credit analysis. we're not long duration here. we're actually maybe duration of three, four, fivish years. right now you don't want to go too long because interest rates are going to come down at some point. that could be a good thing. you want to lock in some yield while you can. so that sort of duration a little shorter than the average corporate bond is a good opportunity. >> got to go, joanne, thanks. time for "squawk on the street." make sure to join us tomorrow. ♪ good tuesday morning. welcome to "squawk on the street." i'm david faber with jim cramer. carl has an assignment today. he'll be back tomorrow. a look at futures before we get started with trading 30 minutes from now. we're set up for -- >> yeah. >> a little open. >> let's not be too negative. >> okay. let get to our roadmap.

it starts with the spike in yields. that ten-year, it touched its highest level since august of 2007. microsoft ceo satya nadella is taking a stand in the antitrust case against google. he's testifying or will testify about the difficulty to break into search. it's day one of the criminal trial for sam bankman-fried right there in that building. it will begin later this hour. we will be live on the scene. let's start with the rising yields. it's funny, jim. we had a funny moment last week where you got up and said all we'll do is talk about the ten-year. i think it's kind of true. >> i know. it didn't start that way. i'm watching frank holland this morning. the ten-year is holding. it ought to be a nice day. the dow is up. and then slowly step-by-step, inch by inch the ten-year falls.

then next the futures are down. the analysts are now -- the tune they're singing is negative for pretty much everything because why? margins, but really the subtle reason is because they have to keep track with the stocks themselves. they're cutting -- remember when things were good and they were raising the price target? now they're cutting the price target. i have yet to call valueless because that would be slamming a whole profession. >> okay. >> except for adam jonas because he continues to entertain. and dan ives because he's plain out funny. where does he get that stuff? men's warehouse? >> he gets it all over the place. >> that stuff is hard to find. i was at marshall's. it's hard to find. he understand the real game which is upgrade, downgrade, things like that.

jonas correctly talks about how much you lose per red caribbean -- >> follows automobiles and comments constantly on evs. >> he's enjoyable and makes a lot of sense. this morning he talks about the legacy companies are going to have a hard time making these evs. that's in part because the choice that they have to make if they give the workers what they want is basically let's cut back -- >> the uaw has gm come back with a counteroffer. >> yes. whether we talk about writers strikes, kaiser permanente. >> potential very large strike in california. >> we have a lot of people who are just making ends meet. i think that's left out of the dialogue. now, why do i say this? i'm not supposed to talk too much about my jury duty, and i can't talk about the case. but when you listen about why people are getting called on a jury and they ask you what people do, it's a really pretty

good sample. people just try to get by. you forget how lucky we are. >> an opening moment for you, jim, a little bit of a moment there? >> i did. they asked you about two people you want to have lunch with. some people don't want to eat alone. the essence is, when you listen, you realize what's out there. people are saying that campbell's soup is too expensive. it's real life. not this. we're so damn lucky. my takeaway was i am one lucky individual because people work hard in this country. >> i like that you've come to that recognition late in life. >> that was not the takeaway. >> are we getting back to the ten-year? can we? >> sure. >> what's it going to take to get stocks moving higher? >> we need to see -- >> -- a move up in price in bonds. >> we need to see a short covering rally.

it is the -- when we hear these comparisons to 2007, that was a moment where there was excess borrowing, there was recklessness in the country. we're dealing with treasury issuance and dealing with the fed selling. inflation, david, peaked. >> mester saying one more rate hike might be needed. >> this is like what of those horror movies. you have to do one more jamma. fatal attraction, remember? >> jim, what about the larger question on bonds and yar denny who is the man who came up with the term bond vigilante. >> did he really? good for him. >> he says the worry is escalating thorough butt deficit will create more supply in bonds than demand can meet. he calls them the wild bunch,

who seem to have taken full control of the treasury mark. >> can we talk about sam peck en paul, one of his best. the wild bunch had -- >> if he's right and the wild bunch is in control, are we going to head to 5% quick? >> ed has been a go-to guy for many, many years. he was bullish during the period we need to be bullish. he correctly points out and something i've been saying that these pieces of paper, the ten-year, the 20-year, they were caught in this inversion stuff where basically everyone said we'll have an inverted yield. the bonds were completely wrong. now we've got to get to the point where, because the economy is okay. i have paychex on tonight who says the economy is good. >> the question is -- i know you're a little low. >> i am too low. don't look. they still make phone books? >> don't do that.

>> what were you saying? >> actually, it's a good place for all those notes. uncomfortable? >> better than that jury seat. >> what i'm saying is the idea that treasury yield will be divorced from economic fundamentals has to be a little bit of a scary premise. it creates supply and demand on our large deaf sis funding them, an inability to find buyers at a certain interest rate. >> we know the -- all the entitlements. you have this week low moment. >> week low? >> not a week low. a we clowe. it's a book. you feel there's no way out, no exit, so to speak. that's the gloom.

against that is the idea that these traezryes have moved. in april the 20-year, my favorite piece of paper because it's back was at 3.75. now it's at 5. at a certain point, you have to say isn't that an interesting piece of paper? >> you would think so, although interestingly there have not been enormous influence into bond funds. investors seem to be waiting for higher numbers. >> i think you have to believe that the ten-year 4.7 goes to 5.7. why is that piece of paper lower than the fed funds? >> i don't know. why wouldn't you want to foenlly take 4.7 for ten years? >> the reason you wouldn't is because you're going to get 5.25 for ten years, unless you have short-term capital gains, sell that and take a loss. i don't want to sit and talk about the role of the 10 and 20-year. i also want to talk about the fact that kellogg is ringing the bell. corn flakes, frosted flakes.

>> cal nova yesterday which is the snacking. this is the spin essentially. this is the cereal company. >> see the piece last week about how the airline business is going to do better because people are thinner because of wegovy and moderna? that's the go on the surfboard, the go-pro moment. >> people are going to weigh less. >> wauz willy and know vo nordisk. >> i'm looking at corn flakes, forecasted flakes and rice krispies. can you eat more of those if you're on wegovy or do people just not want to eat them because they're not attracted to sugar? they split this company off yesterday. >> kale nova didn't perform well yesterday and there's klg.

>> that was good. >> the interest rate is actually going down and we bemoan it. there is a stock, two pieces of research that were positive. what is everyone positive on? what's the one stock everybody is positive on? good jeopardy question? nvidia. how about that? >> day one of the criminal trial for sam bankman-fried. he's facing seven counts of conspiracy and fraud over the collapse of his company ftx. there's kate rooney live from the courthouse, not too far from where we are at the nyse. kate, what are we expecting today? >> reporter: we're not far from the stock exchange. we're here in lower manhattan. it's set to be a roughly six-week trial. we're waiting for sam

bankman-fried's parents to arrive outside the courthouse. the process of jury selection will start in about 20 minutes. sam bankman-fried faces seven counts of fraud and conspiracy over the collapse of what was once his $32 billion exchange at ftx. to get a sense of the scale, investigators say at the time of the collapse $8.9 billion in customer funds were missing. prosecutors accused sam bankman-fried of syphoning customer money to his sister hedge fund alameda and using that to enrich himself and other insiders, also make campaign donations as well. this started back in november when he resigned at ceo. the company filed for bankruptcy. he was arrested in the bahamas in january. he pleaded not guilty to criminal charges. he was out on a $250 million bond. in august the judge revoked his bail after he said bankman-fried violated some of those

