next six to nine months, but getting ready for the ultimate turn in the market, because when rates are lower, when yields are lower and if inflation ultimately is lower. our research shows that there's three sectors they should look at. consumer staples, information technology, and of course staples. >> you just hit the bingo card, because we got to go. we appreciate your time and perspective on all of it. becky, this was fun. "squawk on the street" begins right now. ♪ good wednesday morning, welcome to "squawk on the street," i'm carl quintanilla with jim cramer and david faber at post nine of the new york stock exchange. premarket hanging on to gains even as september ppi runs a bit warm, stirring some jitters about cpi tomorrow. meantime, biggest m&a deal of the year in exxon pioneer birkenstock going public today. our road map begins with ppi coming in a bit hot. investors digesting fed speak

from daly and kashkari. plus, exxonmobil agrees to buy pioneer. it's about a $60 billion all stock deal. we will, of course, give you the latest. it's another big test for the ipo market this morning. shoe brand birkenstock making its public debut -- that's how they pronounce it -- right here at the nyse. ceo is going to join us here at post nine in the next hour. let's start with that massive deal in the energy sector. exxonmobil agrees to buy pioneer. the price tag, $253 a share. it's all exxon stock, so in this case, when exxon moves down, the overall value of the deal is impacted. therefore, it is no longer $253 but not that far off from that price. they are talking about significant synergies, as much as $2 billion total annual average value over the next decade. 2.3234 exxonmobil shares, it's

an 18% premium. little background that i got, jim, and obviously want to get your take. you know this company, pioneer, so well. my understanding is having spoken to people familiar with the old situation, as we like to say, they've been talking on and off for two years, but things only sort of got more serious of late. we talked about the spring and what may or may not have happened there, but really, it's more recent than that. and it does seem to be tied, at this time, as to why it was able to get to the finish line because mr. sheffield is having succession, stepping down at the end of the year. apparently as well there was a belief that his people, so to speak, are going to be treated well. that synergy number is going to result, potential ply, in peopl losing jobs, and there's a feeling it will be equally shared. that's something i was told was important to him. but the premium itself, not that large, jim, and i know you were in the camp that thought they would get a higher number, and

you're not alone in that. >> no. >> as we had reported on monday, most likely would be all stock and it is, and exxon showed price discipline. >> yeah. okay, so, it's a huge position for my travel trust, oewned it for some time. we like mr. sheffield. when mr. julie was appointed to be ceo designate, so to speak, at the end of the year, i thought for sure this would be the long run that i wanted for pioneer, because i think it had the lowest finding costs since mr. sheffield built the best company in the permian. i have tremendous regard for exxon. i will sell every share of pioneer because i have tremendous regard for my travel trust's performance and this is not what i wanted. >> it is an all-stock deal. in other words, you are going to be a beneficiary if, in fact, they deliver on those synergies, if they do bring the price down to as little as $35 a barrel in terms of production cost over time, right? so, would you not want to just

roll into it? >> it's got more growth. i don't want to deal with this overhang. one of the reasons we bought pioneer is because mr. sheffield said to us that we will own the largest dividend-producing stock in the s&p 500. we will not after that. i think the world of mr. sheffield. it's a big win for me. so, kaching, kaching. >> kaching, kaching. >> no assault on anything. >> knowing the company as you do, what are your thoughts in terms of the deal that exxon is getting here? significantly in the permian and mid midland basin, really the saudi arabia of our country. >> that's your world. there's a time value of money. there's whether the ftc is -- >> people are thinking six months, maybe a little bit more. there is not a belief that this is going to get a serious antitrust review. perhaps it does get a second request, but as the gentleman said earlier on "squawk box," they're 15% of oil coming out of permian, less than 8% total for the country.

you would anticipate that would not necessarily bring significant antitrust scrutiny. maybe scrutiny but not -- and you know, exxonmobil is a pretty important company and if they can continue to bring the price down, that conceivably is something that would be good for consumers. >> i think the world of exxon. i think the danbury deal is good. you know why we bought the stock? let me be very clear about this. because of mr. sheffield. we won't have mr. sheffield. >> he'll be on the board. >> look, sheffield's fantastic. i want sheffield. probably isn't someone who's good as sheffield, but i have to do that because my job is to find a stock. i'm not an arb. >> i get it. that's perfectly normal thing to sell out on the deal itself. >> taking the gain. really thrilled. >> i mean, exxon is quite happy they were able to hold it to an 18% premium below a 20%, showing price discipline, all stock, but again, they can also argue --

>> the appointed ceo designate when the stock was at $22, i was hoping for more than $241 this morning. i think it probably trades at $238. that's a hell of a cry from -- >> they do also take their transition targets to carbon neutral in the permian at pxd down to 2,035. >> again, sheffield was brilliant at this. he cared tremendously. that's why matt gallagher was appointed to the board. >> exxonmobil, as we know, having done our documentary, is electrifying all of their operations. now that will include pxd in the permian and the midland. so -- in the permian. >> coterra is a better buy. but no, look, it's time to move on if you own the stock, and find the next one. >> why not just own exxon? darren woods at this point, i mean, three seats to a firm that doesn't even exist anymore. >> well, because coterra could be taken over by chevron.

i want to find a company that is worth a lot that gives you a good dividend. i wanted that dividend from pioneer. it was fantastic. >> because it was not just -- it was 75% of whatever. >> hey, listen, let's say tomorrow, walgreens got a bid from amazon. well, then, i'm gone. >> so, walgreens would be gone too. they would be happy to take a bid. that stock is nothing but pain. >> i personally -- i think mr. wentworth is so fabulous that i was going to tell you that i think you buy walgreens, and i have been negative on the stock. i mean, i just commented about the fact they closed the store that i did a giant piece on with the ceo, my pharmacy, whatever, and it's time to get behind mr. wentworth. >> interesting pick. a veteran of cigna, a veteran of express scripps.

>> he's what we call money. he's fantastic. now, they report tomorrow -- i don't think they do a good number. that's ridiculous. he's from the health care side. it's only about $6 billion versus the $100 billion pharmacy but how about if you closed all the places where stealing is rife because there's under a thousand dollars you can steal? well, then, i think you'd have a really good company. i think it could be a really good health care company, so i'm very positive on walgreens. i'm not negative on pioneer. i just got to move on. i was hoping to get a higher price, but that's okay. everybody wants a higher price. >> are you saying you're specifically looking for m&a in oil or beyond energy? >> i think coterra -- i think jordan's doing a fantastic job, but the fact that the stock's at $28 is absurd. they've got the next best permian and the best nat gas so i i'n ugly "w" but it's a "w."

