we're at the rivian plant talking with founder and ceo rj scaringe. you don't want to miss what rj has to say. a lot of questions how they are set up for 2024 and beyond that as they move towards r2 production in 2025. there are the two numbers in terms of ev companies, tesla and rivian, and their q3 deliveries. back to you. >> the market is taking it well. initially declined on tesla. we're now higher on the session. maybe because they blamed it on the retooling of the factories, which they anticipated happening. does it do anything to q3

numbers which come out on the 18th, phil? >> no, no. these numbers are largely in line with expectations. yeah, they're a little light of what people were predicting, but not so dramatic that people are going to say, hmm, maybe i need to rethink what we were expecting in terms of earnings for the third quarter. i think that those are fairly locked into what people are expecting. >> got it. phil, thank you. phil lebeau with tesla up more than half a percent. da davidson says the damage done to clorox by the recent cyberattack is coming to an end and it's time to buy. the analyst behind the call joins us next. a look at the future of hulu. formal discussions between disney and our parent comcast begin this week. what the outcome might mean for quk t sl eaas is stilahd "sawonhetreet" continues. ♪ jitterbug! ♪ [ giggles loudly ] ♪ jitterbug! ♪ [ giggles loudly ] ♪ jitterbug! ♪

[ giggles loudly ] [ tapping ] ♪ you put the boom-boom into my heart ♪ intuitive sit-to-start in the all-electric id.4. it's the little things, it's a vw.

i think i'm ready for this. heck ya! with e*trade you're ready for anything. marriage. kids. college. kids moving back in after college. ♪ here's to getting financially ready for anything! and here's to being single and ready to mingle. who's ready to cha-cha?! you're probably not easily persuaded to switch mobile providers for your business. but what if we told you it's possible that comcast business mobile can save you up to 75% a year on your wireless bill versus the big three carriers? it's true. plus, when you buy your first line of mobile,

you get a second line free. there are no term contracts or line activation fees. and you can bring your own device. oh, and all on the most reliable 5g mobile network nationwide. wireless that works for you. it's not just possible. it's happening. kellogg, begins trading today.

the street doesn't like it so much, down 6%. that's the company that will run the cereal business alone. kellanova will run the snacking business. we talked to the ceo earlier today. tomorrow we'll sit down with the chief exec of wk kellogg. that's at the 11:00 a.m. hour. we'll talk about the prospects of cereal. the whole idea is if you put it in a stand-alone business -- cereal has been a declining business, that maybe they'll be able to come up with faster, newer innovations that cater to what the consumers want. >> good discussion. speaking of the consumer, let's get to clorox. stock is down nearly 20% since disclosing that cyberattack back in august. but today da davidson does see some opportunity. they upgrade to buy. the firm says when the company does quantify the financial impact that shares could rally. the analyst behind that call joins us this morning. linda, thank you for the time. great to see you.

i was just trying to think about whether or not we've seen a cyberattack have broader impact on one company's operations and, obviously, market cap? >> yes, well at least in my experience, in my sector of consumer products, this has been kind of the most significant cyberattack i've seen. and they haven't given a lot of -- a ton of details, but their wording in their filings has indicated it's pretty widespread across their operations, affecting their manufacturing facilities as well as things like order processing. >> part of your view is that prior to the disclosure, things had been going okay, is that right? how would you describe it? >> yes. especially through the end of april, you know, the stock was up about 25% year to date. and i would say it just -- it came off a little bit after that only because their gross margin improvement started to slow a little bit.

but that's only because the pricing comparisons are getting a little less positive. generally they've had success in making price increases in the last year, 18 months. and their volume declines have been less than they anticipated. so their fundamentals prior to this attack were actually pretty good. >> i was surprised to read, linda, how much the cyberattack had affected, in your view, performance and operations because it's not like they were -- i mean, they weren't outperforming p&g, were they? and the stock hasn't been that different. >> well, my estimation, and they haven't given out any numbers yet, but my estimation in terms of actual impact on their operations is that their organic sales growth could be down 12% in the september quarter. and it was positive right up through when the impact of the