conditions. bankman-fried violated has argued he didn't know about some of this financial fraud and issues at ftx. prosecutors meanwhile need to prove intent on the side of bankman-fried violated. four of his top lieutenants have pleaded guilty which will make this case challenging for bankman-fried violated. at least three of those executives do plan to testify. back to you. >> kate, real quick. talk about challenging. is the jury going to have to understand crypto? >> reporter: so, interesting. i talked to a legal expert yesterday who said you need to be an informed juror. you don't need to be totally ignorant of the case. it's likely most people at this point in manhattan have heard of this case. some of the questions had a list of the questionnaire, things they were going to ask the jurors. they also talked about adhd which bankman-fried violated has. their perception of crypto, of adhd. they seem to be looking for a jury pool who is not at least biased against crypto and

wouldn't have the wanting to see bankman-fried violated fail. >> kate rooney, thank you. i don't know how you get a jury to fully understand it. maybe you go with stealing. people recognize stealing. >> as a wise man, my attorney once said to me they don't pick the names out of a phone book. so the people come in, the jurors come in with a hidden bias. the bias is why would they be going after this guy if he weren't guilty? they've got four people ratting the guy out. i would not want to be in his shoes, whatever size they are. i just think that the jury, which by the way, has a lot of time on their hands. those jurors were not like the ones i saw. i just think that this is one of those cases where adhd will not

play a role. the prosecutors will present people who will say this guy ratted, really was bad and people say, okay, he's bad. this is not the series "jury duty." this is real life. the prosecution tends to be humbly -- in the southern district as you know. the defense is -- what's the defense? >> i don't know. >> i didn't know what i was doing. people don't like people who stole $100 million. they don't like any of the billionaires we put on. they're billionaires, they're smart. which i think is wrong. >> doesn't mean they actually have a clue, by the way. >> exactly. my experience -- my actual uchl considerable experience in the jury and courtroom situation over time is that there's a bias that the prosecution wouldn't be wasting their time. they've got a lot of bad people to go after. >> we'll be covering it for the

next six weeks. as kate told you, that case may stretch over that amount of the time. after the break, microsoft ceo satya nadella testifying in against google. we get trading at the new york stock exchange. a quick look at futures, we're expecting a down open. a lot more "squawk on the street" for you. straight ahead.

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microsoft ceo sat yeah nadella took the stand in the department of justice's antitrust case against google. he was testifying about how it is to compete with google. he says, quotes, the distribution advantage google has today doesn't go away, in spite of my enthusiasm that there is a new angle with ai, i worry a lot about the fact that this vicious cycle i'm trapped in can become even more vicious because the defaults get reinforced. there are investors who actually believe it is a new chap tefr when it comes to ai and search and what it's going to enable microsoft to do, whether it's bing and how it's going to be using copilot in the enterprise. >> when you talk to people who are in the justice department, there's a fear always that the next big thing is going to be worse, even worse. more concentration, more power.

in this particular case, the justice department must feel a little on the run. what's happened is suddenly bing, because of ai, is far more competitive. if you're the justice department and this case goes on too long, you really lose. i know you upgraded me when i say it was a trump justice department foray. the fact is it's been overrun by them. i hate to say this because i love our justice department, it's pretty good, asopposed to what's happened in the debased ftc under lina kahn. they got a losing hand and they got a losing hand because of ai. i think they should realize that events have taken this thing -- >> interesting that nadella didn't want to go there. he didn't say ai presents us a new opportunity to really compete with them in search. he said he's worried about it getting even harder. >> but when he goes in front of wall street -- let's use goldman sachs because they're always on

the red-hot griddle. you spoke to david solomon. we looked at the situation and we're a pitiful helpless giant against google. i would like to have, david, a presentation that's made by mr. nadella to wall street versus the presentation he made to the justice department. i think he's got a real good case that bing is good. i would hate to think he'd go in front of wall street and say we're getting panted. would he use that? >> no, i don't think he would. i think he'd make a strong case. a lot of focus on copilot. >> remember the previous people didn't keep up. he's done a remarkable job. i think it's just a matter of time before he is really -- that you would think of him as equal. i know he has to -- he's an honest man. >> my god, how he's been

positioned the company. tony the tiger is here which is apparently very exciting for jim. >> am i going to listen to you basketball on about google when i've got tony the tiger here? >> i guess you're not. >> satya, he did what you want -- by the way, he's not a liar at all. what he's saying is bing isn't an afterthought right now. i think the ai in copilot is so special, if he comes back a year from now, i think -- >> -- >> he's an honorable good man. >> events can outrun -- >> -- i wonder -- >> technology moves faster than does the law. >> you think he uses bing? >> i'm sure he uses bing. >> if you're an apple guy, you ain't using bing. that's the problem. that's the case. >> i want to talk more about ai when we get a chance as well. comments from jamie dimon.

interesting comments from fed vice chair barra. >> doesn't exxon have the same mascot, right? >> jim is going to get ready for his "mad dash" as soon as his excitement dies down from seeing tony the tiger. we've got to look at futures. en're set up for a lower open wh we begin trading about eight minutes from now. don't go anywhere. 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. the citi custom cash® card automatically adjusts to earn you more cash back in your top eligible spend category. hi.

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all right. time for a "mad dash." opening bell about two minutes from now. what have you got? >> also the key of the market. mccormick is a very, very good company, spice company. david, they actually raised guidance. they would have raised it substantially if it weren't for china. they have china business that is slowed. who's got inflation that has not been rolled back? i think these guys -- this is a very, very good company. >> why is the stock down 5%? >> because they didn't report a good quarter. they have better guidance. i want you to watch because this group is under so much pressure, whether it be pepsi, whether it be kellogg, the cereal company that's ringing the bell, pretty much general mills. look at smucker, colgate,

proctor down a huge number of days. this group is trading as if the margins are going to be crushed, the dollar is going to crush it and the numbers have to be cut aggressively. outfits like costco are pressuring these guys to lower the prices. the fact that the stock is back to where it was before covid tells you that there might be some value here. >> okay. so you believe them -- the market doesn't clearly. >> the market does not -- >> -- >> -- in the new days we look at the price earnings --. it's 28. we say no, we're not going to allow companies to have that price multiple that are slower growth, 4 to 6%. this is an inflationary period. what's not taken into account is are they doing a good job? they are. it doesn't matter -- [ cheers

and applause ] if you thought we were going to recession, we switched to no branded which is also down. it's a great company caught up in the vortex of this very moment involving the ten-year -- [ bell ringing ]. >> w.k. kellogg, we'll speak to ceo gary pilnick. [ cheers and applause ] >> you have to ask him, like everybody else, what's the impact of a sugar cereal with drugs that make it so you don't crave them. >> we did talk about that yesterday, running kel nova, the

larger of the two companies. that's the snack side of it with pringles and pop tarts and cheese its. we asked about that yesterday. he said it's too early to know what, if any, impact there will be from the weight loss drugs in terms of suppressing people's desire to eatthese kind of foods. >> i think that's true. maybe people -- i think that's probably not going to be something that knocks it out. david, what matters is. >> kel nova, put that one up, t too. >> will people take it? are people going to take it for vandy versus blood pressure, for diabetes, obesity? the next will be for drinking. you crave nothing, everything is cardboard. remember the domino's?