>> to your point, carl, we've seen two large deals now. we've got the cisco transaction. >> which was sort of the inverse conversation about sticking around versus taking your winnings and leaving. >> there, that answer didn't work for me, this is good for everybody when you're the splunk ceo and you're talking about how it's wonderful for everyone even though you're selling for cash. if you are pioneer and you get that question why, and why this price, you can say, we believe in the combination in a real way. it's a very different answer. >> i want to find the one that has the optionality. i want the earnings to be up or i want the takeover. that's why it's coterra. that's what i want. that's not bad. but you know, i got to -- >> i don't know. what's coterra's -- >> i might be able to judge whether lina khan will go after this just to destroy the time value of money. she probably understands that even. >> woods was asked about that and said 15% of permian

production is basically not -- >> all of her writings have nothing to do with this. she says, rich people do really well. she'll say that's a misquote. i don't give a damn. she says mergers favor the rich and they're bad for the poor. she's kind of robinhood, but not the stock, which is awful. >> bending the cost curve, as they believe they can, applying their technology to all the pioneers that that will be a benefit to consumers. so, they already have their pitch to d.c. my guess is -- and i think they believe -- that they will not get a serious opposition. >> jonathan kanter would never get -- he's a legitimate guy and a heavyweight right now. when you voted for biden, you got conned. let's not, like, mince words. khan's anti-corporate. she's an agency person. >> every opportunity to just come back to khan. >> i've missed opportunities and i regret that. >> really? really? >> yes, because i wasn't rigorous. >> would you like me to bring

you together with her? she's a lovely lady. >> i've always been forgiving. >> smart, nice. >> nice person. that's my nice person indicator. >> meantime, ppi, as we said, did run a little warm today. 0.5, we were looking for 0.3. core was 0.3 looking for 0.2. year on year, jim, the headline is the hottest since april. >> i'm against these people who say we don't need another hike. give us another hike. let's spike it. we don't want to be in a situation where a year from now we say, why didn't we do more? i don't like this number. in number is too high. there's nothing wrong with another hike to be sure that inflation's over. >> daly last night saying she can absolutely imagine that the neutral's 2.5 to 3, got some play. >> i thought she was smart about that. i happen to like her work. she's a very rigorous person. >> we'll get minutes today at 2:00 p.m. with waller and bostic. collins tonight. bostic has been the most

outspoken, saying, we're done. >> i thought that was very interesting. defere jefferson was there and bostic said, we're done. i don't want to be -- sound redundant, but it's jay powell's fed. and if jay powell wants another hike, then we'll get another hike. >> what jay wants, jay gets? >> yes. yes. see, now, when i think about waddle -- waller, i think about waller, not waddle -- i just think, why can't they hit him in the flat? >> no, it's waddle. >> why can't they hit waller min the flat? >> are you talking about waller on the giants? waddle on miami? >> i play for birkenstock, so i could be anything at this point. i'm just saying, why hasn't he been hit in the flat? >> i'm glad, carl, that we transitioned to the nfl. >> well, waller -- the waller comments were where i am. the daly commence ts where i am and i think that's where powell is. i think he wants to see six consecutive good numbers so we

better have a good cpi number tomorrow. he doesn't want to be the person who's arthur burns who just, like, i stopped tightening at the wrong time. he's a good guy, and he's against inflation because it hurts the working person. so, let's be sure it's done. >> of course, "the journal" yesterday, nick saying that these higher yields are likely to extend the pause and the chance of, i think, of november's 7%. >> i know, and he, of course, is the fed whisperer, which i am not. i'm not a fed whisperer. stock whisperer. >> you're a stock whisperer and a stock shouter and a stock -- every possible range. >> does he whisper? he does whisper when you get uneasy about something. >> he does get quiet. >> i am just where it was when we got the last bad cpi number. like, oh, that was a bummer. and by the way, in september, who went out with higher for longer? not me. i just think you have to be prepared for another hike. it's okay.

>> all right, but the ten-year has backed off and 4.8%. >> this is amazing. >> below 4.6%. >> there are people who say, maybe i missed the opportunity of a lifetime to buy the 20-year. >> i know. >> but how about all that financing? remember when those people were coming out and saying, we're all dead, financing is horrible, medicare entitlements, where'd they go? >> they're still around. >> they only come in on days when the interest rates are really bad. >> they're still around. there is still the supply story, supply-demand story. >> supply story is real, but they financed it at four years. i begged them to finance it 50 or 30. >> i do. we remember it well. >> they all laughed at me. >> they all laughed at you. you begged steve mnuchin. i remember you talking about it all the time. >> i just begged him. >> online, offline, all you said was 50-year. >> there was a uk treasury official yesterday who said, maybe we should have done a little more long-term financing when rates were lower. >> would have, should have, could have, right?

i mean, you know? i didn't go back to the nfl there. >> no, you didn't. >> no, i did not, because i think coach daboll is in jeopardy, and i really like him. >> we'll take a quick break here. take a look at the premarket. we are hanging on to gains. yields up a little bit on the ppi print but not too much. still below 4.6%. we'll get to some calls on morgan stanley today, csx, novo, ourstainand of coue lkg abt birkenstock, a big event here on the floor this morning. don't go anywhere. ' i promise - as an independent advisor -

to put the financial well-being of you and your family first. i promise to serve, not sell. i promise our relationship will be one of partnership and trust. i am a fiduciary, not just some of the time, but all of the time. charles schwab is proud to support the independent financial advisors who are passionately dedicated to helping people achieve their financial goals. visit findyourindependentadvisor.com

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' let's get to the latest in israel this morning, entering its fifth day of conflict with hamas. raf sanchez is live on the ground. good morning. >> good morning. we are hearing from the gaza health ministry that they have now completedly run out of fuel for the strips. that may mean that pretty soon the two million residents of the gaza strip are going to be completely without electricity. this has the potential to be a major, major humanitarian disaster, to say nothing of what appears to be a looming israeli ground offensive against hamas terrorists inside of the gaza strip, but a ground offensive that may bring this war to the densely packed streets of gaza

city refugee camps with civilians caught in the cross-fire. as you said, carl, we are five days into this war but it feels like almost every hour we are learning new details of the full scale of the horror of the terrorist attack that sparked it. yesterday, the israeli military took us into a kibbutz about half a mile from the gaza border. they showed us the hole in the fence through which these hamas militants came, and then we basically followed the path of these terrorists as they went, killing, kidnapping through this community. it was a scene unlike anything i have ever seen. there was blood all over the walls, all over the floor of these small houses inside the kibbutz. some of these homes have been set on fire with people inside. the smell of death was absolutely overwhelming. it was home to about 700 people.

it appears that a very, very significant proportion of those 700 people have lost their lives, even though it's not physically a big place. it felt like almost every couple of minutes, the israeli military was discovering new bodies, including the bodies of children, inside of that kibbutz. so, a truly devastating scene. >> the death toll is shocking and we do expect to hear from the president once again. we'll talk soon. raf sanchez of nbc news in israel. take a look at the premarket. market obviously has a lot to process today in addition to the headlines out of israel. watch the ipo market. we'll watch the m&a market, and of course, getting a little more calls ahead of what will be a busy q3 earnings seaso n.

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>> announcer: the opening bell is brought to you by nuveen, a leader in income, alternatives, and responsible investing. all right, four minutes before we get started with trading at the new york stock exchange. let's get in our "mad dash." we talked a bit about walgreens, the new ceo. >> exxon is not the only important stock in the dow. i happen to know tim wentworth, the ceo. he's remarkable. might have known him from cigna. he's a no-nonsense guy that can generate tremendous returns from the health care side. that's where he's from.

it's only about 5 or $6 billion now, but if you close the underperforming scores, get rid of the stores that have bad shrinkage and up the health care, you will have a stock that is dirt cheap. maybe it can do $4. maybe they can do more. and i think people have -- i've not been in favor of the stock now, i mean, literally for 20 points, but this guy is the real deal, and i just salute him and think he can take you to a higher price and the stock should be bought, perhaps aggressively. they report tomorrow. it's going to be awful. >> still a very large shareholder. >> i know, but wentworth is a guy you can say -- >> conceivably a mistake to have bought boots many years ago in the uk. >> yeah, it was, but you can pivot. these acquisitions that they have been making in health care, they can be good. so, i just say, i like wentworth, and there's now hope for a stock that i have he ld n hope for. >> he replaces ross.

that was not a great situation. >> i like wentworth. i wish he were here because i think that you would hear very quickly that he's really a guy who -- no-nonsense guy who can help on the health care side, which is the future. >> we got another ceo named at sherwin williams, which we'll name in a moment, but birkenstock going public at the nyse. do not miss our first on cnbc interview with the ceo coming up in the next hour, jim. values just south of 9. interested? >> it's not outrageously valued but it is on an ebitda to earnings -- it is higher than every one of the shoe business except for on. on is valued at a more -- a higher price. these guys have a really good price point, and i will say this. i was saying to someone on the floor this morning. i don't want to excitement should not drive investing. this is a big consumer name. >> it's profitable.