s cyberattack started. the pos was down 5% in the four weeks. it ended september 10th. we know it was already starting to be affected. the pos, the point of sale, will be down well into the double digits, i would think, in the most recent four-week period we'll learn about pretty soon. >> as for other risk factors, i know you mentioned what oil prices have done. you have some suggestions about the degree to which households are trading down or maybe getting more -- a little more disconcerting on costs going into year-end. how do those reflect in your call? >> well, actually, clorox overall had been maintaining their market share pretty well prior to this attack, despite all the rounds of price increases. it seems consumers are valuing value, not just price. so with clorox products, they're

deemed to be higher quality. if buy a cheaper garbage bag but it breaks, that doesn't get you anywhere. in that sense, consumers still appear to be looking for value, getting quality for their money. it's not just all about price. >> we'll see what the shares -- how they react in the coming weeks, especially if we start to get hard numbers on this, linda. thank you. good to see you. >> thank you. after the break, the trial of ftc founder sam bankman-fried begins tomorrow. a new look inside a cnbc documentary inside the collapse. as q4 tkicks off today. dollar general down 37. solar edge with more than 50% decline. stay with us.

somebody would ask her something and she would just walk right past them. she didn't know they were talking to her. i just could not hear. i was hesitant to get the hearing aids because of my short hair. but nobody even sees them. our nearly invisible hearing aids are just one reason we've been the brand leader for over 75 years. when i finally could hear for the first time, i could hear everything. try miracle-ear hearing aids with no commitment during our limited time sounds of autumn event. call 1-800-miracle now.

checking out shares of toast today. they're down. mizuho downgraded the stock to neutral this morning. its concern long term, that drugs like ozempic could weigh on volumes. short-term gross payment volumes. the stock's up 20% in the past three months. the analyst really looks into this idea of whether ozempic and some of the other obesity drugs are a headwind for the restaurant industry. that's something that toast is very tied to. does tech services and payments for them. >> have you taken a view on whether or not some of these companies need to worry? >> i don't have a view. i think it's too early.

we don't know how widespread, first of all, the uptick is and how long people stay on these drugs to see how it's going to influence how much they're eating for how long. certainly short term when you go on these drugs you don't have an appetite to eat a lot. i don't know if -- >> if that reverts. >> yeah. or a massive problem. it's something all the restaurant analysts and package food company analysts are watching and worried about and the executives are starting to get questions on the call. like darden said, you can't replace eating out. it's a fun time. but what are they going to say? >> the charts are very suggestive on some of these. let's get a new update with silvana henao. >> good morning. the supreme court denied an appeal brought by former donald trump legal adviser john eastman. the rejection featured a rare accusal from conservative justice clarence thomas. eastman served as a law clerk to the justice, but thomas did not explain the decision to recuse himself. eastman was trying to appeal a ruling that allowed the january 6th committee access to his emails.

construction began today to convert adolf hitler's austrian birth place into a police station with a human rights training center. the project is meant to make it an unattractive place to visit for people who glorify the nazi dictator. police are expected to move into the converted home in early 2026. and simone biles is back and she's already breaking gymnastics record. she became the first woman to land a highly complicated vault in international competition sunday at the world artist gymnastics championship. this marked biles' first international competition since she pulled out of multiple events in the tokyo olympics two years ago, sara. i don't know if i heard this right, but i heard they named that move after her. >> really? well, they should. look at that. it's crazy looking. thank you. european markets set to close in just a moment. giving up earlier gains. real estate and commodities

names in particular among those in the green. health care is lagging overall. the move lower following a modest negative performance last week and the worst quarterly performance in over a year for european stocks. s&p global reporting eurozone final pmi for september continued to show contraction, 43.4. that's worse than what we're seeing in manufacturing numbers. we're also keeping an eye on asian markets. china seeing some economic momentum with pmi beating expectations for the month while the world bank -- all over concerns china's slowdown could pill over into some of its neighbors. the japan, boj announcing an extra bond buying plan for the week after its unscheduled purchase on friday. trying to fight the tape on the recent rise in yields there. a lot of people are watching japan for a potential intervention, not just in the bond market but in the currency market as well where the yen gets weaker and weaker and weaker at that critical 150