>> that does not sound fun at all. >> it's a vicious cycle. >> people love to eat. >> where you don't even want great italian food. >> i don't believe that. really? i thought you just want less. >> well, you can't eat as much. these people -- if you're going to have a bowl of frosted flakes, which tastes great, you're probably going to eat half of it. raisin bran has got a lot of sugar. nothing means anything to you. your life is indifferent about things that people crave which is why in the end some people say most people crave lay's potato chips versus, what, looking in the mirror and feeling a little better about themselves. i think we vastly overestimate how much people don't want junk food. >> now you've got me confused. >> i'm saying they won't take the drug. >> but on the other hand, you're saying these companies could

suffer as a result of declining sales because people aren't eating as much. which is it, jim? >> i agreed that we don't know yet. i think there's a considerable number of people who say, you know what? i want really bad food and i don't really care about -- >> by the way, we don't mean to pick of kellogg. it's been mcdonald's. it's been coca-cola. >> pepsico. >> you brought up hershey's last week. >> an atrocious halloween. parents don't want anything. novo nordisk is like this and hershey's is like this. it's a death cross. >> coincidence? >> no. it's all real. frankly, people are just presuming that people who own these are dealing with margin contractions, dealing with maturity of the ten-year and now we have this scourge that makes it that you don't want food that you historically crave or you

want half of it because you can't finish it. >> it is one of the biggest stories, and we will continue to focus on it. it does have broad ramifications for the health care system, for cost, for so many other potential companies that thrive when people eat a lot and on and on from there. >> america is historically an obese country. >> -- more recently. >> pork rinds, i don't know. watch oil. >> moving on to oil now? >> a little value added is always important. oil was down nicely this morning. i said maybe we'll have two days in a row. now oil seems to have stabilized. i'm looking for things that are going the way of the bulls. right now it's harder to find. it's sentiment because sentiment is incredibly negative. >> yeah, listen.

key to the market is still the ten-year. let's look at where the yield is. it has not been this high since 2007, the early days of the financial crisis. >> will you look at that? that's better than nvidia, that darn thing. >> that's amazing. >> david -- >> a 22% move on that thing. >> a great move. it went from 3.75 in april. can we point out for a second there isn't a soul i know -- >> wild bunch. >> pdavid, we're not going to st here and revalue companies down every single day. that's not right. some of these companies are trading -- david, have you looked at kimberly clark. >> that takes to number one on your list that i'm looking at this morning which is utilities,

jim, which tip clip have high dividends. in a rate environment like this one, probably not performing that well. >> triple whammy. they have to spend more because of pollution control, which i think is good. the second, david, is they have to -- they're constantly financing. they do. >> constantly in the market. >> in the market constantly. the third is -- 4.6. what good is that? one you haven't talked about but is right in your wheelhouse. >> talk to me. >> what do we do with verizon yielding 8.4%? >> wait. verizon yields 8.4%? >> yeah, yeah. >> wow. i hadn't caught that. >> if you work at verizon, hans ves burg, do you say i'd rather be t-mobile because they don't have the security of yield because they hardly pay well.

>> at&t's dividend yield is 7.6. >> they caught that once. that's like a salami slicer. >> that could happen again. give me a verizon 20-year. >> i want you to watch procter & gamble. >> keep in mind, when you put up these 20-year charts we aren't doing total returns, so we need to be fair because they are obviously giving you a significant dividend now and have been for many years. not 8.4%, but nonetheless a significant one. nonetheless, look at that, jim. nothing. >> plenty of nothing. wild bunch. >> this is the leader by far. >> this used to be a -- and now it's i don't know. >> now it's $130 billion company. our parent company is 180. almost 30 billion bigger. >> they have to spend a lot and not getting a great return for that. >> not sure what the strategy

should be there. >> proctor is trying to make a stand. these stocks have been down for 13 straight days. they're oversold. things need balance. they do. >> proctor, colgate. >> general mills. kimberly clark. don't even look. it will hurt your eyes. >> by the way, david, these companies aren't doing anything. when i had costco on, they basically said, listen, inflation is going from 3 to 4 down to 1 to 2. that's them saying to these guys, listen, we're going to blast you with kirkland's signature if you don't take your prices down. >> i want you to get back to this point. companies who said procter & gamble, for example, are not doing that badly. their stocks are not doing particularly well. so where and why? >> some companies have -- i'm

saying -- >> it's not a cheap multiple. >> no, it's not. this is where you should be getting companies that have key price versus not. can conagra maintain price? look at their stock, look at campbell's soup stocks? well below 2019, forecasting they're going to start making a lot less money. that's a negative chart. slim jim. that's what they call me, partner. >> jim, is there an opportunity here then, particularly -- >> my travel charts. >> -- and the wild bunch is not going to have their way with the ten-year for much longer. >> proctor is high mold. that's the one we picked for the travel trust because we think they have a weak -- a strong dollar problem. they have a very strong band that people continue to pay for. but the opposite is they've got a really good house brand. costco, that's why walmart and costco has been so good.

>> when i think of colgate, i think of pet food, too. also not a good place to be. >> one of the things that happened. we saw this with petco and smucker. it just seems as much as i like -- [ cheers and applause ] >> i keep mentioning colgate. >> the issue here is -- i'm not kidding. dogs don't seem to mind the tradedown. some of the tradedown, since they can't take wegovy, some has a lot more sugar. dogs have never said, you know what, i want the more nutricius. this is something i've worked on. having watched the dogs, having traded the dogs, i can get anything i want. there's not a word of resistance. >> there's always been hope this

thing would get taken oupt somehow. by the way, 20-year on this one is probably not looking so good as well. remember when ruben mark ran it? >> he didn't want to come on. he hated tv. >> that's all you think about, whether they come on, not whether they did a good job running the company. 23% over 20 years. how about we put up amd for 20 years or nvidia. >> nvidia has been remarkable. >> that will make people happy. there we go. now i'm feeling a little better. >> someone is going to say it's trading down in the right shoulder. nvidia, again, some people say -- >> that's what you're looking for, 31,000 -- >> that's done better than if you bought the 20-year. that's what we're in this for. david, today could be a fulcrum day. >> really? >> everybody comes in and says,

i guess i've got to sell because of the 20-year and the 10 year. you don't have to sell. >> what i'm wondering is whether i should buy 10-year paper and put it away. >> split it with 10-year -- kimberly is 4%. do you think kimberly clark -- we're not going to come in one day and say i want some chinese tissue, i want people's republic of china toilet paper. ain't going to happen. their biggest problem, of course -- kimberly clark is a good brand. i think it's a loved brand in the country. it's like, hey, what's the general c hfrnlto got there? no, i don't mean to make fun -- my father worked for the chinese. they're fantastic. i'm saying this is not going to replace -- we're not going to replace it by neo. >> keep talking about -- >> i'm saying kimberly clark is a brand that can hold up here.

