good morning. welcome to "squawk box" here on cnbc. we're live from the nasdaq market site in times square. i'm becky quick along with andrew ross sorkin. joe is off today. it's friday and what a week it's been. we had watched the futures or the equity markets move up for four days in a row. yesterday, that trend was broken. you saw down across the board with declines of .50% and .60% for the averages. you are looking at red arrows. dow is off 45 points. nasdaq is off 80. we got the hotter than anticipated cpi number which came after the ppi number.

inflation numbers are up. sharper than expected. you are looking at yields at ten-year at 2.6%. we have news breaking overnight. uk watchdog giving the green light to the microsoft $69 billion takeover bid of activision-blizzard. it removes the hurdle for the deal to close. the regulators said this deal would stop microsoft from locking up competition in cloud gaming and preserve customers. in a post on x, brad smith said we are grateful for the review and decision today. we crossed the final regulatory hurdle to close the deal to benefit players in the gaming industry worldwide. this has been one for the books. saga that i don't think anyone was anticipating would go on this long. given all of the regulatory hurdles.

>> maybe the ftc. >> and cma. there was a question of if they would ultimately approve it. >> 22 months. a long time coming. a lot of questions of what this means. just about every deal will be questioned by the doj or cma. microsoft took the extreme steps and saying we will do whatever it takes. we will work with the regulators and make this happen. it did not make things happen. although the cma is a huge deal. there is no one to appeal to if the cma decides they don't like a deal and then it doesn't happen. >> when the decision came out, there was an expectation it was over. who do you appeal to? >> somehow they did it. >> we'll get to more of that throughout the broadcast. we have an earnings alert this morning. dow's united health group reporting earnings at adjusted

$6.56 a share. that tops $6.32 with revenue of $92.4 the billion. that is also ahead of estimates. you are looking at the stock up marginally right now. unh is lifting the lower end of the guidance to between the range of $24.80 to $25. that stock up marginally on that news. it is a very busy week or end of the week. busy day for earnings. in the next hour, we hear from jpmorgan chase and with wells fargo and then citigroup happening at 8:00 a.m. right now, we want to get to the israel-hamas war. telling the u.n. that the entire population of northern gaza which is more than 1 million people should relocate to the south within 24 hours. nbc's kelly cobiella is joining us with more on that front. kelly. >> reporter: becky, good morning

to you. that warning issued in the early morning hours locally here at 7:00 a.m. the clock is trvery much tickin on gaza right now. the u.n. said this is catastrophic carrying out evacuations of that size in northern gaza. keep in mind 750 strikes by the idf on the gaza strip. a lot of infrastructure is damaged. roads have been bombed. there are buildings which have collapsed into the roads. just getting people out of north gaza is incredibly difficult. you talk about the numbers of 1.1 million people trying to evacuate. that number of people and now less than 24 hours is virtually impossible. the largest hospital in gaza is in gaza city which is in the

north. a place where people have taken refuge and scores of people being treated. here in jerusalem, there is a tight security situation. it 2,500 police officers deployed after hamas called for a day of rage in east jerusalem and occupied west bank and other parts of occupied territories in israel and beyond, really. there are heavy, heavy restrictions on friday prayers here. only wor worshippers over the af 50 are allowed in the mosque. tensions have been high here in the west bank since the attack on saturday. some 24 palestinians killed in the west bank and east jerusalem over the past six days or so in clashes with israeli forces, according to the palestinian health ministry.

security forces want to keep ahead of this today and they are hoping things remain quiet. it has been relatively calm so far today. becky. >> kelly, thank you very much. it looks like we are taking a few hits. we will keep in touch. kelly cobiella from cnbc. in the meantime, lee cooperman calls this a stock pickers market. we talked to him yesterday where he told us he is not interested in buying stock market benchmarks likes the s&p. he says valuations at this point are too high. he thinks the market is under estimating the risk of the fiscal crisis. he called out his least favorite part of the market right now. >> my least favorite would be long-term bonds. i don't think bonds with the long duration make sense given what is going on in the world.

i think interest rates will likely go higher. when interest rates go higher, bond prices drop. i would not be a buyer of bonds until we got to over 5%. >> later this hour, we will take a closer look at the energy sector. that is a place where cooperman is finding value. andrew, he has 20% of his portfolio in energy stocks. everything that happened with exxonmobil and pioneer earlier this week makes him think consolidation is coming. we have more on the auto strike. yesterday, ford's president of operations saying the company is at the limit of what it can offer the uaw in concessions. ford is willing to shuffle money around within the existing offer to meet the prierorities, but added costs would hurt in the area of electric vehicle.

shawn fain posted here's to talks with stellantis are better than yesterday. fain is expected to update members on the progress of talks in a 10:00 a.m. address which is expected to air on facebook live. we will bring you that news as it happens. >> speculation yesterday with an analyst putting out a note saying maybe this is a good sign they shutdown operations at ford. it is a stretch. phil lebeau thinks it is a stretch, but he says maybe this is the way of fain taking the ultimate move that really cripples and hurts the companies and they are doing the best to get the best deal. phil thinks that's a stretch. interesting take. >> interesting on the ford front. if ford is saying there's no more money, it is clear you can

shuffle money around -- >> they don't want to take more steps to cripple them down the road. bring back retiree benefits which they had gotten rid of earlier. they are looking at bigger issues. i think there are things that the automakers, all three, are reluctant to move on. >> we will talk more. when we come back, steve scalise is dropping out of the speaker race. we will talk to punchbowl's jake sherman about the speaker. later, calvin butteler wille with us. this is a live shot of new york city. we're coming right back.