>> cornerstone investors here. lvmh. durable. >> do you find corner investors just be like a dodge? >> we'll talk about lvmh on its own. that's an important story this morning. >> this is a stock that could go up, and it's expensive now. it could go higher. how about that? >> carl, ten times oversubscribe, top ten accounts got 75% or more of the stock. >> very good. >> always sounds good but we say that for every ipo and you never know. >> look, i mean, we did a big takeout saying if you bought the stock around $49, you're talking about expensive stock. crocs is -- just use the relatives. nike is at $20. these guys are just a little bit higher than that, and you know, they have 27.5. i shouldn't say little. on is the highest at 27.5. this is lower than that. but it's incredibly popular.

>> big deal for the new york stock exchange. there's the opening bell and the cnbc realtime exchange. at the big board, birkenstock celebrating their ipo. we'll talk to the ceo in the next hour. at the nasdaq, it is teen vogue and culture house celebrating the international day of the girl. >> okay. i like the fact that the margins are thin at birkenstock. >> so, jim, in terms of indexes, 4,370. yesterday, people started to talk about resistance once again, just north of 4,400. >> i think we have to take stock of the fact that even thursday, we had so many naysayers come on. they've all vanished.

they don't seem to want to come on and explain why they were right. i want our viewers to understand, take counsel of yourself. if you do not think it's the worst time since world war ii, december 8, you know, 1941, that was a bad time. and he was saying to the pacific, and i know that was not a great time to buy stocks. but nor were -- and then i could name six, seven, eight other times, and is our country in a perilous fiscal situation? we've been in perilous ever since we decided to load up on debt. they have to find a way. i don't know what they're going to do. we're not turkey. i'm saying that basically we're a first-world country and eventually we'll deal with it, even though it seems inconceivable to deal with it, but i have great faith in our country, and i hear people who says it's perilous, perilous, perilous, and i say, they do not share my faith. >> we had this discussion yesterday, and by the way, today, b of a, subramanian

reminds us we're exiting the worst seasonal period of the year, entering the best. lot of technicians saying you might look at the july highs or at least -- >> larry williams, high regards, the foremost market historian, is saying that the seasonals here, including november, could be extraordinary. and the pessimism, obviously, is high. but david, we know this. 28% of this market with megacaps, and the megacaps could have great quarters. >> they could. >> i could break them down. >> but you think they're going to be very strong. >> yeah, i think amazon is going to be strong. i think meta is going to have an insanely good quarter. >> is there any underlying reason or are these all four separate and distinct reasons? >> tremendous balance sheets, really good growth, acceleration because of a.i. a.i. being so meaningful that i had carmax on yesterday and they told you that they can pivot really good people to more

important tasks because they are able to free them from less important tasks because they can be done by generative a.i. this is -- i hear this every day from companies. it's not dross. >> this is the early days of applications for it. you're hearing it now, and i have as well, although frankly what i hear more is sort of internal testing without having fully rolled something out in terms of its use by a company. but if you're hearing that now, jim, what's a year from now, two years from now? >> b of a has a piece out today, percentage of companies that have not articulated an a.i. strategy, 6%. 6%. >> i know that when nvidia was in town last week for nonroad show road show, there's never been anything like it in that you go to a bank and every senior person from the bank is there. not the analysts, and not just the accounts because people are trying to figure out what to do. but by the way, once again, not trying to figure out how to lay off people, try to make people

more productive. that may be -- some people -- >> that may be an interim period. >> right, but i think you can get -- be more productive and do more business. therefore, you make more money, find things to do with these people. >> without a doubt. unless you can just fully replace all the people, and then it really is very productive. >> i now find myself asking people whether they're human and a good percentage are human. get me? >> when you're dealing with somebody on the phone? >> yes. i say, are you human? and it's very challenging, because they are -- you can now -- salesforce has some incredible software that would make it so that you would be thrilled that you didn't have a human. >> td cowan today takes nvidia to $700 from $600. >> i like that. >> and people still talking about adobe max this week and some of the firefly products. >> firefly stuff is incredible, if anyone's used it. the things that you can do with it a la shopify are extraordinary. to make a small business person equal to a large.

i know people don't think that's possible. you got to try it. if you tried it for a small product, i think you would be blown away. it's just extraordinary. look, i'm real positive on this stuff. i do believe, last week, there was a misinformation story about microsoft trying to make its own chips. you need to have chips that learn and process, and only right now, nvidia's learned. i mean, it's just a two-step process, and i think that people don't understand that the reason why microsoft or amazon needs nvidia is because you can't make what nvidia's making. i mean, you love to. everyone would like to cut out nvidia. david, how much would elon musk love to cut out nvidia? >> he would like to, and they are developing their own chips at tesla. but he's a huge buyer of nvidia chips as well to power their a.i. >> look, if you want to know a way that nvidia -- there would be a moment where maybe nvidia needs the chinese buyer. did you know that autos in

mexico, that three years ago, the chinese had about 3%, and now they have 23%? >> of the market? the mexican market? >> in three years, and you know how many cars are made in mexico. that's been our way to make cars. i found that number staggering. if we let china in -- >> let me understand. you're saying sales in mexico, 23% are comprised by chinese-made automobiles. >> yeah. >> up from? >> 3%. i'm sorry, 23%, that's in three years, it's up from 3%. and what's incredible to me is that, look, we have these -- the largest factory in the world for vehicles is in puebla. when you see that factory -- >> is it bigger than what i saw in austin at the giga factory? >> fraction of the size. >> really? >> yes. >> that thing was a mile. >> this plant, you just can't -- remember the boeing plant in

washington? it gjust keeps going on and on and on? >> you know calhoun. >> we got an initiation today. ubs goes to buy. >> there you go. maybe i can get back in. david got me out. at 184, i was like, i'm doing great. >> only with david's blessing can you go on boeing. >> david got me out at a remarkable price. what was the next one you were on for me? disney? nelson peltz agrees with me on disney. >> he does. >> he bought 30 million shares. >> he did. we haven't heard from him since "the journal" had that -- >> he made an interesting claim to me. he said that the stock has been very bad and if bob iger doesn't like that, that's like empirical evidence. >> at least we got news today they're raising ticket prices by almost 9%. >> how do you like that? the theme parks are unbelievable, and i am told that nelson believes the theme parks are worth the price of the stock and you get all the other stuff,

but you know, obviously, bob iger's, i think, working very hard to bring out some value. but i don't know if it's hard enough or fast enough. >> that is the question. and if mr. peltz does choose to challenge with not just a directorship for himself as he continues to want but for potentially a slate, it will be an interesting battle. >> why wouldn't you let him on? don't you need fresh set of eyes? >> they don't feel like his expertise adds to the board. that is what i think disney has said. >> david taylor didn't in procter, and then he liked it. >> they believe some are good. >> heinz didn't like it. there's three for three. >> peltz has a track record. >> unilever liked him. what's disney's problem? the ceos of these companies have told me that they liked him. so, what, you guys don't know what you're talking about? you run your company, but that doesn't mean anything? i analyzed your stock. i know more than you? >> right.