it's not going to go away. everyone says it's going to go away because of head and shoulders and the ten-year? no. kimberly clark is a brand that's worth something. there. >> you feel better. >> i said it. >> do you feel better? >> i do feel better. i do not have any problem with the prc people. >> the prc takes up a good amount of your head space. >> i've got a lot of head space. >> kimberly clark and suddenly we're talking about chinese toilet paper. >> david, here is a question for you. who owns all the real estate that we read every day that fail? >> who owns it all? >> it's not any of the big reits. >> no. we have reits -- >> insurance companies. >> of course. >> they are opaque balance sheets. we know when the yield is 7% -- >> okay. that said, they also own and/or

are putting new premiums to work all the time and getting a return that's pretty significant. >> i'm saying, everyone keeps saying, oh, gees -- jamie dimon, in his comments. it doesn't seem like he needs new headquarters. >> he's building new headquarters, a giant new headquarters. it's going to be incredible, beautiful. >> it's going to be powered by all sorts of alternative energies. >> by the way, you haven't mentioned meta, the year of efficiency. they charge if you want to advertise -- >> trying to settle on one thing for a minute. >> i'm saying who can get people to come back to work? mark zuckerberg is trying. i think if you don't come back to work, i think you may actually lose your job. there's a lot of other people that can do your job, and there's also machines that can do your job. the think that's intriguing about jamie dimon is why he doesn't say, if you don't come in five days a week, i'm sorry, you're done.

i can get chatgpt and other people out of work who are better than you. >> i get how you moved here. wep talked about the headquarters building. immediately thought about the fact that people still don't come into the office, why are you building a new headquarters building, then you thought about occupancy rates. then you thought about the fact that companies are trying to get people to come back in. >> did i ever say -- >> i'm just trying to follow you. you know where i'm going to go? jamie dimon's comments about ai. he did say recently people are going to live to be 100. we're going to get rid of cancer and you'll probably work 3 1/2 days a week which is a lot more days a week than i would have thought. >> what is that? brave new world? >> talked about ai being critical to jpmorgan's future success. they've been using it a lot. by the way, we're talking about ai which has been around for

quite some time and the new tool, generative ai which has been the revolution -- >> the stuff that learns. >> then we've got -- >> can we go back to 100 and the cancer thing? i didn't know he was also a doctor. and also an actuarial. this guy has many roles. >> true. then we have fed vice chair barr. take a listen. >> generative ai has the potential to more quickly become a productivity enhancing tool. it will have potentially significant ramifications for labor markets. some jobs might be eliminated or change dramatically. it has the potential to affect white collar jobs in the ways that prior technological

innovations did less of. it could have significant changes to labor markets. >> interesting to listen to him. maybe ai will change that shot in the future automatically. >> we have a shortage of people in this country. that's the problem. that's the inflationary issue. we have the declining demo, fewer people, as opposed to india where they've got growth. i look at this and i think this could be the difference between the declining labor force and inflation. i think that that's dead wrong. this is the holy grail. >> interesting. >> this makes up for all the problems we have. we don't have enough people. >> well, we've got 115,000 new immigrants right here in new york city who would like to work, so -- >> we need more people. we need people to fill jobs. ai could help us. ai is going to generate more jobs. i don't know what else to say. all these innervations -- i

remember when we got the pc. i was in law school and i was supposed to be out of a job. the pc didn't do jack against me. >> news to get to out of d.c. i want to get to emily wilkins on what's going on with speaker mccarthy. >> reporter: david, as you know, congressman matt gaetz took the first steps to potentially oust kevin mccarthy from his speakership. of course, that actually does need to get a vote. we're told that vote will occur around 2:00 p.m. this afternoon. that was just decided in a closed door session where republicans are meeting today. behind me it's the democrats who are meeting. they are going to be incredibly key for this vote as to whether or not they decide to back mccarthy. mccarthy doesn't have enough votes within his own conference to survive this kind of challenge. he's going to need help from democrats. mccarthy told cnbc he's not going to be offered anything, not going to be making any deals. democrats in there are trying to

figure out what the path forward is going to be. it's a moment where they have an enormous amount of leverage. the question is if mccarthy is ousted, what's that actually going to look like for congress? >> thank you, emily. interesting listening to speaker mccarthy this morning talking to "squawk box" about the various options available to him. obviously his thoughts about matt gaetz. >> the guy is a survivor. say what you want. he's a survivor. that guy stays in the aisle. i got nothing for the other people. we're going to take a quick break. catch your breath, think about the chinese again and the prc. >> there's a look at treasuries. we have spent a lot of time talking about the lower part of that screen, the ten-year and the 30-year. there it is, the longer end of the curve, yields continue to

move higher. we're back after this. .

there's the laggards led by mccormick which jim talked about in his mad dash. >> ver ralto a good company. >> not good at mccormick but guidance okay. market doesn't seem to care or believe. we talked about a lot of these companies that are seeing their stocks down dramatically over the last year. down to 2019 levels. we're back after this.

it's stop trading. >> most oversold since the spring when we bounced. keep that in mind. david, i think that we want to take a hard look at tesla because this is certainly we have bernstein not going to make the numbers, deutsche bank saying not great numbers and the stock hangs in. what does that say? it could mean the higher growth, high multiple stocks might be able to try to make a stand. i have macy's tonight and paycheck tonight and oshkosh. i refuse to be as negative

because two weeks ago it was good to be negative but now you're with the crowd. >> thinking of bucking the trend here. >> i feel as i scream about kimberly, a company i don't particularly love but they have a name brand, their brands are worth something. they don't just say things being tortured by the 10-year. i love today's show we covered a lot of ground. chatgpt is here that we did not talk about. >> we will. i promise. we will make it up. it is very important. >> yes, it is. >> speaking of important, we have some breaking economic data, jolts after the break. don't go anywhere. icy hot. ice works fast. ♪♪ heat makes it last. feel the power of contrast therapy. ♪♪ so you can rise from pain. icy hot.

good tuesday morning. welcome to another hour of "squawk on the street." i'm sara eisen with mike santoli and david faber, as always, live from post nine of the new york stock exchange. carl is on assignment. taking a look at stocks this hour, selling off a again, down half a percent on the s&p. nasdaq down 0.6. positive on the week because it got a rally yesterday, but the gains are slipping. the only sector right now that's

higher in the s&p, materials. industrials and staples were up but turned negative and everybody else is down. consumer discretionary, utility, the rates trade is sweeping more sectors into the red and the 10-year yield above 4.7% this morning, near the highs going back to 2007. 30 minutes into the trading session, three movers we're watching. hp, berkshire hathaway revealing they have paired the stake in the company down to 10%. bank of america says the stock has bottomed here. making a rare double upgrade from sell to buy this morning up 3%. eli lilly signing a deal to buy biopharma for $12.50 per share in cash. shares of the latter name surging on the news and competitor novartis will be on next hour. mccormick one of the laggards in the s&p post results, matching analyst system despite a 2% volume mixed decline.

really the thing that's upsetting investors the guidance raise on the back of better performance from the mexican jv, which is not a great reason, and some of the weakness in china and asia helped that organic growth. >> good to know. jim and i were discussing that. >> it wasn't a terrible quarter. >> not getting a good reaction in the market. to new data on job openings out just moments ago. rick santelli is in the house, and he has that for us. >> absolutely. a surprise, strong number for job openings and labor turnover. known as jolts. number 9, 610, 000. bests estimates and the best level going back to may when it was slightly higher at 9, 616, 000. a revision putting extra horsepower. has month's 8, 827,000. rates moving up towards the high zone. the roller coaster ride can be

wild. it's the close that matters most to technicians and if any close above 4.70, many have been trying to pick a temporary top will, of course, concede and you might see some late session selling pushing yields even more aggressively to the upside. david, sara, back to you. >> all right. yeah, reaction is swift and big in the bond market. look at the intraday of the 10-year yield on the back of the hotter report on job openings, moving back above the 9 million remark. fewer than 9 million last month for the first time since 2021. the fed, the market, wants to see this number come down. why? because it speaks to the tightness of the labor market. at the cycle high it was two openings for every job. we got down to 1 1/2. we're rising again. look at the reaction. yields higher. this is not helpful for the higher yield trade. 4.74%. this is going to increase the chances the fed has to go again in november.