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that's a good question. the government is in chaos at the moment. house republicans are unable to rally around anybody. it is fair at this point, andrew, to say there's a possibility that nobody could get the requisite votes to become spooek speaker of the hoh republican support. scalise is out. jordan supporis up next. he was getting calls out to get the bid for speaker. there are a lot of moderates against jordan who don't believe he is the right pick for speaker. irony of this all is at the end of the day after conservative hardliners pushed kevin mccarthy out, we could end up with a patrick mchenry or a moderate house republican getting to the speakership with democratic support. after hardliners put mccarthy up, you could end up with a

speaker with democratic support. >> walk us through the permutations of what happens next and how long this can go on? i imagine technically forever. and when mchenry would be a true possibility if that was to be the case. >> this could go on for weeks. there is no end in sight right now. we have to see how jordan does today. what happens is republicans need to go into the closed meeting and vote for the nominee just like they did with scalise. vote for the nominee for speaker. if that person emerges from the conference with majority vote or if they change the rules with 217 supporters, then they go to the floor and have to build support for 217 votes on the house floor. i would say, though, if this permutation doesn't work out or option doesn't work out, they have to move to open the house of representatives which is not open right now.

they can't do anything. they have to move with democratic support at some point soon because this is getting ridiculous. the government shuts down in 30 days. just a little bit more than 30 days. israel twill need aid in the net couple weeks. they need a speaker of the house desperately. >> jake, what are the odds -- there are a couple of scenarios i could think of with bringing back kevin mccarthy. that was brought up and he said forget it. maybe what is a more likely scenario because it is hard to imagine two sides getting together and say we agree on supporting somebody to make them the new house speaker. maybe they agree to give more powers to patrick mchenry as the temporary speaker and that is how they get through in the long term? >> i don't think kevin will do it based on my conversations with people in his orbit. i think mccarthy thinks once you leave, you got to go. i think that is probably right.

i think the next option if jordan cannot get through is moderate republicans seeking a compromise with democrats to empower mchenry to be the speaker. >> to be the speaker? maybe not be the speaker? this is the situation with mick mulvaney who was the acting chief of staff for forever. >> it is different, becky. this is a statutory obligation. they need to elect a speaker. they need to vote on it. the house of representatives, same at the senate, you can do anything with majority support. they ask pass with 218 votes to give mchenry the power to move legislation. that is the next step, i imagine, especially on the government funding deadline. what you and andrew both asked, this could ask a while. the patience is running thin in the house republican conference.

they said they wanted this time for passing bills and now they're fighting with each other which is not ideal. >> jake, i want to go back to the mchenry possibility and how that would come together. what would need to happen for that to take place? >> they need to come up with a piece of legislation that would -- two paths, andrew. he could be elected speaker. he can't win speaker with the republican vote only, i don't think, because he was the architect of the debt limit deal. the other deal is they could drum up democratic support and the speaker pro tem can pass legislation and gavel in the house and do all of the things the speaker can do. democrats want something from that. we have to bring our bills to the floor. you have to give us seats on certain committees. they will exact a price for that. it is possible. i can tell you there are a lot

of republicans who are talking on the record about this and already talking to the house parliamentarian about how to put this in place. >> jake, it is good to see you. i don't know. i feel like we're going to see you every morning. >> i'm here for you, andrew. >> thank you. we appreciate it. we appreciate you okay the broadcast and in our inbox. thank you. >> thank you, sir. when we come back, shares of dollar general are jumping after an executive shuffle. we have the details straight ahead. check it out. that stock is up by more than 7%. later, quarterly reports due from jpmorgan chase and wells fargo and citigroup as we kickoff earnings season in real moan mode. jprg chase down this morning. citigroup is up right now. "squawk box" will be right back.

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we have a market flash for you. check out the price of oil. rising after the crackdown on russian exports. two shipping companies violated the oil price gap. you are looking at crude up 4% this morning. wti at $86.33 by barrel. becky. it is time for the executive edge. dollar general shares are higher after the company announced the former ceo is coming out of retirement and will take on the ceo role again effective immediately. the board thanked the ceo for his service, but said it determined the change in leadership is necessary to restore confidence in the

company. owen had been in the role for less than a year. the stock suppis up 7%. it is off 55% for the last year. this morning, it is up 7%. in the meantime, earnings are coming out this morning. blackrock reporting adjusted earnings of $10.91. better than $8.26 that the street was looking for. that is on revenue of $4.52 billion. that is in line. we will see if they get credit for this. blackrock seeing net inflows of $2.75 billion. assets under management at quarter end are $9.1 trillion. that is up from $7.96 trillion last year. any time you use a "t" and millions and billions. there was a period of time where they had more than $10 trillion under management for a period of

time. i want to say a hot minute. when the markets are much higher. >> anybody saying there's been all of this dispute from states. red states saying we're not going to invest. blackrock is doing fine. $1 trillion increase of assets under the last year. that comes in different forms. these other numbers are year to date. 98billion in etf. larry fink is making comments here saying they have seen periods of uncertainty like this before. people did not know what was going on and a lot of people went to cash. you can make a yield return on cash. get paid to sit and wait. when investors are ready to put that money back to work, they came to blackrock. he thinks this will be a set up for this again. >> we will talk more about that and as we get another set of

earnings report with jpmorgan chase in a bit. coming up after this break, after exxon's deal to buy pioneer this week, will others jump into the m&a game? leon cooperman thinks so. and an update on the united auto workers strike with shawn fain. we will talk about the odds of escalation. as we head to break, we have a look at yesterday's s&p 500 winners and losers. >> announcer: executive edge is sponsored by at&t business. next level moments need the next level network. move to the cloud. - so, the question is... - cyber attack! as cyber criminals expand their toolkit,

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good morning. welcome back to "squawk box" here on cnbc. we're live at the nasdaq market site in times square. i have futures to check on. the dow would open down 47

points. the sa&p would open down 13 points. at pioneer could open the door for more in the oil and gas sector. that is what lee cooperman says will happen. we spoke with him yesterday and the energy sector is one area of the market that has his attention right now. >> there will be other deals that follow on. we think devon could be a candidate. we own pipeline companies l like enterprise products and high yields paying me to be patient. good management and large insider ownership. >> joining us right now is rob thummel. rob, it sounds like you are in agreement with leon cooperman. this is similar for others looking to invest in the permian ba basin? >> i have been investing in 37

years. he has a few years on me. maybe a few decades. i agree. oil is established it will be around a while. the permian basin established as a low cost and low carbon supply basin for the world. there are a lot of players in the permian basin and consolidation makes sense to lower the cost of production. >> what happens? we spoke with exxonmobil's ceo and pioneer's ceo earlier this week. darren woods thinks they will be able to get this out of the ground in the permian basin at $35 a barrel once this deal goes through. they have other things to make it cheaper with the technology. what does this mean? that's a good number. what does that mean for the other big players? what do they have to do at this point? >> if you look back at history with the majors like bp and

shell and exxon and chevron, they were skeptical of shale early on. shale development was a short cycle. they were focused on deep water and long-term projects. in the meantime, early adopters of pioneer with shale and devon and eog were building land positions in the permian. those companies now own some of the best agec acres in the worl. now shell and recchevron have access. pioneer was the corner lot in the best neighborhood. there were others like diamondback with best positions. if you are able to an mamasse l acres, drill horizontal wells.