level where they've had to step in before against the u.s. dollar. the move higher in u.s. yields causes global headaches. that's what you need to know. especially as japan has completely gone the other way. >> not just about reshoring manufacturing activity. it's about the actual level of rates around the world as well. they're getting hit on both sides. >> exactly. a couple hours into trading. let's get post to post with bob pisani. >> hello, carl. it's great the s&p is up ten points. reverse in direction for september. a big cap tech is helping. but higher rates, higher dollar. just killing. utilities and real estate investment trusts. we talk about this a lot last week. smile, anthony. here's dominion. another new low. the low list is littered with utility stocks. these things have collapsed in the last two weeks. one thing you can't see up here, current yield, 2.6. on a utility. these normally yield 3%, 4%. they're all the same. doesn't matter what business

they're in, what part of the utility business, where located. eversource, another one here. down 4% right now. 5% dividend yield right now. again, 1%, 2% -- 1, 2 points higher than they normally would be. keep an eye on that. it's an ongoing story. consumer discretionary had a big problem because the impulse is higher rates, pressure on consumer, sell discretionary. sell autos, sell anything related to that. sell housing stocks. autozone, which had a decent earnings report not long ago, september 19th. this is one of the highest priced stocks in the s&p. i think it's third highest. it's going nowhere essentially in the last, oh, couple of weeks since they had that earnings report. even though the report was good, pressure from the macro situation. i talked earlier about lennar. they had a great report earlier, september 15th. they beat on top and bottom line. doesn't matter. rising rates, sell home

builders. stuart miller talked about how they're gaining market share from existing home sales. the stock has been straight down since they made the announcement. a great report overall. guys, this is a good example, the pressure on the overall market from higher interest rates really affects things, besides utilities, particularly those consumer discretionary stocks. sara, back to you. >> thank you. bob pisani, thanks. as we head to break, share price of recent ipos continues to struggle, though beirkenstoc is preparing to go public. cnbc is sharing hispanic heritage. we are sharing the stories of influential hispanic business leaders. >> since i was a little girl, i have been surrounded by beauty in our latina culture. watching my mom take care of her skin, put on makeup, my aunt. beauty is such an inherent part of who we are as latinas. so, i took that passion that i

have for beauty growing up as ayla tina, and then i turned it into a career. i don't work a day in my life because i'm having so much fun.

pretty light week in terms of corporate results, but those that do report, the consumer is in focus. watch mccormick, constellation, levi. i think we get conagra. >> these are at 52-week lows. conagra, campbell's soup, smuckers. the infamous ceo of cryptocurrency exchange ftx sam bankm man-fried bankman-fried's trial begins tomorrow. facing criminal charges after money went missing from the exchange in november when the company filed for bankruptcy.

he's pled not guilty to all the charges. most ftx customers are still waiting to see if they might get any money back from the exchange. some of them shared their story with cnbc. it's part of kate rooney's documentary live on cnbc.com. kate's here, which is amazing to see you. >> great to see you. >> tell us about what you've been working on. >> we spoke with some customers who lost millions on ftx. others lost hundreds of thousands of dollars. we asked them to share their message to bankman-fried ahead of the trial. >> if i could talk to him now? i don't know if it would get through to him, but i believe the worst thing he has done is the suffering he has caused to millions of victims worldwide. >> i would tell sam, it's great at least you're saying in the media that you want to make sure all the customers are all right. i guess, do the right thing then. serve your time, pay your penalties and do the best you can for your users. >> i think advice to him is,

figure out what you can do to help all those people who lost their life savings in ftx. i don't know how you're going to do it or what you're going to do, get it done. >> if i had a chance to convert sam face to face, i would honestly be curious to know what he was actually trying to do. were you trying to do good or were you just, you know, a really bad person and promoted yourself really well in order to swindle a bunch of people? just give me an honest answer. >> our documentary "the collapse of ftx: insiders tell ll" focuses on what customers went through during the collapse of ftx. they share why they moved their money to the exchange, why they felt it was a safe place to put their crypto and ways they are trying to get some of the money back. more from the customers you heard from on cnbc.com. you can scan the qr code, check it out. >> are they going to get the money back? >> we'll see. so, it could take years. legal experts have said it might be pennies on the dollar and it