>> the 2-year yield dramatic reaction on that number. 5.08 to 5.14 the fed side of things. yesterday's stronger than expected ism number not the key driver but everything seems to be pushing in the same direction right now, okay, maybe the economy will be able to hang in there and give credence to the inflation stickier for longer idea in addition to all the supply and demand impact we've been seeing in the market. to me, just looking at the stock market, and the way it tries to metabolize what's happening in the bond market, anything seemed forced or price sensitive selling off the rails once the bonds have started to look like they're stretched to the downside, the yields to the upside, it unnerves you and the volatility effect that translates over. with all that said, the stock market somehow at this point holding above last week's lows and trying to put on a brave face in front of it. >> it's going to be tough today and we're seeing new highs, 4.75

on the 10-year yield. it marks a pretty big spike up. it's not helpful. the fed speak we've gotten and a bunch in the last 24 hours, not helpful. barr, governor barr a vice chair of super vision and handles bank regulation at the fed and gets a vote here's what he's saying about rates. >> i think that, you know, it is likely that we'll need to keep rates up for some time in order to be effective in bringing inflation down to 2%. i'm confident that we'll get there. >> and then meister, who doesn't have a vote this time but the cleveland fed president, often kind of comes down around the center, i think she sounds a little like powell. here's what she's saying about where rates need go. >> i suspect we may well need to raise the fed funds rate once more this year and hold it there as we accumulate more

information on economic developments and assess the effects of the tightening in financial conditions that has already occurred. whether the fed funds rate needs to go higher than its current level and how long policy needs to remain restrictive are going to depend on how the economy evolves relative to the outlook. >> they're still singing the same song, higher for longer, maybe even higher, but definitely for longer. that's not helping when the bond market is going -- >> 4.7 -- >> the speed and magnitude of the moves are when you have people wondering if something breaks. last time we saw a run-up in the 2-year we saw the regional bank crisis. look at the emerging markets currencies since july, i don't know if you check the hun gare ran -- >> i usually do. >> -- or the chilean peso, these are down double digits. it's painful and all of it leads

to slower growth and financial problems. >> i mean, you mentioned the banks. let's not forget that was back in march when they were sitting on these unrealized losses so to speak and you don't need to realize them unless you have to sell where for perhaps if you have deposits flowing out or any other reasons. it hasn't gotten better. it's gotten worse for the bank balance sheets from some of the elongated assets getting hit opening them for any period of time you're under water. >> the marks will be tough for sure. even things like mortgage backed security spreads are wide. seems as if nothing is showing you the way out in terms of the bank balance sheets. you haven't had anybody say this is actually -- it's crippling, and, obviously, you know, you're going to be able to manage it. it creates a little bit of restraint on credit creation. we know that for a while right now. you know, sara, i've been in your camp saying these yields are searching for a place where it does restrain the economy and hurt growth, but the economy so

far is working through it. obviously, it's all about -- >> locked into low mortgage rates. >> 4.7, 5.2. we talk so often here or you have certainly for the last few weeks about escalating federal budget deficit, supply-demand, mike mentioned it a few moments as well. the guy who coined the term bond vigilante, we're watching to see if the high yield market is next. goldman sachs is out talking about interest expense as much as 3% of gdp by 204. >> you have this elevated issuance, which is a problem, colliding with a fed balance sheet that is shrinking and tightening and actually we're dropping below the 8 trillion mark on the balance sheet which you watch, at the same time where the fed is talking higher for longer and there's not enough evidence that inflation is going to go back down fully to 2% and that the economy is not weakening into recession and

add it all up and there's the balance sheet and you have got these persistently higher yields. i wanted to show this, david asked about it, but because mike tells me it doesn't matter, and i think it matters a lot and i think yields matter a lot. >> they 100% do. >> are not the single -- they are the -- >> what are you going to show us. >> the fed balance sheet. >> i said they're not the only thing that matters. they're not somehow this magical causal effect of everything else. we're down a trillion dollars. what's going on. when was the last time they bought a bond, right? so it's not as if they were out there at every auction the fed was soaking up the supply. it's more about the supply side right now at the same time -- >> tied together. >> yes. they're just allowing stuff to mature. is what's going on. >> you two are the biggest nerds i know. this is an interesting market. this market got very interesting. >> be careful what you wish for, right. >> i guess. >> we're pushing these -- >> we're only up 10% on the s&p

for the year -- >> we're down the average stock -- >> this move and the 10-year is fascinating. >> it's testing every kind of premise for the idea that we were backing -- >> the yields back in the october lowe's, the 10-year yield 4.30 around the highs considered to be too much for the economy to handle. . panic because we hadn't seen inflation come down at all. now it's a different situation where it's kind of what's the new equilibrium between growth, inflation, and rates and we're searching for it. >> can i add something else? oil just turned higher again. it couldn't hold on to losses, up $90s a barrel. higher oil, stronger dollar and rising rates. >> that's falling down the lest of things to worry about. >> but it feeds into the rate story. >> it helps. >> and the inflation story. find out -- you like to argue with me -- wall street economists make of the action in yields joining us is wells fargo sara house.

we are looking at the yields making news cycle highs as we speak. surprisingly strong job openings report. how much higher can yields go? >> well, i think what we're seeing is this reaction to the economy not just hanging in there stronger and that's affecting expectations for what the fed does, but i think a lot of supply considerations that you are just discussing, so everything from the current position of the deficit, but also qt ongoing and so i think, you know, we're -- it remains to be seen just how high, but i think a lot of it will be affected by also what the fed path does from here. what the latest economic data suggests is higher for longer and i think it really keeps the potential for perhaps one more rate hike this year on the table. >> beyond that, federal reserve is talking about higher for longer and it will rest on the economic data and inflation data. where does that go? does the tightening of financial

conditions that we are witnessing now in terms of rates and the dollar and everything else, do the work for the fed to get on to cutting faster? >> i think it does help. this is one thing we haven't seen throughout the tightening cycle is the fed would be raising rates, but we would see financial conditions ease during periods. i think there was this idea that while conditions ease the feds can keep rates elevated for longer until you see the pass through and that's what we're seeing. yes, to some extent this does the fed's work for it. that's by design. the fed's interest rates work thu those financial channels, and when we look at the tightening in financial conditions, that suggests that we haven't seen the worst of the slowdown in growth. while prospect have improved for a soft landing the debate is far from subtle with the real rates likely to further dampen growth.