that is incredible. that is what pioneer is talking about doing with now being part of exxon when it happens. >> rob, which of the companies do you own? >> we own a lot. we are focused over a decade with exxon and pioneer and devon. we own eog. like all of the really shale early adopt afterers and we havd them for a while to continue to produce low cost oil. >> what does the new race that has been kicked off by exxon deal for pioneer mean in terms of where prices go from here? how much is baked into the stock prices? >> oh, if you look at the multiples of the energy sector and the stocks, they still trade at large discounts to the s&p 500. you know, they have big dividend

yields. we think there is a lot of opportunity forthe stocks to rise significantly higher. there's a long way to go in terms of price appreciation in this environment. >> even in this environment. that is what i would ask next. what is the environment? there has been talk about not money poured into this. there is an issue with supply, especially with what is happening in the middle east right now. there are also questions about the demand if we head into a downturn and oil prices come down from here. >> that's a good observation. if you look at what is priced into the stock, it is not $85 for oil or $90 for aoil. it is in the 60s. assuming we don't have some major global economic recession any time soon. as a result of that, that's why we see lots of upside to the

stock. you point out rightly that if we have a significant recession, yes, demand for oil and demand for all energy products temporarily declines. that often bounces back. look at 38 of the last 40 years, global demand has risen. what we see is opportunities if we stay out of recession and oil prices will pull back if we have recession. >> rob, the reason you see valuations below valuations for rest of the s&p 500 is because of what's going on with climate change regulation and what differentadministrations are proposing and imposing on the companies, too. that is something that will not go away any time soon. >> that's true. i think what people are coming to realize is that oil companies can be part of the solution, not just the problem.

the u.s. companies, you have to give them credit. they have made major strides improving the environmental footprint. they are looking for ways to reduce carbon. this is chevron's mantra. more energy and less carbon. how are they doing that? they are using electricity that is based off wind power out in the permian basin to operate the wells. that is remarkable. the other thing the energy companies are doing is switch to the free cash flow model. in the last decade, it was the worst performing sector in the s&p 500. this decade or since 2020, a lot of the energy companies have been generating a lot of free cash flow and disciplined and returning to shareholders. if they continue that discipline, investors will come back to the sector. >> is that part of the m&a

activity is about? >> i think when you look at that way into the future and the sector bringing in dividends and beyond that and how you continue as an oil company and continue to grow earnings, you need a lot of resources. that is what pioneer offers. drilling inventory. every year, you drill one well and the next year delivers less oil and gas than the first year. it is natural depletion. it is the nature of the oil and gas industry. you need to continue to replace oil and gas reserves every year in order to sustain production and operations. >> which of the big majors is under the most pressure to do a deal next? i think chevron because of the deal they had with anadarko.

does this put more pressure on them? are they willing to sit by and say we will wait for prices? >> you recall mike worth well. chevron is probably the most likely to continue to par parti participate. they are competing head-to-head with exxon in the permian basin to grow production. chevron wants 1 million barrels per day by 2025. exxon had a similar goal and will surpass that once the pioneer transaction is over. chevron acquired another company in colorado the earlier this year. you know, you can see them actively looking to acquire another player. there are not many left that are

pure player. >> rob, thank you. i appreciate your time. coming up on the other side of the break, the ceo of exelon will tell us what he heard from president biden at the white house meeting of ceos. you can follow us onsqwk "ua pod" and listen any time. we are coming right back.

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welcome back. here we are on friday morning at end of the week. the week which has been strong for the markets. equity markets. yesterday, you saw a pullback of .50% for the three averages. you are looking at red arrows. dow down 53. s&p futures off 13. nasdaq down by 78 points. it is a busy morning to kickoff earnings season. we will hear from jpmorgan chase and wells fargo. we hhave citigroup expected to hit at 8:00 a.m. a nonumber of ceos at the white house yesterday. exelon's ceo calvin butler is joining us now. what did you hear? what did you learn? >> first off, good morning. it was an opportunity for many of us to talk with the president

about the economy. more importantly, his desire to continue a strong stimulus where we, as an industry, multiple industries, are partnering with his administration to drive economic growth in a faster and more efficient manner. >> so what does that mean in terms of the stimulus? a lot of people think we're on a sugar high already and maybe overstimulating the economy with what the government is doing. >> i think he said in a direct way, he said i need to hear from you on what we can be doing more to ensure that you have the latitude and the tools in your box to keep employing and driving economic growth. we talked about specific details relating to each industry which was represented across the room. it was work force recruitment and development and retooling and re-training.

reducing tariffs on imports coming in. we talked about real things and tangible ways his administration could do in real-time. >> calvin, did you talk at all with what is happening about labor wages and the strike going on with the auto workers right now and also in hollywood with the actors? more broadly the labor movement and cost of labor? >> we didn't talk about that specifically. what we did talk about is the pain the americans are feeling with the inflationary pressures they are facing every day with the common goods. prices at the gas pump or items at the grocery store. we did talk about those things. we also talked about the need to attract a trained work force and ensure it is a partnership between business and labor to drive solutions and create solutions and not pitting one against the other and it must be a joint effort to keep moving

the economy forward. >> it is a third rail issue. i'm curious if it came up. immigration. a big issue in the business community in so many dynamics and ways. >> immigration was not touched. i think you can't not address immigration as we talk about the recruitment of talent. that has to be at the forefront of a strong policy. >> on a very specific level, what was brought up and what was the take away? did you walk out of the meeting thinking this is fantastic and they're on it? this is great. did you think i don't think this is great and they're not on it? what was the take? >> a couple of things. one was that you had an administration that was willing to listen in a bipartisan manner. we did not talk about politics. we talked about the bipartisan manner to drive the economy. the second piece is they were

willing to listen. willing to listen and say this is not just going to be a one and done. let's have continued conversations about what's working and what's not. i think that's the biggest take away i took from the meeting. >> any discussion of what's taking place in the middle east in israel and the like? >> it was not. we addressed the issue from the world right now in a perilous place. we went into the issues of impacting business. >> let me ask another one. a number of businesses on the list that do business in china. again, third rail issue for some people. was that addressed? >> it was addressed. the need to protect our proprietary information and technology and to ensure we are

competitive and we are not giving our intellectual property away. yes, that was addressed. >> the biggest question that the viewers watching now in the business community want to know is how you feel about it and maybe you feel it is a political question. how do you feel about the administration? did your opinion going in and your opinion coming out of the meeting change anything for you? >> no, i think what we have as a company and i'm hired to represent exelon's employees and individuals to run a safe and reliable electric grid. the fact i had an administration that was willing to listen to the issues that are impacting the energy transformation is what i led with. the fact he has a crossof indusd talking about issues that were important to us is key. >> thank you, calvin butler.