>> no. >> that's going to be his argument. >> well, it's a good one. >> disney's continues to be that we're disrupting everything in here anyway. we don't need you. you don't have the expertise that we feel would be additive to the board, and so we're going to continue to try to create shareholder value with all these different efforts that they're currently engaged in. >> i would welcome him. i think he's -- look, if the stock were at $120, i'd tell him to hit the road, but at $80, you need everything you can get. >> jpmorgan today saying disney plus downloads, pretty solid. ad revenue hasn't really happened. >> once again, i have a meeting today at 12:00, and i throw myself on the hot coals by saying that one of the dumber things i did was to stick with disney. i'm thrilled that peltz is involved because i don't like losing money. that's a fact of life. >> sounds to me, carl, like we may get a visit from nelson peltz soon on the show. i'm feeling it.

>> the stock is at $85. the price i bought is considerably higher. in the world of karen cramer, that makes me an idiot. i left out an expletive that would have made idiot sound a little more serious, and i would have had to wear a post-it that said dis, and karen would have been right. karen cramer, who, by the way, is my ex-wife. so we just put it out there. she's a great trader. >> i want to hit lvmh, because we have talked for some time about what does appear to be a slowdown in luxury. lvmh, of course, has been such an incredible success both as a company and as a stock and has made itsfounder and ceo, bernard arnault, one of the wealthiest men in the world. he goes back and forth with musk or has. but you can see there, it was topline growth but the concern here is sequentially slowing trends. what some are calling a normalization but certainly concern about macro factors.

people not buying as much leather and not as much fashion, so there's a deceleration there. there's a concern, perhaps, that there's a saturation when it comes to, again, sort of leather. europeans noted as a consumer cluster that is with weakening trends. and a few others. and so, that is having an impact, carl, not just on lvmh shares, as you can see there, but on others as well in that ultra-luxury region. >> rising rates, inflation, china slowdown. they did point out that dior has grown 3x in seven years, and at some point, some of these growth rates have to normalize a bit. >> yeah, look, i think that in a way, to be able to show your wealth in china, you can't have a big house. so, you buy their goods, and i guess, david, you know i believe there's a crackdown in china not unlike what the communists used to do, which is say, listen, we're not into your showy stuff. and not only that, we detain people who have bad quarters.

>> yeah. but you talked about the chinese consumer driving luxury to a certain extent. >> but it's been excessive. it's excessive, and i think it's repulsive. i think it's repulsive to have a country of 1.4 billion people and you're out there just spending money on this stuff when other people are trying to eat. >> jim, the dialysis makers are getting smacked today. >> holy cow, i've got a lot of on that one. >> ozempic kidney failure study showed effectiveness pretty early. >> i think this is the last straw. if you're humana -- m mr. broussard is retiring. if you're trying to buy health care, i think now you say, the kidney -- chronic kidney is a silent killer. you really got to let people be covered by ozempic. >> what don't these drugs treat at this point? >> hair loss. >> downn't count it out. >> that's next. >> what name would you short on

that? >> improved cardiovascular, heart. >> sadly, i will tell you there's nothing related to cancer that i can tell. >> no, no. >> and that is a huge killer. >> i was kidding. but clearly, the indications for these drugs are rapidly broadening. by the way, we should point out mounjaro is still not approved for weight loss. >> no, and novonortis is ahead on these tests but david ricks is frantically buying, building plants in north carolina to meet the demand. >> right. for when they get approval. it's being prescribed off label. it's ozempic and wegovy and then mounjaro and the key question will be, at what point do you get an oral? you still have to -- it's a shot. >> i will point out again, i want everyone to understand that each indication raises the possibility that medicare, that the companies who handle your

insurance, your work insurance, will cover it. and so, therefore, the private pay goes down. now, my mom died of kidney cancer, and i did a lot of research on kidney. there's just never any way you can tell. obviously, this would not have helped her, but they do have stuff for what would have kept her alive for longer. this is very difficult to tell. you may think, i'm fine, but it's possible you don't know, which is a great reason why you could say to your company, listen, i'm getting this, and you have to pay for it. big deal. >> yeah. a lot more significant than whether or not apparel habits change. >> exactly. you see, wow, this is a real hit to them, not unlike dexcom. abbott labs, real hit to them. if you can diminish the volume of people who are hurt by these, then i do think you have a sea change in what's covered. and that is when you might be able to say, well, walmart

should really be it. it has to be covered. david ricks was on my show saying -- he's not predicting instant big wave of people using it. >> there have been a lot of pushback against walmart's argument or at least their statement that, in fact, it was -- they were seeing some impact from the use of these drugs on purchases of certain supermarket items. pepsi said, no way. apparently they're selling more french fries than ever. and on from there. >> well, i had chip berg on, whom i love, and he said, look, as we had people buy jeans because of covid, people have to, en masse, buy jeans that are smaller and that's going to help levi. you have to get a different size or else you look like a guy -- you look like mr. greensleeves. >> mr. greenjeans? captain kangaroo. >> i don't want to be

mr. greenjeans in "captain kangaroo." >> i loved the captain. >> good morning, captain. we're dating all of ourselves right now. >> i know, the younger people are thinking, birkenstock, greenjeans, why don't these guys go away? >> i thought they were inside the tv. that's how long ago we're going. >> we're watching birkenstock this morning, going public today, pricing at $46 as we said. leslie picker is on the floor. i think at post five, right, leslie? >> yeah, that's where i'm at, carl. the debate this morning is less about the pricing and more about whether or not you should be wearing socks or bare feet with your sandals. you can probably see there are a lot of birkenstocks here on the nyse floor today after that company priced its ipo, $46 a share. that was toward the middle of the range and gives this company a market cap of about $8.6 billion, and the company, as well as their selling shareholder and entities affiliated with it, raised about

$1.5 billion. 30% of that was primary, sold by the company. that will be used to repay debt. the rest was sold by the selling shareholders and will be collected by them. but i'm told we can expect to see indications pop up on these boards here between 10 to 10:30, citadel is the market maker here. they'll be filling out the book as orders start to come in. right now, it's still early. we hope to give you a sense of where this could open, given the early indications within the next 30 minutes or so, guys. >> leslie, thanks. we'll check in a lot this morning. leslie picker watching birkenstock. of course, the ceo coming up in the next hour. jim, we talked a bit about this and i guess more broadly, what do you think it means for the ipo market? >> look, this is the first deal that i think has cracked the barrier of large cap companies that people might want a piece of and put it away. now, i think it's going to be,

obviously, if it's much more above 46, it's very expensive, but you look at the ipo so far. arm holdings, very important to us, and to people who know its tack, but really not that important to everybody. instacart, now called maple bear, that completely defrocked itself when they did that. david had problems pronouncing clavio. cava is closed. >> got an upgrade today. >> and kenvue has been a disaster. i'm not -- >> arm is hanging in there. it's doing okay. >> arm is good. >> feet, not so good. arm, good. get it? >> i like that. yeah. head, shoulders, knees and toes. >> isn't birkenstock fashion trends? wasn't it '60s, good, '70s, not good? >> did you watch the "barbie" movie? >> no. >> he doesn't know anything. i know pop culture like there's no tomorrow. i watched the "barbie" movie. >> that man knows pop culture. you're not my go-to on pop

culture. >> i thought the "barbie" movie was great. >> i"oppenheimer" is great. that's our parent company, we got to go with that. >> carl and i went to see that. >> two-year back above 5%. we'll get more speak today from waller, bostic, collins, and of course, fomc minutes at 2:00 eastern. be right back.