>> and to say that, you know, there's going to be a slowdown in train. we have seen things like the leading indicators pointing that way for a very long time. growth has continued to surprise to the upside. where do you actually think we're going to have that final point where things become too much, frankly, for the economy and is the fed really looking for that? they have said that they're, obviously, looking to be restrictive in their policy, at the same time upgraded their growth estimate for next year, still below 2% real. >> yeah. i think a real test is going to come in the fourth quarter where you do have accumulating headwinds. not only do you have the ongoing headwinds from tighter monetary policy that is increasingly restrictive in real terms, but you have this increasing effect of the fed support that continued wind down in excess savings. the restart of student loans and child care cliff.

you will see consumers squeezed with perhaps a bit of a jump in that dynamic here in the fourth quarter, but i think it's really the slow squeeze that we're looking for, where we think things continue to moderate as we move through the first part of next year. >> sara, thank you. appreciate it. sara house of wells fargo. one more point on the fiscal thing you brought up. >> yes. >> i think the big change this time and people are talking about this, fiscal monetary policy are working against each other when it comes to fighting inflation. monetary policy is trying to fight inflation and bring it down. fiscal has been doing the opposite and that is a very different dynamic and we have been dealing with where we used to embrace fiscal policy, and it meant growth. the market is booing it because it's tightening financial conditions and making it harder for the fed. tightening on that side of things. >> causing inflation. >> that is a big difference. >> by the way, also, widening our deficits which is then also resulting in the other thing we talk about a lot. >> which why maybe it used to not be a problem because we

embraced the deficits and growth and spend, but maybe that was the weird time and now it's problematic to have that rising deficit and extra spending at a time where the fed is going on an inflation fight. >> it does make you wonder whether the chorus asking -- arguing for more austerity -- >> what's interesting, it was almost unintended fiscal stimulus. the cost of living adjustments, lower revenues, you didn't have the capital gains from last year. it wasn't like -- you had the inflation reduction act which we knew, but it's over and above that. that's what we're seeing right now. >> hard to cut defense which is like half of the discretionary. >> yes. >> tricky problems. interesting market. the 10-year yield up 4.74%. the 2-year yield above 5 a.1. our road map for the hour, the soaring yields looking enticing for investors but not all risk-free as we have been talking about. what you should know before jumping in. >> a sad story, manhattan is run outing of luxury apartments.

we're going to tell you why and what it means for that part of the housing market. >> and we continue our q4 playbook series. what's head to tech into year d.g ow bish still ahead. stay with us. is it possible? with comcast business... it is. is it possible to help keep our online platform safe from cyberthreats? absolutely. can we provide health care virtually anywhere? we can help with that. is it possible to use predictive monitoring to address operations issues? we can help with that, too. with the advanced connectivity and intelligence of global secure networking from comcast business. it's not just possible. it's happening.

sam bankman-fried on trial today for fraud and conspiracy charges. to kate rooney from lower manhattan. kate? >> sara, jury selection just got

under way in the sam bankman-fried trial here in lower manhattan not far from where you guys are. the stock exchange, over six weeks, the jury will decide whether this was, as prosecutors allege, one of the biggest financial frauds in u.s. history. sam bankman-fried has pleaded not guilty to seven counts of fraud and conspiracy. over the collapse of what was his $32 billion crypto exchange ftx. the list of juror questions include have you heard about bankman-fried, posted about this trial on social media, do you have negative opinions about crypto currency and if a company fails do you feel only the owners are to blame here? then they also talk about any negative opinions about amassing wealth to give it to chair, altruism, something sam bankman-fried was involved in and him having adhd, plan to ask people to raise their hand if they've ever had adhd, eye

contact, ask jurors about the defendant having adhd. bankman-fried has been in custody since august and argued he didn't know about the financial issues at ftx and prosecutors need to prove intent on the side of bankman-fried. four of his top lieutenants have pleaded guilty which legal experts tell me will make this case especially challenging for bankman-fried, at least three of those executives do plan to testify against him. back to you. >> kate, thank you. meantime investors looking to take advantage of high yields and risk freeh treasuries are facing risks whether they buy bills or long-term notes. steve liesman joins us. the risks are on display every day as prices crash. >> only have to look at 7%. it's more now the decline in the past several weeks to appreciate the risk and risk freeh treasury markets. those losses can mount in a hur. we talked to the bond fund

managers how to manage the risks. pimco's cio dan ison tells me his risk the inflation is still a material risk, high devils of debt are still a problem and could be and some investors are demanding default. the economy has been strong and you saw the move this morning with the jolts report. that could push up as it did interest rates further. now, iverson recommending investors look to extent the average duration in their bond portfolios. don't buy on the short end. he's taking the duration up to 4.7 years. still low but the highest since 2014. all of that points up a risk that many sitting in cash in those short-term bills may not have thought about called rollover risk. the juicy money market yields that can disappear quickly if the fed starts to cut. vanguard's active tells me the conversation we're having the most about those individuals who rushed into money markets

chasing attractive yields have the strategy to hang out there until they see the fed being done. in other words, staying short in cash is like saying you can time the market, a risky proposition. says you can make some of the choices now about your duration. there could be further losses, but only if you sell the biggest risk, he says, from investors who abandon the long-term strategy because of short-run fears and you realize those losses instead of riding them out. >> yeah. it's a huge debate as to whether it's a gift to be able to lock in the long end or not. see how it plays out. >> one of the things, mike, people are making a choice. it's a call a to be in cash. it's not a neutral, benign decision. it's a decision you make. >> absolutely. yeah. no, over that 10-year period you have no idea what the rate is going to be, and maybe the market does. we'll see. as we head to a break, check out the biggest gainers on the s&p this morning on a day when the s&p is down 1%. you see boeing up a couple.

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less than an hour into the trading day so far and the s&p down over 1%. we talked, bob, about the 10-year, the bob i refer to is this man to my right, bob pisani. what do you make? >> we were doing fine on the verge of going positive and then the jolts report came out and cost 30 points immediately, yields move up and we're captive to yields. look at the sectors here. modest moves up earlier on in consumer staples, industrials, that's gone negative. new lows on reits. we talked about this yesterday. utilities new lows as well. we're basically in runway rate shock situation. that's what's going on here. two problems, number one, the classic yield plays, the reits and utilities, can't compete with 4.7% treasuries. people are selling them. this is secondary problem, the knock-on effects. this is increasing the costs to fund projects everywhere and we think about it, think about capital intensive industries out there. two examples i have been using

are clean power and biotech. utilities as well got to build plants so a secondary effect here. let me show you, for example, nextstar energy, the renewable energy company, talked about revising down growth expectations because of higher borrowing costs. with you saw this with orsted, big company in denmark had to revise down their estimates due to higher borrowing costs. they do offshore wind projects. that's been a problem. look at bitcoin. why would biotech be affected? this is very capital intensive industry. this is a new low for the biotech etf. on top of that most of the biotechs are small cap companies. this increases the risk to banks lending to them because they're small caps. higher borrowing costs and the fact that you're a small cap putting pressure on. we were talking a little while ago about the higher yields. only about 60 companies in the s&p that can compete with these

yields. david, you were talking about verizon at 8.4%. >> i didn't know it was that high until jim pointed it out to me. >> altria, almost 10%. at&t, now reits, to give you some idea about what is normal, typically, those kinds of stocks the verizon and at&t, they will be doing 4%, sometimes 5%. 8%, oh, simon property and the crown castle the famous reit there, normally also in the 4 to 5% range. these are way outside the normal range. one thing that has been happening, banks have been moving down. the yields on some of the super regional banks. we're near 8% at keycorp. normally these are 3% yields that you typically see. so this is really way outside the range of people who are out there. so these are very juicy yields if you can stand the risks, sara. by the way, new low list expanding. bank of america just hit a 52-week low today. that's the first large bank i'm

seeing at a new low here. you want to keep an eye on that one. >> in particular because of the size of its treasury portfolio and the assets where dated. that's been a concern. down 20% for the year, more than any of the -- >> cash on hand is going to be very interesting as part of the portfolio balance sheet these days because, obviously, you've got that cash sitting there. you can reinvest that in treasuries. wondering if this is an issue for some of these companies. might have large amounts of cash on hand. we should look into that a little bit more. >> we know you will. still ahead, a tough september for technology stocks. apple now more than 12% off the highs of the year, nvidia down 10% from recent highs. what's ahead for the magnificent seven and the rest of tech into year end? we will discuss it as the losses w wnbo 3 pnt dodo aut00ois.