>> thank you for having me. >> andrew, quickly. it looks like wells fargo is out. i don't have a release yet. i'm looking at headlines crossing on the wires. it looks like for the third quarter they came in with $1.48 a share. the $1.24. revenue line came in a little bit ahead of expectation. $28.6 billion against the $21.1 billion the street anticipated. the stock is up 2% right now. they did talk about the net interest income level being $13.11 billion. third quarter efficiency of 63%. if you look at the third quarter net charge offs is $864 million. return on equity is 13.3%. return on assets is 14%. we are going to continue the earnings parade this morning.

we whileill talk about the big s just ahead. as we go to break, shares of boeing falling now as it said it and spirit is expanding the ongoing inspections of the defects which impacts the 737 max aircraft. don't go anywhere. >> announcer: the cnbc program is sponsored by truist securities. earns, expertise, execution.

all right, everybody. welcome back. before the break we had wells fargo. now it is jpmorgan just reporting as well. jpmorgan came in with numbers that were much better than anticipated.

earnings per share, $4.33, and doing this off headlines because the filing i'm having trouble getting to just yet. revenue number better than expected, it came in at $39.9 billion verse $39.63 billion that was estimated. assets under management, up 22%, in a difficult quarter you did see more assets going and flocking to jpmorgan. now at $3.2 trillion in terms of those assets under management. looking at a few things here, in book value, $100.30. return on tangible common equity, 22%. return of revenue on a managed basis, third quarter revenue on a managed basis, $40.69 billion compared to the $39.6 billion that the street was expecting. a little bit better of a beat when looking at the revenue number. jamie dimon is making some comments about how the bank intends to adapt and manage the

new rules very quickly but jamie dimon and brian moynihan from bank of america have been outspoken about the rules. jamie dimon makes additional commentary on this saying there are material regulatory changes that will likely have real world consequences for the markets and end users. both of these ceos have talked about how it will mean they can't loan as much money, that means fewer loans to consumers, fewer loans to businesses and the biggest point of concern is what it means in terms of international competition, what it means for our banks relative to the banks in europe and what that is going to mean for growth for the country. at least that is the case they have laid out for all of these things. dimon going on to say, u.s. consumers and businesses generally remain healthy at this point, they say consumer spending is down with the excess cash buffers, kind of going away, to some extent too. all of that additional money they had, i think it looks like the consumer spending is down. jamie dimon also saying that there is apersistent tight

labor market and the high government debt is increasing the risks of inflation, that remains elevated and the potential for rates, interest rates to rise further from here, these are the concerns we have been hering fro hearing from bi lately. the idea that hitting some point where it becomes a real problem. >> and things start to break. >> right. >> well, it hasn't broken yet for these guys. >> right. >> let's bring in stephanie link to talk more about these earnings and the upcoming earnings, we got wells, but we'll talk about the others on tap. i don't know if you have wires in front of you as we speak or just had an opportunity to listen to becky sort of walk through some of those numbers, but your first reaction? >> okay, so first and foremost, they always complain about the regulations and the capital requirements. but the -- i understand why. but the thing is, andrew, it is because of these regulations

that these companies are able to survive in the bust times, right? boom and bust. so i understand that they don't want to have to have these capital levels. but it is good -- it is a good thing. they're too big to fail, and they should have a lot of capital as a result. and so they do. so that's number one. number two, i think wells fargo is an expense control story and that continues to be the case. i don't know how much they're going to be able to lower costs into next year, but this year certainly they are continuing that theme. and it is a turn around story. it is very cheap at .9 times book. jpmorgan, they actually guided higher to net interest income. and that's, i think, one of the main reasons why they beat numbers. they are benefiting from taking market share from some of the regionals, right, and then they're also focused on the assets under management as well in terms of growing that number.

but net interest income certainly is a positive for jpmorgan, and they're also benefiting from the first republic acquisition as well on the synergies there. >> we got to run, steph, but is there one of these you would own or not? do you think there is a big opportunity here? >> well, i own morgan stanley because i think capital markets is bottoming. i also own bank of america because of their wealth management business, both stocks are very cheap. >> okay. stephanie link, nice to see you. thank you for walking us through this. when we come back, a lot more on the quarterly reports from jp and wells fargo. more highlights after the bell as well. and we'll hear from city group at 8:00 a.m. still ahead, the ahhead of the cfpb will join us. "squawk box" returns with that conference and more after this. ( ♪ ♪ ) ♪ (when the day that) ♪ ♪ (lies ahead of me) ♪

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good morning. big bank earnings in focus. jpmorgan, wells fargo and others reporting this morning. we'll look at the numbers as the earnings season kicks off. the speaker's race is back on after steve scalise ended his bid to take over the leadership position. we will get a live report from washington. and hamas rejecting calls for citizens to evacuate north

gaza. concerns are mounting over the possibility of an israeli ground incursion into the territory. we will speak to the former israeli ambassador to the united states about the ongoing war there as the second hour of "squawk box" begins right now. good morning and welcome back to "squawk box" here on cnbc. we're live at the nasdaq market site in times square on a friday morning. i'm andrew ross sorkin with becky quick. joe is off. we have a whole bunch of earnings reports literally crossing the wire this morning. we heard from blackrock, wells, and citi in an hour from now. the dow looking to open off 13 points, nasdaq off 65 points. the s&p looking to open down, we'll call it 9 points now. treasury yields if you look,