we have this tentative deal with the canadian labor union although b of a said be careful you saw tepid approvals on the ford side meaning some members may be inpatient and unhappy with the terms. we'll see what happens with that ratification. but gm in the green.

the s&p up almost 12 points and stop trading with jim is coming up next.

it's time for jim's stop trading. >> i think that what's going on in the food business and at the grocery stores. people are switching to healthier snacks. so you want to be on the hunt for companies with the healthier snacks. that's not easy to find. for instance, hostest, not that healthy. you can argue that pepsico is able to pivot, they do a lot of doritos, though. so i'm on the hunt for companies that do snacks that i think people would say that's pretty good for me. because that's what you're going to win. >> you buy this cava upgrade today? arguing the whole sector has been smacked 20% for the summer. >> i don't really care for the restaurant stocks. i think they don't have labor under control and there's just a lot of turmoil in that group, and some of the solution is overcharging. they have to pay a huge price for labor and the prices are going up. but i have to tell you olive

garden did a good job. but i think i have to find a healthy snack line. i think they're the winners off o of ozempic. >> yes. where is the wagovy truck right now? >> where's the truck? >> ever yes. >> right now it's at walgreens. >> how about tonight? >> anyone that's owned a restaurant or had a small business knows you use intuit and it saves you a fortune. some people feel the last position wasn't that good. i'm checking on that. >> see you at six. >> it was a good show. "mad money" at 6:00 p.m. eastern time. >> dave hope you feel beertt. >> thanks. glad you feel it was a good

show. >> first trade on birkenstock in a minute.

good wednesday morning. welcome to another hour of "squawk on the street." i'm sara eisen with carl

quintanilla and david faber live for you a always from post nine of the new york stock exchange. stocks this morning higher as we digest the wholesale inflation number. the s&p pushing higher by about .2%. nasdaq up .75%. most of the sectors are green, led today by real estate, communication services and financials. energy is lagging. here are three big movers we're watching now. walgreens in the green announcing it's appointed tim wentworth as its new ceo. shares have been underperforming on the year. exxon mobile signing the deal to acquire pioneer natural resources more on that deal in a moment. and novo nordisk moving higher again. the company stopping a trial study of ozempic ahead of schedule because the analysis showed signs of success, however shares of dialysis provider

davita are sliding on the other side. and watching birkenstock after pricing public offerings at $46 a share. let's go to leslie picker for more. >> i'm here with the lead designated market maker for citadel, which is handling this deal. i know weer expecting more action in the next 30 minutes or so but what are you watching now? >> yes. the goal is to try a ang late the order flow here about what we're seeing and where there's need for supply and demand. this is playing out over the next few hours. seeing the book build now we'll communicate the information as we get it here. >> do you have enough

information to determine whether or not we're looking at higher indications in the next half our so? timing? this. >> it's so early right now in the process. these ipos normally take a few hours to open. i think in the next hour or so we'll have an idea what the first price indication is going to look like and then build it out over the next couple of hours. >> we'll stay on top of it. pete, thanks for givening us a behind the scenes look of what you're doing now. for birkenstock's ipo debut here on the new york stock exchange. back to you. >> leslie picker, thank you very much. we'll talk to the ceo later this hour about birkenstock going public. this is a company that traces its roots back to the 1700s. oliver is joining us on "squawk on the street." talking about the wholesale inflation number, ppi coming in the on the hot side and cpi is out tomorrow, more important.

headline numbers .5% monthly gain. that was more than expected. .3% in the core index, which strips out food and energy which is important because energy is a contributor to that headline inflation. food was also a contributor about.9% in food prices jump on the september month but the core price a little bit elevated not what the fed or market wants to see here. if you look at the year over year reading on core, it's 2 pn.7 so getting closer in the neighborhood but still elevated compared to prepandemic inflation levels. so that's the conversation at the fed. this and yields. >> now we're down 30 basis points. >> on yields. >> yes. >> there's a flight to safety, everything going on in the middle east. and there's a lot of fed speak,

daily kicked it off last week, san francisco fed. and then jefferson. and then -- >> logan. >> lori logan, she was hawkish and then sounded more dovish saying the jump in yields may be doing our work for us. but there are still hawks, michelle bowman, listen to what she said about it, about having to raise rates more. >> i'll continue to watch inflation as financial conditions continue to evolve and develop. and that gives us a little bit more of an opportunity as a committee to weigh the data as it's coming in. we're definitely data dependent in the path going forward. so it's another factor that we will consider. but if we don't find ourselves, you know, making a dent or if we see inflation increasing again, then certainly we need to be able to position ourselves to be ready to increase rates if that's a necessary action. >> she's the only one really

talking more explicitly about increasing rates. and she's referenced lately in comments multiple potential hikes needed. but the bulk of the committee, and logan is a voter so that was a notable shift in tone from her, is talking about the fact that maybe they might have done enough or at least the rise in long-term treasury yields is helping do their work for them. neil kashkari who was also hawkish previously said something similar, here's what he said in the last 24 hours. >> it's possible that higher long-term yields may do some of the work for us in terms of bringing inflation back down. but if those higher long-term yields are higher because their expectations about what we're going to do has changed we may need to follow through on their expectations in order to maintain those yields. so it's a little bit circuitous and hard to say definitively because they moved therefore we don't have to move. i don't know yet.

we need to look at the rest of the inflation data we'll get in, the labor market data, the wage data we get in for me to get comfort that we've actually done enough. >> a little wishy-washy. but definitelyfelt like he was absorbing the point that other fed colleagues have been making about longer term rates doing the job and therefore the fed may not have to raise as many hutch. feels like they're on the side of wanting to wait. >> it was notable you mentioned bowman in the past talked about multiple hikes from here here. didn't reiterate that point yesterday. didn't mention the article in the journal that said the higher yields may extend the pause, didn't mention atlanta fed yesterday going to 5.1. i know you didn't miss that. >> it's amazing the third quarter gdp growth, the bigger question for the markets and the market has moved on from this is fourth quarter. a lot of economists are expecting a deterioration. we need to track those numbers

as well. but it's good for earnings if we see that kind of growth. i went to the bank of america -- we're all trying to figure out how much the economy is slowing beyond the spurt we're seeing in the third quarter. the bank of america credit card numbers are out. here's what it looks like, it was flat, the top orange line is services spending. that's what everyone is watching. that's the hot part of the economy and inflation. and then the bottom green line is retail, excludeing restaurants. so basically goods spending. what you can see there and why it was important to show all three, david, is that services are still elevated but starting to converge with goods. and that should be good news for the fed. who was wandting to see the services part of the economy slow down to keep a rising lid on the economy. >> if you watch it closely they must. >> they should be watching it. and the high frequency data is

important because some of the data has been harder to gleam. we're getting minutes, that's old news. >> old news. >> it's before the old rise in rates. >> surprising just how many fed members talk so often. >> they do. >> every day there's someone giving a speech somewhere about something. >> its's in the name of transparency they would say. and they have a healthy debate like in the market. what it shows you, david, is that they react to price action like investors do and economists do. and a spike in yields changes the tone for them. they don't know where it's going. >> there's one guy. isn't there still one guy? >> there's one guy but he has to build a consensus on the committee. >> he does. >> there are influential members look at the board of governors, vice chair jefferson. and bowman too. he doesn't want to preside over