could take multiple years. a bankruptcy case separate from the criminal trial. that's still playing out in delaware. no expectations of this being a quick turn-around. >> i think even noncustomers are skurs about his ultimate motivation, especially after "60 minutes" last night where michael lewis said what's happened to him. bankman-fried is almost a cruel joke in lewis' words. >> that was fascinating. i saw him at some of these conferences. he spent a lot of time with sam bankman-fried and probably has an interesting look into the psychology. we talked with anthony scaramucci, an investor, and went down to the bahamas and he talked about the aftermath and bankman-fried's reaction. have you seen "saving private ryan" and the soldier is walking around with the soldier's arm and doesn't realize it's his own arm. and other top ftx employees who talked about the way ftx was managed which has come up in the

bankruptcy case, no cfo, no high heef level leadership other than this insular group in the bahamas. >> as far as the trial set to begin this week, what are the key witnesses you're watching and testimony? >> so, trial begins tomorrow. jury selection. and then we'll get a list of who's testifying. caroline ellison, ceo of alameda, is the one to watch. she was his top executive ceo and his former girlfriend. that was also at the center of this with what the judge said was witness tampering. he leaked documents about their relationship and her time at alameda. there is a ton of interest. that's going to be a packed courtroom when she testifies. >> not to mention whether or not we hear from him or the parents. >> yeah, absolutely. >> kate, good to have you here to help us understand what's going on. another event set to begin this week is in the media space, talks to decide the fate of hulu, between disney and our parent company, comcast r kicking off. julia boorstin has more on what's in store for that. hey, julia. >> well, carl, comcast and disney have made it clear disney

will purchase the remaining third comcast owns but the question remains how much they will pay for the third of hulu? the appraisal process starting saturday, months earlier than originally began. valued at $27.5 billion in 2019, it could take months. as comcast said, the price tag could be much higher. for disney, hulu who has 48 million subscribers, is seen as a valuable asset to integrate further with disney plus to bolster its streaming appeal and minimize turn, while comcast could use the proceeds to return capital to shareholders by buying back stock. some see the sale as negative for disney and positive for comcast saying they believe disney will integrate hulu. saying, we think this should represent value creation for comcast. but wells fargo says the

resolution of this deal, and earlier than originally anticipated, it removes an overhang. they also estimate billions -- $1 billion in synergies for disney, seeing the deal as driving operating income improvement. >> julia, i guess the other discussion for investors in comcast will be, what happens to that check once it's processed and what kind of aspirations we may have? history shows when we swing the bat, we tend to swing big. >> yeah. the question is whether some of that investment goes into peacock and building up peacock now that peacock may be seen as more of a sort of direct competitor to hulu. and then there's also the question whether it just goes back into stock buybacks. there's been the sense of returning capital to shareholders and that being the most -- than most natural move for some of this. but i do think that nbc universal, cnbc's parent company, is going to be figuring out how to invest in peacock. they do talk about peacock as more of a partner to the tv

business rather than really being a competitor to it. birkenstock kicks off its road show with valuation of more than $9 billion. leslie picker has been following that for us. leslie, what do you expect? >> yeah, birkenstock moving ahead with ipo with amended to kick off the road show. the documents from this morning reveal birkenstock and selling shareholder will raise as much as $1.6 billion by selling 32 million shares between 44 and 49 apiece. more than $600 million of the deal is already claimed by cornerstone investors who have indicated they intend to buy in at the ipo price. at these levels, birkenstock's valuation would be as high as $9.2 billion in an ipo on nondiluted basis. today's road show was almost this warted by government

shutdown. when the prospect of an s.e.c. closure looked like it could happen over the weekend, they actually tried to move it up to friday afternoon and early evening, but weren't ultimately able to get the final ts crossed in time, according to sources familiar with the matter. but when congress averted the shutdown over the weekend, birkenstock had that green light. they were able to move forward with their original plans. now, the company actually traces its roots back nearly 250 years, family-owned business, but only two years ago birkenstock was acquired by private equity group and the family office of bernard. in documents revealed a few weeks ago, birkenstock showed top line growth of 29% for the first nine months of the year, although profits declined. i'm told they are targeting a listing date for the middle of the week under the symbol byrk. >> abigail adams wearing