4.617 on the ten-year, two-year up above 5% again, 5.030%. and oil, a big story on the move in a big way this morning, up now, up 4%, we can round up to 4% now, 86.11. over to dom chu, he's got a look at some of the other big movers in the premarket this morning. dom, good morning. what's happening today? there is a lot. >> there is a lot, becky you guys just went over those wells results, the jpmorgan results. let's get you caught up with the other news of the morning here. the breaking merger and acquisition news of the morning, what is happening with the deal in the works and fighting regulatory scrutiny for quite some time now. microsoft's prproposed purchasef activision blizzard, taking a huge step forward after the united kingdom's competition and markets authority or cma issued its regulatory approval for that deal. that clears the way, by the way, for the deal to move forward and that deal was first proposed all

the way back in january of 2022. it has been almost two years of negotiating with regulators across the globe. activision blizzard you may recall, big game franchises, call of duty, world of war craft, candy crush as well. those shares activision up fractionally. a lot of at least speculation that this deal is going to happen here. microsoft down about one-third of 1%. no better person to talk about this particular deal and what it means than bobby kotick who will be joining "squawk box" in the next hour, 8:30 a.m. eastern time in a first on interview to talk all things video game, activision blizzard being part of microsoft, and everything else. we'll look forward to that interview. a couple other earnings movers out there besides the banks. black rock andrew mentioned. just down fractionally, moving between gains and losses, around 1,000 to 2,000 shares of premarket volume. quarterly profits that topped estimates on revenues that

narrowly missed. bl blackrock was helped along as investors put new money into the vast array of funds. it is still lower than the $9.4 trillion that we saw at the end of the second quarter. blackrock shares moving between gains and losses. we'll cap things off with united health, shares of the health insurance giant higher by around maybe 2% or so. just around 5,000 shares of volume. it reported a beat for earnings and revenues. united health helped along by lower medical costs and jump in revenues a revenues. big moves here. i know the banks will take center stage, but still with a dow component and united health and blackrock out there, it gives you a tell on what the markets are thinking these days. >> it is early. this is just the beginning. we got a lot more of the s&p 500 to get through. but so far this morning, four reports, united healthcare,

jpmorgan, wells fargo, blackrock, all four of them beating expectations to this point. and what is expected to be a pretty lousy earnings season. people did not have very high expectations coming into this. >> and i think that's probably part of the story, right, to your point, if the expectations were set that much lower, it is not to say people aren't in tune to this idea, investors aren't in tune to this idea that expectations had been lowered, but there might be some positive catalyst for the fundamental side of things. i think there is a big argument, becky, and i know you guys have been talking a lot about this on your show for the last several weeks here about whether or not those corporate fundamentals take center stage versus the macro picture, interest rates and everything else. for the time being, for a market that is trying to find some kind of positivity to latch on to, amid rising interest rates and geopolitical risks and terror attacks in the middle east, i'm not sure whether or not investors want there to be a positive side of the story. so maybe we do see sentiment change and some positivity out

of earnings can help propel that upside story. >> we're looking forward to any of the commentary you get from the ceos about what they're seeing in their businesses right now what their outlook is and we'll hear a lot more about that. >> not just that. i'll be paying attention, close attention to what they say about whether or not they think there will be a recession at some point in the next six to 12 months. >> right. dom, thank you. we'll check in with you a little later this morning. >> okay. jpmorgan reporting just a short time ago. want to get straight over to leslie picker who whas been dicing and slicing all the different numbers. what you got for us? >> a lot of dicing and slicing. i think the market is too with the shares muted in the premarket today. but a lot of interesting things to get to here. i know becky mentioned had some of dimon's comments last hour. he goes into the state of the consumer, u.s. consumers and businesses generally remain healthy, he says. though consumers were spinning down the excess cash buffer. persistently tight labor markets and extremely high government

debt levels with the largest peace time fiscal deficits ever are increasing risks and inflation remains elevated. he also goes on to comment about the war in ukraine. he said that compoundedcompound tacks on israel may have far reaching impacts on energy, food markets, global trade and geopolitical relationships, saying this may be the most dangerous time the world has seen in decades. nonetheless, overall, it was a pretty very decent quarter for the firm. they showed average loans were up 17%. average deposits were down 4%, firmwide, we'll get into that more when i tell you about what happened in the consumer community banking division. but net income, up 35%. and excludeing that first republic acquisition, it would still be up 24%. net interest income, the metric that people follow to kind of get a sense of how profitable

the business of loan-making is, that was at it $22.9 billion, up 30% or up 21% excluding first republic. a huge tailwind from rising interest rates. provision for credit losses was $1.4 billion, that reflects net chargeoffs of $1.5 billion. net reserve release, net reserve release of $113 million. now, some of these metrics partially very, very small offset, by an impairment of an equity investment in their payments division. but going into that consumer community banking net income there, up 36%. banking wealth management driven by higher net interest income reflecting higher deposit margins, that's in part because the larger banks haven't been needing to pay out too high of rates to their deposit holders to make loans. so those margins have been able to be pretty steady. but that's partially offset by lower balances as their customers look to generate

higher yield in cash that can generate more income for them. in the investment banking division, revenue overall down 6% driven by lower advisory fees. that was largely offset by higher debt underwriting fees. markets was a little mixed here, equities revenue down 10%. but, overall, it was slightly higher in the fixed income, just up about 1% for that group within markets, guys. >> okay. leslie picker, we appreciate it. we were just looking through some of these. i thought some of the stuff he said just about the country was fascinating in addition to what he was saying frankly about jpm. he basically goes into a whole sort of, you know, i don't think he's -- i don't know how anxious he is, but between ukraine and talking about are where we are in terms of peace time fiscal deficits and then that's pretty

heavy stuff. >> it is and ultimately he kind of pins it back to what that means for interest rates, whether inflation is going to be something that is persistent and strong and whether interest rates have to go much higher. but obviously he's concerned about what he sees around the globe. >> he's always been more, though, ambitious, let's say, about discussing some of those anxieties than i think most of the other bank ceos. >> oh, yeah. he's never one to hide his thoughts on these issues and i think he takes the leadership role seriously. that as a leader, in corporate america, it is his job to speak out on these issues and something he's done as long as -- let's recap wells fargo once again. earnings come ing at $1.48 a share, on a revenue of $24.8 billion. comments from the wells ceo charlie scharf as well. while the economy has continued to be resilient, that they are seeing the impact of the slowing

economy with loan balances declining and chargeoffs continuing to deteriorate modestly. that plays into exactly what we heard from jamie dimon saying the consumer is healthy now, but they are spending down the excess balances they built up over the pandemic period. wells fargo shares this morning are up by 1.75% right now. coming up, we're going to talk markets and what the upcoming earnings season means for investors. later, hamas rejecting calls for citizens to evacuate north gaza after giving a 24-hour deadline for civilians to leave before it possibly carries out a ground attack there. we'll bring you the latest from that area mi ucongp in just moments. "squawk box" returns after this.