a fed with dissents. >> that's true. exxon mobile buying pioneer natural resources it's an all stock transaction. on monday we indicated the likelihood it might be an all stock transaction. the price 253 that's what it was. it is all stocks so it's 2.324 exxon mobile shares about an 18% premium to where pioneer was. they're happy at exxon they kept the prooem below 20%. they have shown price discipline and this deal one would argue and in the den berry deal as well announced this summer. created earnings per share, operating cash flow, free cash flow. they are talking about as much as $2 billion in total annual average synergy over the next

decade. this is bringing an enormous amount of acreage to exxon mobile from someone who has been the premier operator in the midland area. listen to the ceo discuss it? >> the context to look at the deal is the size of the oil and gas industry. while we talk about this being a large merger, transaction, you look at it in the context of the over all oil and gas markets, if you look at it in the context of the production, together while scott and i will have a large business together, it'll still be less than 15% of the production coming out of the per peaup. i think from a scale standpoint we're still a small player in a large market so we don't anticipate any regulatory issues here. >> that was an answer to a question of will regulators take a look at that the? you heard mr. woods outline the percentage or market share.

and many seem to agree while it certainly will get scrutiny from washington d.c. it doesn't appear to pose a real antitrust threat given the percentages are relatively small. they are going to use their production and advances they have had at exxon mobile as well to enhance what they believe will be the recovery value of the assets that pioneer brings to bear to get the supply down to $35 a barrel. the production cost i should say. >> so people you talk to think it makes sense? it's going to go through? >> yes. >> and exxon has wanted it for a while. >> especially if you can bend the cost curve that's a nice argument to washington it could conceivably benefit the consumer. we'll see if that's the case but that's the argument they'll make. they've been talking i'm told for as long as a couple years perhaps not as seriously but perhaps talking about the

possibility. only recently hit serious conversations, maybe part because mr. sheffield, that grew pioneer is stepping down. he will be an exxon board member. all stock. so woods showing price discipline. his shareholders probably feel good about it. he's in a different place than he was even a couple years ago having lost a high profile proxy ni fight, three board seats and on. it helps when oil prices move up but i think certainly he has solidified his leadership there and is generally being viewed positively. >> also sheffield was asked about the war in the israel and what happens if iran gets involved he said that's up to netanyahu and depends on the proof they get if any regarding iran's involvement but that's key to the direction of crude prices. israel, entering the fifth day of conflict with hamas. matt bradley is live in lebanon

with the latest. hi, matt. >> reporter: what we're seeing, we have front row seats i'm in lebanon, not far from israel's northern border and yesterday we got to see some outgoing fire across the border into northern israel. it actually started a fire, like a forest fire that raged for a couple of hours. that's how fearsome the fighting was. it's not as nearsome as what we've seen in israel and the gaza strip for the past several days. but there's still fear, why? because hezbollah like hamas is an iranian backed militant group and political party but hezbollah is much much stronger because it has seats in the lebanese parliament, control over airports and ports, freedom of movementment, leaders are able to leave the country and travel around the world at will and enjoys more international support than hamas which is why

the international community, the united states, and lebanese people and governments are worried that hezbollah will decide to enter into this war in a way it hasn't done in nearly the last two decades. there's fear here -- everybody in southern lebanon is thinking back to 2006, if you remember that was the awful cross border war that killed nearly 1,500 lebanese people, mostly civilians, and hundreds of israeli soldiers that could be a repeat here but this time it could be more ferocious because it would regionalize a conflict we've seen already between israel and the gaza strip. so that's why there's so much dread right now even though we have seen the kind of tit for tat fighting that is rather typical across this border

unfortunately. but there are concerns and worrieds here that hezbollah will decide to weigh in. we don't know what will spur that decision. as far as we've heard, that decision hasn't yet been made. it might come from iran. when we've spoken to people affiliated with hezbollah they say if the decision comes it will will be from hezbollah. >> a designated terrorist group like hamas. thank you for that reporting. stocks in the green for october. we'll talk to one strategist who's forecasting pain ahead and sticking with one of the lowest s&p year end targets on the street. and getting a read on real estate, one of the largest lenders in the industry joins us. and birkenstock making its

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unlike chrome, the duckduckgo browser has privacy built-in. it comes with a private alternative to google search, which doesn■t spy on your searches, and it blocks cookies and creepy ads. and there's no catch. it's free. we make money from ads, but they don't follow you around. join the millions of people taking back their privacy by downloading duckduckgo on mobile and desktop today. birkenstock pricing at $46 a share ahead of the debut at the new york stock exchange valuing the german brand at $8 $8.6 billion, larger than crocks and in line with on. the ceo joins us here as we await the first trade. welcome oliver. >> thank you. as we've been talking about, birkenstock people don't know this is a company that goes back to the late 1700s. >> yes.

>> a big infusion of private equity money a few years ago. why is now the time to go public? >> it's a very simple story. it's like birkenstock is always the second best option because the best option for human beings would be walking barefoot on soft uneven ground because we're surrounded by hard surfaces so people have to go for the second best option which is wearing the birkenstock to make sure you get the rollover moment and everything is under pinned the right way and the right weight distribution. so coming back to your question. it's exactly the same thing with going public. the best thing for the brand would be staying family owned but within the family there were so many problems. so we go for the second best option and that's to be public and give the brand back to the people. >> let's talk about the business growing double digits the last few years and coming off a solid

last year. how do you keep a 200-year-old brand relevant to today's consumer in. >> the magic of the brand is simple. it's driven. it's a footwear and fashion brand. everyone is talking about evolution. compare us with the wrong partners but the truth is this is a purpose to do the best running show on the planet. in 1774, birkenstock family was sitting on the same corner saying we want to do something to make sure people are walking natural intended walking. that's the mission and the purpose of the brand. that gives you a total adjustable market which is

shocking every human being on the planet. so everyone should have access to the foot bed once and then decide if they want to have it. that's fine with us but we're not just a footwear brand. >> it does depend on fashion. i remember the all bird ceo sitting here sitting here also, very purposed brand around sustainability, and that stock has been disastrous. i feel like the shoe has gone out of style. how do you get around that? >> purpose is never getting out of style. i don't sell any luxury or look or feel. people love us for a thousand wrong reasons. but once you step into the foot bed you're coming back. you can imagine the conversion rate behind somebody owning a pair of birkenstock and infecting his kids, his partners, friends, and so on. going into your private environment and ask do you have

a pair of birkenstock? yes. how many pairs? ten, 12. >> i have two. >> you're a rookie. still room for improvement. >> now that you're a public company you're going to be watching the market, maybe you won't watch it. but the stock will go up and down based on the view of your growth. i have gotten a couple of questions about investors about the growth because i believe your ebitda numbers now are higher than the long-term guidance for those numbers. why is that? >> we are a german company, we have a german mindset, traditional. you can imagine we're not the most outgoing ones if it comes to expectations and managing expectations. let's keep it simple. the track record i've created in the company is 20% growth, 60% profit mar bgin and 20% ebitda.