birkenstocks in the 1700s. probably didn't happen. why the urgency to go public from this company? is there a liquidity story here? is it the company is firing on all cylinders? >> i think it's the latter. in talking with sources. that's my question, too, after only two years of ownership, already flipping it back into the public markets. you can see that top line growth of 21%. very good. over $1 billion generated in the first nine months of the year. you got the tailwind marketing from the barbie movie and other aspects of just this being a much trendier shoe than, perhaps, it may have been a few years ago. so, according to people i speak with, it's really just the latter that they're trying to kind of hit it while this company is on fire. even though the ipo market has been a little touch and go over the last few weeks. >> even i wear birkenstocks, carl, and you know i do not wear flats very often, but i do because they're trendy right now and they make them in metallic

pink. they're not just crunchy. >> if birkenstock comes out with a high heel sandal, look out. leslie, thank you. leslie picker on birkenstock today. the street boosting big tech earnings estimates as we go into the new quarter. are those estimates justified? we'll talk about that as the ten-year not too far away omfr 4.7 with the s&p red. stay with us. hi, my name is damion clark. and if you have both medicare and medicaid, i have some really encouraging news that you'll definitely want to hear. depending on

the plans available in your area, you may be eligible to get extra benefits with a humana medicare advantage dual-eligible special needs plan. all of these plans include a healthy options allowance. a monthly allowance to help pay for eligible groceries, utilities, rent, and over-the-counter items like vitamins, pain relievers, first-aid supplies and more. the healthy options allowance is loaded onto a prepaid card each month. and whatever you don't spend, carries over from each month. other benefits on these plans include free rides to and from your medical appointments. you pay nothing for covered prescriptions, all year long. all plans have dental coverage which includes 2 free cleanings a year, fillings, and a yearly exam. they also have vision coverage including vision exams and a yearly allowance towards eyewear such as lenses or contacts. and hearing coverage, which includes routine hearing tests and coverage for hearing aids.

you'll also have a $0 copay for the shingles and other routine vaccines at in-network retail pharmacies. plus, your doctor, hospital and pharmacy may already be part of our large humana networks. so, call the number on your screen now to speak with a licensed humana sales agent. wouldn't you love benefits like a monthly allowance to help pay for eligible groceries, utilities, rent and over-the-counter items? so, if you have medicare and medicaid, call the number on your screen now and speak with a licensed humana sales agent. if you're eligible, they can even help enroll you over the phone in a humana medicare advantage dual-eligible special needs plan. so, call now. humana. a more human way to healthcare.

big tech now trying to turn a corner after the worst month so far this year. some analysts are now saying that's a buying opportunity. that's the focus of today's "techcheck" with deirdre bosa. good morning, dee. >> on a price-to-earnings basis, mega tech is cheap again. the rest of the magnificent 7 have been hit by rising yields along with the rest of the market, but their profit ratios have fallen harder. if you exclude those seven mega caps, the remaining s&p's 493

companies has seen its price-to-earnings ratio fall from 18 to 16. now, if you look at the biggest names combined, they've seen that metric fall far more steeply, from 34 to 27 times. goldman sachs uses this chart to put all of that in historical perspective. the mega cap's pe ratio has fallen below that orange line on the screen. the median since 2013. also the lowest versus the broader market since early 2020. a discount goldman says has only been reached five times over the last decade. main reason for that is fundamentals. higher yields make future earnings worth less. that should have more impact on high growth on profitable tech. the mega caps are widely profitable companies, even if recession fears are overshadowing a.i. hopes. here's another interesting dynamic. over the past three months, wall street has revised up their earnings expectations. analyst increase their outlooks for nvidia and amazon's profits by 60% and 20% respectively. just over the last three months.

meta, 14%. apple and microsoft, their earnings expectations have been revised down. but that may have more to do with visibility on newer products and technologies like like generative a.i. and the vision pro from apple. the growth part of the mega cap equation, it's not much to write home about, but it is stable and beats the broader market. 11% revenue growth expected in the current quarter for the magnificent 7 versus 1% for the s&p as a whole. all of this is to say, guys, while tech isn't typically thought of as a defensive play, to play the markets t may offer more protection than the usual hiding spots as it did earlier this year, you might remember. in a longer term, higher interest rate environment, those fundamentals, that could underpin big tech. we didn't get into the stable management, the wide moats and generative a.i. that could push rates up in the future. >> the flip side of the argument and why they've been so pressured is high rates and what that does to the multiple, right, when it comes to higher

priced stocks. that's always been a headwind for tech. >> exactly. i think you have to separate very profitable mega cap from the rest of tech because what higher rates does, it makes future profitability worth less, but mega caps are already extremely extremely already profitable, and they are earning higher interest on, and then you look unprofitable tech or less profitable tech with growth rates and that could be less appealing in this kind of environment. >> thank you. good distinction. top of mind for investors as the ten-year, and 4.689, the highest level, basically, since 2007. the question is how much higher can they go from here?