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the markets have already digested a few quarterly results this morning and we will be hearing soon from citigroup. next week, we have got 50 of the s&p 500 companies reporting. and five dow components too. for more on the markets and expectations for third quarter earnings, we want to bring in cameron dawson, chief investment officer of new edge wealth. what do you think of the reports we already heard this morning? it sounds like just about every one of the companies if not all of them have beat expectations this morning. if you listen to the commentary, there are some signs of concern about what comes next for the economy. >> i think that is exactly it. there is a lot of blocking and tackling this quarter. you see by a name like jpmorgan

still able to do an 18% return on equity, just shows you that even in a challenging time they're still able to be very profitable. the question is do times get even more challenging? jpmorgan talked about how consumers are starting to spin down their cash balances, but they're not at a point of reaching the full exhaustion of their spending capability. but, of course, banks are very aware that if consumers continue to get pinched by inflation, things like higher oil prices, you spent on the cash balances, how many more levers can you pull for the consumer to be the sole driver upside surprise for this economy, which is the big question going into 2024. >> so, what -- where do you come down on all of this? we had seen this kind of pressure on stocks na brought things down, real negative sentiment, but that's kind of reversed over the last five, six, seven sessions where people are thinking maybe the sell-off was too much. what camp are you in? >> yeah, we thought that some

sell-off was very likely given the seasonals, but we're starting to see this pressure when we return down to the 4200 level in support of the 200 day and rally back up to that 50-day moving average, you're losing steam, which just means that we're likely in for some more sideways chop. when we think about the messages the market is sending us, one of the most important things that we're watching is how consumer discretionary stocks are performing versus consumer staples. that actually is a really good indicator about forward growth expectations for this market. and i think one of the most interesting things is that ratio has held up surprisingly well throughout all of this correction, which brings us back to a point that maybe this correction really hasn't been about growth fears. it has been about interest rates and valuations and some kind of digestion of that, and instead of this fear -- rising fear of an impending recession. >> if it is about higher interest rates, get ready for some more indigestion

potentially. you're right, we have seen stock prices come up as the yields on interest rates came down, over this last week. jamie dimon says he would not be surprised to see interest rates higher from here, just given everything going on around the globe, if you look at potential for the strong job market that we're seeing here in the united states and then what to anticipate from the continuing war in ukraine and the attacks on israel this week that all of that could add in to additional inflation, meaning that the fed may have to raise rates. >> yeah, and he also called out those record peace time deficits, which is really important, because we're seeing big increase in supply of treasuries, that's not being taken down very well. that's what we saw yesterday with the treasury auction going rather poorly for the 30-year. and i think the interesting thing here is that if you even look at the congressional budget office projections for 2024, they have a little bit of an improvement in debt to gdp, but

it really isn't that much of an improvement, still about 6%, which is very elevated given the fact that we're still in a strong gdp environment. so, what happens if we do enter a recession, gdp falls, and you have to spend more for more countercyclical measures, where do the deficits go, what does that mean for treasury supply and what does that mean for treasury yields which could be biased higher? >> so, cameron, what do you like when you look around? it is a lot on either side of the ledger for the bulls, the bears. what do you come out thinking? >> yeah, we have been liking this pair in the sector standpoint between technology, which still has very strong trends, you don't want to fight it, we still have very strong earnings growth within technology within 2023 and even looking in 24. and then pairing it with something of more of value, cyclical value like energy. energy has the worst earnings growth in '23 which sets you up for pretty easy year over year

comparisons. but if we start to see oil prices continue to rise as they are this morning on geopolitical risks, that's an area where if the rest of the market does not like those oil surprises, simply because it would exacerbate inflation, energy would do well. energy is a cheap sector as well. you also have seen a lot of outflows from that sector. so we like the highest quality names within the sector, names that generate a lot of free cash flow, don't have too much debt, but we think it is a sector that was left for dead in '23 which could set it up for a stronger '24. >> cameron, thank you very much. >> thank you. meantime, news just out, the healthcare union striking at kaiser permanente just released it reached a tentative labor deal with the company. we'll bring you more details as we get them. they had gone on strike, they had stopped that strike, hoping to get to this place, and it appears they now have. good thing all around. but we will dig into the details of that transaction and what that deal effectively looks like

for all those employees at kaiser permanente. coming up on the other side of this, where will the fractured republican conference go next now that steve scalise dropped out of the running for the speaker of the house? we'll bring you details about that after the break. time now for today's aflac trivia question. how many ridges are on the edge of a quarter? the answer when cnbc's "squawk box" cties onnu. coach saban, this goat done took over our office. and he's using it to send out medical bills. good hands! hospital bill for prime?! gaaaaap! did you just say gap?! he's talking about expenses health insurance doesn't cover. good thing coach prime knows about...say it one time! aflac! because aflac gets you money to help close that gap! now how do we get this goat outta here? (whistles) aflac! meet one of my new homies! gaaaaap! get help with expenses health insurance doesn't cover at aflac.com. elephant would've been scarier.

>> announcer: now the answer to today's aflac trivia question. how many ridges are on the edge of a quarter? the answer, 119. who spent time counting that number? house majority leader steve scalise dropping out of the race for speaker. emily wilkins joins us now with more. this has gotten stranger and stranger. >> becky, it is just completely unprecedented territory and we got more into unprecedented territory as the week has gone on. 24 hours after he secured the nomination from his party, steve scalise dropped out of the race for house speaker last night, after it became clear he cannot

get to that magic number of 217. republicans are now scrambling to figure out what comes next. scalise gave a warning to his fellow republicans who blocked his nomination. >> there is some folks that really need to look in the mirror over the next couple of days and decide are we going to get it back on track, are they going to try to pursue their own agenda? you can't do both. >> a lot of republicans do still want to see jim jordan run for speaker. but several members have already come out, said they will never be able to vote for jordan. and this is how congressman mark alfred responded last night after a republican meeting when asked if jordan could be the nominee. >> i have no earthly idea. i'm a freshman caught up in this maelstrom. we're a ship that doesn't have a rudder now and i'm thoroughly disappointed in the process and i pray to god we find something. >> some republicans are already

suggesting other options if jordan can't reach 217. some are putting forward the names of lawmakers, and some are pushing to give patrick mchenry the bill to temporarily pass legislation. house republicans are going to meet this morning to figure out next steps. it is not clear at this point when we are going to see a speaker of the house. it now has been 11 days since kevin mccarthy was ousted. >> and it is not like there is nothing going on in the world that is demanding attention at the moment. look -- >> just a shutdown and a war. >> i have to assume there is pretty significant pressure coming even on both parties to try and reach something to figure out, to break a logjam here. what happens next? is there -- is the idea of a bipartisan situation one that works or is it more likely that maybe they get together and decide on a temporary basis they will just make sure that legislation can make its way