you have to dig deep in the luxury segment to come up with a comparison. so yes, we are confident and our estimation for the future and forecast is a bit more traditionally oriented -- >> conservative? >> but the insiders know -- >> under promise, overdeliver. >> you got it. >> that's what you're going with? >> that's the old school way i would say. nothing fancy. we're not a one-trick pony here. this is something serious and big. >> is there an interesting cultural clash between the german discipline and engineering and financial discipline and french fashion, culture? >> frgnot at all. it's the perfect match. in the end they're all looking for the match. how do you create this relative market scarcity. how do you create this kind of discipline in the engineer and distribution. we established what we call

internal distribution. i'm with the company 16 years and i can tell you we have sold out in 16 years it's a painful thing. when you have the situation demand is outperforming the supply. then you just do what is, i would say, very traditional old school thinking. make sure you get the best per pair in every single pair. that's how you allocate the product around the world. and that is underdeveloping some areas because you -- lower asps, lower margins. this is how you steal your business. it sounds weird, i'm fully aware. we know our asp, our growth rate and we know our ebitda at the beginning of the year. >> really? that much visibility. >> yes. >> it's the same with the luxury segment, they own the channels, control the channels and play the same. it's a 3d model. how do you steer your product?

it's a territory drive, a channel drive and a product drive. more of this, less of this, you create an asp. this is the beauty of the business it's all steered, it's not just falling. >> it's not all selling stock holders here, you are raising capital as well. anything in particular you're going to do with it? >> to be honest we fell in love with our partners, but we found out they didn't have the money to pay us cash. we never produce any debt on our side. the debt is purely from acquisition time and we will pay -- >> pay back debt. >> yes. a serious amount of this because we don't need money to drive the business. whatever we do generates much. we have a cash rich company, a few million sitting in our bank accounts. so everything is super fine with us. but just coming back to this very old school point we want to bring back the brands.

because this is a democratic shoe brand. it's democratic foot bed company you can compare us to a medical health care thing and say it's good for your feet. even the haters. the guys who i hate my toes, no. they wear us at home. >> get a pedicure. >> wearing them with socks, yes or no? >> if you wish, i'm okay with both. >> i say no. but what was the -- did you get a boost from barbie? i know you did not pay for product placement there, but it was quite a symbol of i don't know enlightenment. >> we didn't have the barbie moment. barbie had the birkenstock moment that's the truth. think about this. it's a bit of a proof of concept that, you know, even in this main stream, very main stream product birkenstock is something which is into the real world.

so that's nice. >> olliver. thank you, hopefully we'll speak to you again. >> thank you. a number of health care and biotech names popping higher today. what investors need to know about some of the studies comi t no pticular when we come back. megawatts of power, rails and open road, and essential services of every kind. all running on countless invisible networks, making it a prime target for cyberattacks. but the same ai-powered security that protects all of google also defends the systems running america's infrastructure. for these services. for the 336 million of us living here. ♪ 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

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welcome back to "squawk on the street" i'm dominic chu. stocks are jean-claugeneral hig morning. the s&p 500 and sectors mostly in positive territory as you can see behind me here. but in the health care and pharmaceuticals arena watching novo nordisk this morning, saying a study tied to ozempic and kidney failure showed promising results. that sent other providers like davita lower. by the way, positively eli lilly, which has its own rival

to ozempic is trading at all time highs today after merrick garland -- morgan stanley reiterated a buy rating on that stock. and walgreens named tim wentworth as its ceo, formerly ceo of scripts. so health care, barbell, green and red. back to you folks. >> we have a good start here for stocks to october. lower treasury yields is helping ten year below 4.62%. the s&p falling more than 5% into year end? find out why when we come back.

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welcome back. here's your cnbc news update. on the fifth day of conflict in

the middle east, gaza's industry said the sole power plant is out of supply. that leaves only generators to power the area which is home to more than 2 million people. israel is amazing troops near the gaza strip border as part of its response to the surprise weekend attack carried out by hamas. as israelis assess the damage from hamas rocket attacks in this morning, the education ministry announced schools will switch to remote learning on sunday. the curriculum will focus on emotional and social aspects appropriate for the current violence. another strong earthquake rattled afghanistan this morning days after saturday's tremors which taliban officials say killed at least 2,400 people, the wider impact of today's earthquake is not clear yet but the group doctors without borders said around 120 people went to the hospital with injuries.

carl, back to you. >> thanks. b of a raising the year end s&p target to 4,600. all three indices are in the green since the s&p's low closing low last october. our next guest has one of the lowest targets on the street at 4,150 venu joins us. great to have you. i know you've written a lot about the bear steepening going on in yields and what that has meant for the economy and stocks, right? >> yes. if you look at the questions we've been getting is the steepening of the curve and what it means for markets and what's different around this time that it's steeper in other words it's the long game, which is going up. and the question was whether it's anything different in terms of what it means for the

markets. and we did find a panel to this but this was a deflationary period which is consistent with the period we are in, even though the higher inflation periods are higher. but generally speaking in all instances, i think the risk of recession remains generally high. even though right now we recognize that recession risk lower and if you look at the performance of stocks likely to outperform in the sessions. in other words investors are not concerned about recession right now. >> if you are looking at a recession in early 2024, is the play book to try to play stocks at all? what do we make of areas that are defensive that have performed so poorly? >> we're not looking for a recession next year. we are saying that u.s. growth has probably peaked and likely to moderate. the question then is, where do

you find earning strength because the market is being quite optimistic in expecting accelerating earnings meanwhile this year flat to down earnings. for that to happen the macro economic conditions have to be meaningful. we thoreau bust. but we're struggling to see where the upside coming from. the sector standpoint we like a secular growth, which ends up being big tech, heavy on quality that we like as a factor, as a hedge in a macro uncertain environment like this. on the other hand we have liked energy for a while now and higher geopolitical risk it all likely remain higher and oil companies focus on profitability and less on spending i think that remains an interesting area. so i think the market you can get exposure but generally we are somewhat weary of discretionary sectors even though we recognize that has

valued a lot in the last few months. >> is it hard to make a call on the market would knowing whether the labor markets is going to soften meaningfully? because that's the surprise. the jobs have held up and that's helped the consumer and that kept inflation firm and that's been a headwind the last few months for stocks. >> exactly. exactly. that's been the headwind for a while. but the difference is now the market is finally taking mnotic of it. but that's because the bond market is also reacting quite violently. if you look at where the market is in terms of inflation, rates and growth, you have to argue that multiples have been much lower, they're not. clearly the market is looking past earnings but where the problem comes is that where is the earnings going to come from? that's not happening. in other words, if you look at what's happening in the market returns this year, whether the high of 18 or 19% or where we are now, 12, 13% it's driven

completely by an evaluation expansion and not earnings growth. so we are reasonably optimistic. we see earnings going up next year. but sort of that's the challenge. to your point, the live strong labor market has helped consumers keep spending and that has kept the market resilient but we are listening from our consumer analysts that ticket sizes are falling, there's more caution, they're trading down but we expect that to translate to margin pressure and soften demand at the same time. this is not an easy environment in the sense that frustration talking to clients. so i think they were frustrated for not having tech exposure and now they're frustrated that the market has become choppy again. >> right. we'll keep our eye obviously on that case on the credit card data and seasonality and the holiday, too. venu, thanks. good to take to you. >> thanks, thanks for having me.

still to m kol, the chairman and ceo of one of the largest lenders in the country, willy walker. we always have lots to talk with willy about. "squawk on the street" is back after this. 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

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keep you honest on the first trade of birkenstock after pricing at 46, indication 4648. leslie picker is manning post five we'll check in with her in a food minutes. >> mortgage lender calling on jay powell to stop rate hikes saying it's pressuring an already strained real estate market. this is the spread between the 30 year and ten year. joining us now to get the read on the market, is willy walker, chairman and ceo of walker and dunlap. are you behind the sentiment of that letter?