jeffries' david joins us after the break.

stocks are heading south again. big move just now in the ten-year yield, and that has been the center of the action and continues to be so hitting its highest level since 2007. we are now above 6.8%. are new highs ahead? joining us, david zervos. what do you make of this? >> it's a combination of several things, and it's coming through the real rate side of the ten-year, and that's made up of inflation and real rates, and we are seeing real rates rise. it's a combination of term

premiums and real rates, and it's not about the people getting nervous, and the question is why are real rates up, and i think that's going to be a hotly debated topic over the next -- well, probably throughout the rest of the year and later. >> i brought up the term premium going positive for the first time in a while, and i wonder if there's concerns about the fiscal credibility and the supply and demand of treasuries. what do you think? >> i think there's that. what is happening in japan probably has a little impact because they are such a global driver of long-term interest rates. positioning might play a big role. if you look at the beginning of the year, most of the professional forecasting for the community of the economy predicted a recession now, and the interest rate market, if you looked at futures, we were forecasting rate cuts now and that was back in january.

obviously that has not been the outcome, but i think a lot of fixed income managers chose to take duration risks with that view as opposed to the credit risks, which is the two ways you can enhance a fixed income portfolio, and i think there's a bit of choking on that. >> we have a soft number in ism manufacturing, prices paid and yet the yield picture today is not what it is, and are you on the lookout for weaker activity failing to reign in yields? >> it's early for weaker activity to do much of that. we had good gdp revisions from last week to say the consumer is in a great place, and the recession story is that much further off, and just a bad call by a lot of people in the market. i think we're going to get a little slowing, carl.

i think that's what you expect after 525 basis points. the market will not be surprised by a little weakness, but the idea that we are going into a more sinister period for growth is a really hard story to tell, and i think the yield market is reacting to other things related to what sarah and i were just talking about, maybe real premiums going up and real expectations going up a little bit, and the fed having to be higher for longer to keep the inflation trajectory in the right place. >> and quantitative tightening is happening, and that puts upside pressure on rates. what turns it around? what calms bond investors down? >> you are absolutely right, sarah, the balance sheet broke below $8 trillion for the first time, and we peaked at 9 trillion, and that's not a trivial amount.

so we just did more than half of qe 1 in reverse. that's a big part of the story. i have tried to work with clients all year in thinking about what this balance sheet means, what the size of it has done to the economy and having the residual amounts in our system and what that has meant and we have to be humble with the balance sheet and know it's a new toy, it's a new policy and has a lot of power to it. we need to sort of step back and take stock of the fact that it's something we don't know a lot about, and when somebody is feeling confident i usually look the other way, and i go back to the ben bernanke quote, it works in practice but not in theory, and we have to abide by those words. in the end, it's the uncertainty about real rates that drives the

real rate risk premium, which is what having an affect on ten-year yields. >> do you think it will affect the fed's own psychology, because there's a 50/50 shot they raise rates in november? >> i think caution, and jay said the word careful how many times in the last press conference, some said at least 50, and i don't think they want to raise that much more but they may have to do another one or a small sequence if inflation ramps back up. the idea that we are going to get a big drop in rates next year i think is still a pie in the sky idea unless something really major happens in the economy, so people banking on that for their tech portfolios need to think again. this is a fed looking at its own risk premiums and term premiums around policy and thinking we

need to be careful on how we operate, and what just happened in the last year, and the inflation, the giant crash from 3%. these are big changes. >> thank you. we just crossed 47. let's get to the half. welcome to the "halftime report." i am scott wapner. the investment committee revealing how they will play that. joining me, shannon, joe and steve and brian. let's just talk the markets right now, because carl hit it, 470, and the earnings and rates, first and foremost rates before earnings because that's the way rates are progressing. as we continue to move up in