welcome back to "squawk on the street." i'm bertha coombs with your cnbc news update. the man accused of abducting a 9-year-old girl from a new york camp ground was arraigned overnight on first-degree kidnapping charges and ordered to remain in jail without bail. authorities say they tracked down the girl monday night to the man's trailer and found charlotte sena in his cupboard and found craig nelson jr. through fingerprints left on a ransom note he put in the family's mailbox that morning. police in thailand arrested a 14-year-old who they say opened fire in a luxury mall in bangkok today killing at least one person and injuring six others. police say the boy is being

questioned. a motive not clear. and india has reportedly told canada to remove 41 of its 62 diplomats from that country. it comes as diplomatic tensions rise between the two nations after canada's prime minister said there were credible allegations india was involved in the killing of a sikh separatist leader on canadian soil. according to the associated press, india gave canada one week to repatriate the diplomats. over to you. >> thank you. turning now to tech, the nasdaq coming off its worst quarterly performance since the second quarter of last year. still, the second best year to date. let's bring in analyst mark mahaney for a look at what's up and generated here in terms of potential opportunity, maybe some hazards out there in your university. what is the market delivered to you in terms of an ability to either reload or back away? >> well, i think you still have

certainly for the average, like meta and google, alphabet, you're going to have accelerating growth in the back half of the year. this recent pullback, mike, i think sets up good, long opportunities for those stocks, particularly meta, one of our top three stocks. data about amazon that has to do with the direction of aws growth and market skepticism they're going to be able to generate acceleration in the back half of the year. if they do the stock has a lot to the upside. we like uber which has held in here along with some parts of the market. >> you make the case that sort of the meta earnings leverage story top line growth story may be still under appreciated even though the stock has done well. how are you thinking about this idea that, perhaps, charging for subscriptions in europe, how does that blend into their profitability per thursday. >> >> i'm not sure that blends in well at all. i don't know if that's a negotiating tactic with europe.

it would be unfortunate if meta has to do that. there's this debate about whether -- that it should be allowed to do personalized targeted advertising in europe. it seems you have a choice if you want personal advertising or junk mail. i'm not sure that's what's going to happen in europe. i'm not sure that blends well. the rest of the business, that's a sizable part, but the rest of business the rebuilding of the stack, the monty zaz of the reels part, the short former videos on meta and the messaging ad. these product cycles are powerful and the easiest comps in the space, the most clear acceleration story out of meta. it comes down to what expense guidance is for next year. if you keep it modest you get rewarded by the stock, the stock will go higher. >> a headline this morning out of the "wall street journal" netflix may be considering price increases out there, too.

the stock has been green on a down day. is that a key part of the story? it has ban theme for a while now. >> i think it is. i love the way the management team raised this. widening their price points, a wonderful way to describe what is a price increase. they talked about this publicly. i don't find it that terribly surprising. the question, when the hollywood strike did push that timing out they're not going to put up a price increase during a strike and a price increase until the contents gets more robust. there may be holes as the same for all streamers because of the strikes. a price increase is coming on the high end price points, but it's in the back half of next year. >> appreciate the time this morning. >> thanks, mike. >> thank you. after the break, long-time m&a veteran rob kindler will join us. don't go anywhere.

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it's in the back half of next welcome back. the deal making environment is

seeing glimmers of hope with domestic m&a seemingly more resilient in the third quarter, at least that's what our next guest says. having been around deals as both a lawyer and banker for the last 40 years, i guess that's about right, recently moved from morgan stanley to the law firm paul weiss which has established itself as a major adviser on the largest transactions out there, this man, rob kindler, global chair of m&a at paul weiss. glad you kept the title. well done. let's talk a little m&a. it's been a long time and it's good to see you. first of all, this move up in rates, is it coloring at all your view of both the fourth quarter and next year? too early to say? what impact will it have? >> i don't think vatsz that much significance. i mean, it does limit buybacks. the days of borrowing money to do buybacks is basically over anyway. and also shareholders don't want buybacks as much as m&a or

organic investment. even rates for private equity aren't really the drivers of returns. the drivers of returns for private equity is availability of leverage. the difference between getting six times leverage, six and a half, affects returns. 2% and more for interest rates doesn't really affect returns. >> these days they're having a harder time getting six times leverage, too. >> yes. the general availability in the market, but not necessarily rates that affect returns. i don't put this -- i don't put the slowdown as being attributable to interest rates. >> that said, i do wonder if private equity is more on the sidelines now as a result, perhaps, of the availability of credit and the inability to get those leveraged rates they might have wanted in the past? is that the case? does it open it up more from the strategic side? >> a couple aspects to that. you never underestimate the ability of private equity guys to do deals. that's the business they're in. the market where debt is trading

below what they put it out as, they'll buy back the debt. there's no question that generally p/e, particularly dealing with public companies, has been muted. i think that's partly because the stock prices are relatively high. if you're looking at the market and trading multiples, even though the market has come down, generally this year, the mumts. s are high. it's hard to do a deal for a public company. >> what are you expecting as this year comes to an end and head into next year? are things going to get busier in m&a? >> i think so. what people are comparing everything to is 2021. that was $4 trillion worth of deals. we'll get back to a normal pace of m&a. this year was down more. there were more uncertainties in the market and war and all that. just more uncertainties for people. i think we'll get back to a

normalized level. >> one thing we have talked about great deal and i think for good reason is, regulation. in particular antitrust regulation. the ftc and doj. what are you hearing from companies in terms of their approach at this point, given the losses the ftc has had of late in certain cases? are they more willing to pursue things they might not have, even a year ago? >> well, there's a couple aspects. in europe it's been pretty challenging to do deals for years. europe was really the more than the u.s. then the change of administration, it's become much more difficult in the u.s. there are deals not being done because people don't want to take on the risk and time to do it. given what's happened in the recent cases people are emboldened. having said that as we get more into an election year people may say i'm going to see what happens in the election before i start something that really has

any antitrust -- >> still an issue. >> definitely. >> the number one issue you find when you're at least advising early on whether an approach made or deal considered? >> number one issue. used to be when i became a banker 23 years ago, that the first call would always go to the bankers. put together the deal. when done, let the lawyers take care of it. now it's the opposite. the first call is to the lawyers to say, what are the regulatory implications, not just in the u.s., but globally, but in the u.s., you have antitrust, you have cfius. the first issue you think about. >> does that still put a lid on particularly the stuff that i might want to get excited about, the mega kind of cap oftentimes does run into more impediments on the regulatory front? >> i think for at least the foreseeable future, we're going to see very, you know -- a bigger slowdown than in large deals. but the flip side of that is