through the house? >> well, democratic house leader hakeem jeffries has reached out with a bit of an olive branch toward republicans that said, hey, we can't find a way to come together. but for a lot of republicans, they still want to work this out internally. absolutely not ready to work with democrats. that said, there are some discussions beginning to happen among certain more moderate republicans, republicans who were elected from districts, that supported biden and who are really worried that come 2024, republicans will lose control of the house if they can't get their act together on speaker. so, i think a lot of possibilities right now, we hope to learn more a little bit later this morning after the meeting, what direction republicans are going to be taking. >> emily, hakeem jeffries reached out with an olive branch to say we can work together. what is the price tag that came with that? what do they want in return? >> that's a great question. that's something that republicans have told me that some of them want to hear a little bit more. at this point, jeffries has left it pretty vague. and that's one thing that we're seeing a lot of these ideas that

have come up, hey, maybe we can make patrick mchenry temporarily have the ability to pass legislation. how would that work? would that be legal? do you need to get a lawyer involved? again, it is just a lot of unprecedented territory, it is a lot of possibilities, but at this point, it seems like republicans are going to try and move forward with jordan, they might try to move forward with someone else, but you have all these other ideas percolating if they can't come to an agreement within the next week or so, remember, the senate gets back next week, biden said he was going to send his request on funding for israel next week so there is already pressure on house republicans, that's only going to amp up. >> emily, thank you very much. still to come this morning, we're going to bring you the latest on the with a are in the middle east. plus, the consumer financial protection bureau working to prevent junk fees. we'll talk about the fight against those extra charges. later, activision ceo bobby kotick will join us to talk about the breaking news of the morning, the united kingdom's competition and market authority

issuing regulatory approval for that deal, paving the way for activision's deal with microsoft to go forward after what has been a long, long legal journey. stay tuned. you're watching "squawk box" and this is cnbc. (all) ♪ toooo youuuuu! ♪ (sean) i wish for the amazing new iphone 15 pro! (jason) sean! do you mean this one - the one with titanium? (sean) no way i can trade this busted up thing for one. (jason) maybe stealing wishes from the birthday boy is not your best plan -- switch to verizon and trade in any iphone and get the new iphone 15 pro on them. (sean) what!?

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welcome back to "squawk box." the futures this morning have shown a little improvement. the dow futures are higher right now, up by about 43 points, maybe in part because we have some dow components that have come out with better than anticipated results. united healthcare better. all of the earn ings we heard this morning have been better than anticipated. nasdaq off by 42. if you're watching treasuries, which equity traders have been watching very closely for a very long time, the ten-year this morning yield a little bit lower 4.62%. the two-year at 5%. it is down slightly, but still above 5%. >> okay. meantime, pnc financial reporting moments ago earnings of $3.60 a share. that's better than the $3.11

that the street was looking for. revenue of $5.23 billion, slight miss. some comments by pnc's ceo. the regional bank is positioned well for the current economic environment and he proposed regulatory changes, we heard j jamie dimon commenting on the regulatory changes. pnc hasn't been impacted in the same way. but look at where the stock is today and where it was 160 before, you know what is going on. let's get to the latest now in israel, with the hamas war. israel told the united nations overnight that the entire population of northern gaza, which is more than a million people, should relocate to the south within 24 hours. nbc'skobeiella joins with more. what you tell us? >> good morning. that order came at about 7:00 early hours of the morning here local time. so it has been in effect now for

several hours. and what you're seeing in gaza is families trying to find any way to get out of the north, get out of gaza city and other places in the north. and head south. the problem from what we understand from our people on the ground is that there simply aren't enough taxis to carry all of the population of gaza in the north down to the southern part of the strip. 1.1 million people live in that part of gaza. it is also home to the strip's largest hospital, sheva hospital where people have been taking refuge and where many people have been getting treatment after the almost constant bombardment by the israeli defense forces. the united nations has asked for -- has called on israel to rescind that order, saying that this could cause a humanitarian catastrophe, with people on the road, heading south, those who are able, and then with no place

to stay. israel rejecting that, not backing down at all, with those, you know, hundreds of thousands of troops amassed at the boarde and all indications that some kind of ground offensive is imminent. defense officials said they are preparing for a ground offensive into gaza, though the government has not yet ordered it. also today, more action on the diplomatic front. secretary of state antony blinken meeting with king abdullah of jordan today as well as mahmoud abbas, palestinian authority president. we are still waiting on a readout from the u.s. side, but the palestinian president telling the palestinian media that there has to be a humanitarian corridor in gaza to allow palestinians to leave safely. becky? >> kelly, thank you. that is nbc's kelly cobiella. >> with the latest from israel is michael orrin, former israel

ambassador to the u.s. we appreciate you joining us this morning. you heard that report, and we're all, i think, trying to understand not just what comes next, but how this can be done in a way to is both retaliatory but also respectful to some degree of the human lives that are there in gaza and how you think this is going to ultimately play itself out. >> thank you, andrew. thank you, becky, for having me on. that is a tough question. and the question that should be addressed not to the state of israel but hamas. hamas is using this population as a human shield. hamas has a vast number of attack tunnels, ambush sites throughout the neighborhoods. don't think of a leafy suburban neighborhood, these are killing zones. and the actual humanitarian thing to do is to ask the

civilians to leave and give them ample warning. otherwise, hamas will use them as human shields. hamas has given the order for the people not to leave now y would they do that? they want to use those humans, those civilians as those shields, they would like to be able to claim israel is guilty of war crimes, that's the way they can legitimately give -- delegitimize us. this is the best that israel can do. we have called on the international community and there is no shortage of ngos in the gaza strip to assist with the evacuation, to provide shelter and food for this population in the southern part of the strip, which is agricultural and wide open places and asking egypt to open the border, the border is sealed and allow some civilians to resettle temporarily in the sinai desert or in the city. >> how concerned are you, though, that this entire battle