>> i am, david. interest rate hikes have hit a small percentage of the economy, things like government that's 35%, didn't get impacted by rate hikes, health care people are still spending, that's 18% of the economy. banks and real estate are getting slammed by the rate hikes as a result we sent the letter to secretary powell. >> real estate and banks in the cross hairs. we like to get a read on the market particularly with the recent move up at the longer end in terms of yields, it's come back a bit. what are we seeing there? what are the implications? >> r as the yield curve has flattened, we have seen people who had a floating rate loan and try to move to a fixed rate loan have a harder time doing that as the long rates have gone up. so there was a moment earlier in the year where somebody who decided to float years ago could say i'm going to flip to a fixed

rate equivalent. today it's harder to do that requiring people to go back to raise capital or add leverage to their fixed rate loans to use the proceeds and do a floating rate loan. >> is that working? what's that conversation like? >> in some instances it works, others it doesn't. you're seeing it across the board. not only in office, which is very clear defined financing on office is extremely difficult but even in this a liquid market of multi-family. >> have we seen delinquency rates rise to a level we might have anticipated given what we've seen the last couple of years? >> not at all. >> why? >> if you go back to peak delin g delinquencies in q12010, that was 8.9% of commercial real estate loans were delinquent. today it's 80 basis points.

less than 1% are delinquent and the charge off number is low, 8 basis points of chargeoffs in q2 versus 2.9% during the gfc. we're nowhere close to what we saw previously yet everyone continues to talk about what appears to be a building storm. >> you said it's wreaking havoc in the real estate market, the fed hikes. is it doing enough to lower prices. they're trying to fight inflation on the rents, sales side. you have the tight jobs market and still have people locked into these low mortgage rates so they're not trading. maybe the fed has to do more. >> it's a -- the desired effect as it relates to getting rent growth out of the market. that is a supply and demand issue. a lot of multi-family was built it's being delivered now and r rents are now flat and we're going backwards. so that pressure is gone today. on the single family side you

had someone on talking about the fact that the cost of housing has gone up. the cost of rental housing has been but has not. but single family mortgages, 80% of americans have a mortgage a fixed rate mortgage under 5% locked in for somewhere close to the next 30 years. that's a massive gift to the american consumer. it's interesting because unlike other western developed economies like japan, the uk, and canada people borrow short term and floating rate we have the great gift in the united states to buy the paper from banks and allow people to have the added benefit of having a fixed interest rate on their mortgage. >> that's why nobody is going to sell their home. >> that's why the home builders are doing well. >> pricing is a problem. >> careful on that right now. they're delivering inventory to the system that's highly unaffordable to the average consumer. >> meaning what? i'm sorry. >> an average purchase price of

$452,000 last quarter from lanar, that's an average consumer can't buy a $452,000 home. they're buying them today but with where mortgage costs have gone. the home builders are are buying down rates right now, allowing them to continue to move inventory. that's great but at some point the game or financial manipulation ends. >> what about the argument that realtors come on, life goes on, people have families, people die, people are born, people go to school, get married, get divorced, even though it has to go through the fierce filter of higher rates and that will keep supply going. >> at the end of the day it's household formation which drives housing. people getting married. and one of the interest things about the rush we've seen is how many people had delayed weddings during the pandemic who came out and got married and formed a household. household formation is a driver of the single family market and people graduating from college and moving into rental housing

is what drives the rental side of thing. >> end with your company, the stock hasn't done well in the environment you're describing. when are volumes going to come back in a real way? >> that's the question that every analyst that looks has asked me. if you look at the forward curve, which has been completely wrong from the beginning of this tightening cycle, you'll look at q4 of '24, and if you look at the forward curve, long-term rates come down in that cutting and then they start to rise again. if you do get some relief on both short-term and long-term rates, you would think the deal flow would come back. >> we didn't even talk about back-to-office. >> we didn't talk about back-to-office, but we'll get to it. we're out of time today. willie, always great to have you here at the nyc. we'll be right back.

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let's get to steve liesman

with some breaking news on the fed. hey, steve. >> fed governor chris waller now, he had been one of the earlier, most hawkish members of the fed, but that changed in september when i did an interview with him in early september, and he's talking again, and again he's repeating this idea of the federal reserve could wait and see what happens on rates. that was interesting when he said that back in september and everybody thought that they were going to hold, but here they are, coming up closely into that november meeting and he's still saying that the fed can wait and see about raising rates again. he said, it's hard to see a link between mideast violence and fed policy. i'll get back to that in a second. but he says the last three months of inflation data look very good. it's astounding how resilient the job market has been. and suggesting, guys, that the market can do some of the work for the federal reserve. very interesting coming from waller, he's one of the thought leaders on the fmoc. he is a voter all of the time, and he had been one of the most hawkish. i got the idea of wait-and-see september, but the idea that's

coming over again, pouring more doubt, which is where the market is on whether the fed needs to hike in november or even december or even again, guys. >> but then again, steve, like, they would never say, okay, we're done. like, that's it. >> no. you're not going to get the mission accomplished, all done. i know we all want that, sarah. so we can put our feet up and maybe drink some gatorade and stuff like that, but we're not going to be able to do that. the ideas that we might wait and see means he might not be able to pull the trigger on another rate hike. >> that seems like where the center of the fed has moved in the last few weeks. thank you, steve. steve liesman. we'll look for minutes for you later from the last fed meeting. as we await birkenstock to open, it was an interesting conversation with the ceo. there's the indication. $46 to $48. they priced in the middle of the range. they came out with some anchor investors, like some of the oh,

ipos we've seen recently, and this is a company that has been in growth mode. and i thought the comments from the ceo to us about how forecasts were conservative can also be taken quite bullishly. but it's also consumer discretionary in the middle of a time of uncertainty for what comes next on the economy, for more than 50% of their revenues coming from the americas. >> yeah. i mean, 20% revenue, he said all of these things. 60% plus adjusted gross margin, profit margin, and 30% ebitda margins. to your poisoned, when i asked him, because there was some concern about where they are now on ebitda margins and their guidance, but he simply said, hey, we're german. we're not going to get ahead of ourselves in terms of predicting huge amounts of growth. but that said, they have a very cash flow positive business. this is not your typical growth company looking to raise capital to fuel the hope for profits one day. >> they also have a lot of receipt customers. he called me a rookie for only having two birkenstocks. you're like a nobody. he called me a rookie for only

having two pairs. >> in my household, there are. >> the fashionable ladies. >> there are definitely birkenstocks around. >> they're useful. and women don't like heels anymore as much. >> they're useful? >> yes. >> i find that whole thing, it's second only to walking barefoot. >> kind of orthopedic, the way he described them. >> you have like 4-inch heels on today. >> well, most women prefer less heels. i need heels because i'm short. >> i could use some, too. "squawk on the street" continues right after this. don't go anywhere.

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good wednesday morning. i'm carl quintanilla with sara eisen at the new york stock exchange. mark esper joins us this hour as fighting in the middle east stretches into its fifth day. >> and the dealmaker behind birkenstock's highly anticipated ipo. >> and later, a new short from muddy waters. carson block will join us with a sector he says to be bearish on. let's start with the markets. wholesale inflation, ppi coming in a bit hotter than expected this morning, signaling the fed might need to continue to raise rates, at leas