that we're going to see more deals dealing with corporate clarity. i came in today and, obviously, kellogg is being spun off and we also had, you know, johnson & johnson spinning off. so there's going to continue to be spin-offs done because shareholders want corporate clarity, but large deals, i don't see it happening. >> the old shrink to grow is going to continue to be a theme? >> inn think so. >> talk about banking-lawyer, lawyer, banker, lawyer? are you going to keep working forever? >> i was listening this morning. jamie dimon said everyone will live to be 100. i'm only 69 years old. you're only 59 years old. >> thank you for reminding me. >> congratulations on 30 years. it was wonderful seeing your mom and all of that. >> yes. >> the flip side you've been unable to find another job for 30 years. >> that is true. >> congratulations. >> you have, too, although as lawyer-banker the same job or

different job in all seriousness? >> it's similar. it's advising boards. i'm spending my time as a lawyer just advising boards on governance, activism, non-deal related things, and there's a lot more of that than there was when i was a lawyer last time. the role in doing m&a is very similar. >> very similar. you mentioned activism actually. it's a good question i haven't asked you. do you expect, again, we move towards the year, windows start to open up in terms of nominating, anything we should anticipate when commit to that? >> i think it's going to continue to be pretty busy on that front. there were -- i don't know the number, i think close to 90 proxy fights last year. of course, virtually all of them end up settling, but having said that, yeah, i think activism is going to continue to be out there because these activist investors and, of course, most of them it's just a small part of their overall funds, not just activist investors, but the activist side of it, they see

companies where they think the expenses can be cut or parts of it can be spun off. >> you can't stand those activists? you hate activists, come on. >> some of my best friends are activists. no. actually, david, i've said this before with you, is that activism generally has been good for the market. it's really forced companies to think about things like kellogg spinning off. jense j&j had an activist but they would have done this without an activist. i think activism has been a wake-up call. how about ceo confidence. that always proves very important in terms of the willingness to do deals. how do you rate it? >> still uncertain. from an m&a side ceos recognize you need m&a. right. all of these corporations have huge inside development and business development and all that. they need m&a.

on the other hand, to do significant deals with challenges in the market now and the market maybe still being overvalued in an election year coming up, the regulatory issues, i think it's pretty muted. >> how is paul weiss treating you okay? >> it's been great. a terrific firm. >> are you going to stay a lawyer or be a bankinger? >> i'm only 69 years old. i don't know what i will do in 10 years. >> your favorite guy marty is still at it. >> absolutely. >> rob kindler, good to see you. sara, back to you. >> learned everybody's ages. thank you. david faber. kellogg spinning off its serial business now trading as klg on the stock exchange. shares are falling pretty hard down almost 7%. tough day for it. the company's new ceo joins us with his take on the business and the consumer. the future of cereal, that kicks off in 10 minutes. don't go anywhere. we are losing more ground in the market. the dow down 375, more than 1%

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the s&p 500 down 1.3%, making a new low since back on june 1st. slightly below last week's bottom level. we also have the volatility index ticked to about 19.8 at the high. that was june 1st data. it was the date before you had a blockbuster jobs report, june 2nd. the market gapped higher, 300,000 also we stopped short last week in the selloff of 4200 in the s&p. it seems like a lot of things coming together to see if we get a moment of truth for stocks. >> the center of action is, no doubt, the bond market today. the backup of yields we are seeing just accelerated. the jolts report on job openings

adding fuel to the bond selloff. you saw it immediately in the 10-year. the 10-year at 7.58%. it showed that. there were more job openings in august than expected, 9.6 million. july was revised higher. it's august so it's old news. doesn't say much for the september jobs report we're going to get on friday. what it does say, david, which i think is spooking the market, the economy, specifically the labor market, is remaining remarkably resilient in the face of these rising interest rates. that isn't necessarily supposed to happen. it does give the fed more room to go even higher and to go higher for longer. that's part of the mix now, on top of everything else. the issuance, the concerns about the tightening and the balance sheet, the concerns about inflation sticking around for longer. it's all adding up to fuel what are now higher rates.

we're looking at new highs going back to 2007. >> we heard, as you pointed out from mester nonvoting, barr voting, both saying potentially one more hike or higher for longer. >> did you see michele bowman, the governor, she's the most hawkish, she gets a vote every meeting, and she said we could get a few more hikes. she was the first to worry and warn about inflation. that's just sort of adding to the worries here. and then if you add it all up, guys, it does increase the chance of a hard landing, right, because it constrains capital. companies have to pay higher interest, consumers have to pay higher interest rates and eventually -- >> that's the fear. the ultimate fear is not, hey, the economy is cruising along and we're going to have higher debt cost. it brings things out of balance. 8% mortgage rates and things like that. >> starts to filter through. >> not great for any interest rate sensitive groups, obviously. we just looked at the banks,

whether it's utilities and the like. you don't know, mike, some high dividend payers that bob was mentioning earlier, verizon at 8.4%, for example, are they just moving at spread to treasuries? >> in a sense. implicitly when the market has your yield at 6% plus, which is where they've been for a while, those companies, it's saying this is no growth. this is being run off over a very long period of time. and then after that, it's what moves the relative yield it is, obviously, just spread to treasuries. also these are leverage companies when it comes to, you know, at&t, verizon. >> to a degree. >> without a doubt, to a degree. large user of capital. >> borrowing and paying higher. >> any companies reliant on having to pay in a regular way. the banks, you know, bob mentioned as well, bank of america, the largest loser amongst the big banks in terms of the stock market. we talked during the mini crisis

quite a bit about the fact that, obviously, it's too big. it's a sifi by far, but, nonetheless, they didn't do a great job sort of apportioning their assets properly. >> no. the irony, in a sense, they thought they were being pretty conservative because they weren't writing new loans and throwing mortgages around with the excess capital. they were parking it in treasuries. just so happened at a part of the curve that was vulnerable to big paper losses. that's what we've seen. >> the other headache, of course, companies have to deal with on top of rising borrowing cost is the stronger dollar, which gets stronger every day and tracks yields higher. we saw it jump when we got that report of the higher job openings. there's funky stuff going on now. you're reaching these levels. i was watching the dollar/yen. it went the other way. it spiked up to $150, key level where they went in the past and now the other way. either people were scared they might intervene again or a big options -- >> went the other way, meaning the yen strengthened. >> they were wondering, were

they intervening? no word of that yet. we are at levels where things are creeky, right? and we worry about it. we're wondering -- >> a company you know well, proctor gamble, which we have seen dollar impact there. stock's up this morning. >> i was going to say some of the core defensive is starting to work, kimberly clark and png. utilities not yet. >> we've got a lot more market coverage for you. stock market and, most importantly, perhaps, the bond market as well. "squawk on the street" is right back after this. when you're looking for answers, it's good to have help. because the right information, at the right time, may make all the difference. at humana, we know that's especially true when you're looking for a medicare supplement insurance plan. that's why we're offering "seven things every medicare supplement should have". it's yours free, just for calling the number on your screen. and when you call, a knowledgeable, licensed agent-producer can answer any questions you have and help you choose the plan that's right for you. the

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good ftuesday morning. a first on cnbc interview with the ceo of novartis is ahead as they plan to spin off their generics business tomorrow. >> speaking of spinoffs, we have the other half of kellogg, the ceo of the company's north american cereals business joins us. >> and later, the highly anticipated trial of sam bankman-fried kicking off. we're live on the ground with the latest this hour. markets under significant pressure this morning. the s&p 500 still down about 1.3%. the dow off 350. nasdaq composite underperforming slightly, down 1.72. this is in