spreads? that iran meaningfully gets involved? that others meaningfully get involved in at this point? >> it would be my personal working assumption, i'm not in government anymore that the minute israel enters into the gaza strip, that hezbollah will not sit by passively. perhaps not iran. they don't act without a green light from iran. and therefore it is very important. the decision by the biden administration to move significant naval assets into the area, to serve as a check on possible hezbollah and iranian involvement in the war. >> in terms of u.s. support and u.s. money, we are looking at a situation where there is no speaker of the house, there is a question about whether our own government is going to shut down within the next 45 days or less at this point. how pivotal and important do you think that is right now? >> it is important. i wouldn't necessarily say it is

fateful right now. and president biden did say he would work with a dysfunctional congress to assure that we get the necessary funding, if we need one. what israel needs right now is ammunition. we're almost certainly going to run short. underneath the state of israel there is $2 billion in prepositioned u.s. military material. it was put here at the beginning of the gulf war to serve u.s. forces in the middle east. it stayed here. and each time we usually have a war with hamas, we ask the united states for the key to the warehouse so we can go in and take what we need and we almost always get permission to go in and get what we need. this time the biden administration has actually preempted our request by sending vital munitions already to us, by plane. in addition, if the international community tries to condemn us for conducting this war, for defending ourselves, the united states will be there to cast a veto in the security

council. and the last great service of the united states can give for israel is the morning after. there will be a morning after of this war. and we have to think seriously now about how we can -- rebuild gaza in a way it emerges as a peaceful or an element for peace in middle east, not an element for terror and vicious barbarism. >> ambassador oren, thank you for joining us. i hope we get to that morning after and i hope we have an opportunity to have you back to talk about what that morning after should look like. thank you. >> thank you very much, both of you. when we come back, the latest on the uaw strikes against the big three automakers. right now as we head to a break, look at the big bank stocks this morning after jpmorgan, wells fargo and blackrock all reported numbers better than expected. jpmorgan up by about three quarters of a percent. wells fargo up by 2%. citigroup shares ahead of their report up by 1%. morgan stanley and goldman

sachs, we should be taking a look at blackrock as well. again, though, citigroup coming at 8:00 a.m. eastern time. also at 8:30 a.m. eastern, activision ceo bobby kotick will join is on a first on cnbc interview on the merger deal with microsoft that was given final approval by a uk watchdog overnight. "squawk box" will be right back.

the uaw expanding strikes this week and more could come today. phil lebeau joins us right now with more. phil, what's next on the agenda here? >> becky, it is unpredictability. that is the word of the day when it comes to the uaw. remember, a couple of days ago as you and i talked about yesterday they called for a strike at ford at the kentucky truck plant. that was going against the grain in terms of how they usually called for their strikes. typically on a friday morning, it is when shawn fain holds a facebook live update and talks about negotiations and has said here's where we are striking.

we'll hear from him later today. let's see what he has to say. in terms of the strikes that have been called so far, including the one at kentucky truck plant that was announced on wednesday evening, about 33,000 big three uaw members are currently on strike. you take all of the plants where there are strikes, it brings down about 29.8% of the big three's u.s. production. not overall production, but u.s. production. so, a healthy chunk of what they build here in the u.s. and more than 5,000 workers have now been laid off by ford, gm and stellantis at facilities where there is just not work to be done because they were receiving stampings or parts from facilities that are now on strike. here's the strike map of all the strike locations across the u.s. there are now six final assembly plants on strike, including three from ford. speaking of ford, yesterday, the company held a briefing with reporters and analysts in the afternoon and the company said we have hit our limit.

there is a limit to how far we can go in terms of the economic proposal, in terms of the pot of money that we are willing to agree to in this next contract. now, they did say they're able to move things around a little bit, whether it is, you know, from commitments in retirement savings, to cost of living adjustments, they're able to do that, but in terms of the overall amount and they wouldn't tell us how much, they say that they have hit their limit, interesting to see what shawn fain has to say about that today. and then quickly take a look at shares of gm and stellantis. the uaw was meeting with gm and stellantis yesterday. we don't have an update on the talks. but they have been talking on a fairly regular basis. and those talks held yesterday, not talks between ford and the uaw yesterday. shawn fain talks at 10:00, guys. we'll let you know what he has to say. >> phil, you've been so close to this whole matter, this whole issue, the whole way through. does this feel like a situation where there is progress being made or does it feel like that's

pretty elusive still at this point? >> still elusive. i will say this, becky, i do think that there is progress being made in certain areas. but the key area that needs to be cleared, the big hurdle, is what happens with the ev battery plants that are being planned by gm, ford and stellantis, and you know last week, shawn fain said, hey, gm came to the table at the last second and talked about us organizing and representing some of these battery plants. haven't heard anything else about that from gm, or from the uaw. was it a formal offer? if that's the case, that is a major change. i think that's the area that people are focused on the most. but in terms of whether or not it is a 21, 22, 23% wage increase over 4 1/2 years, cost of living adjustments, they made progress in those areas. there is no doubt about that. now the question becomes the big hurdle on ev battery plants and then can you lock it all up?

i still think we're probably well away from seeing this thing finalized. >> phil, thank you. we'll see you later. >> you bet. okay, coming up, the white house unveiling new efforts to crack down on junk fees of all kinds. we're going to talk hidden charges, the impact on american families next. and we're going to do that with the director of the cfpb. check out the futures this morning, right now the dow about 13 points. the nasdaq off 51 points. we have earnings coming in from blackrock, jpmorgan, wells fargo. at 8:00, we'll hear from citigroup. we're coming back after this.

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welcome back, everybody. the protection bureau is working with president biden to get rid of those so-called junk fees. thank you for being here. all right, junk fees, i think it's a hard thing to find anybody who really wants to defend these fees. it's sneaky stuff. it's ways of trying to get consumers to pay more. what's the pushback you've gotten from anybody at all? >> many of the firms have built a business model and their whole pricing models on how to obscure the up-front costs. everyone wants to advertise it as free but there always is

someone on the back end. we're taking a series of steps, particularly in banking, to make sure that those fees are history. we've seen ftc proposed rules have all-in pricing and no more young fees across the country. i think it will make a big difference to people to the tune of billions of dollars. >> what do you think of junk fees? i think of things on my cell phone, service charges. >> not just a little. it's like a third of the bill. >> it is. >> i think it's airline seats, getting charged to sit with your family. the airlines is one of the biggest issues i run into. >> any kind of a worthless service or a service that really doesn't cost anything at all to provide or really when it's pushed on some sort of consumer who has no real choice. we've actually recovered hundreds of millions of dollars just in the last few months and

we have found so many. one, a bank was charging a paper statement fee every month. they weren't even printing it or mailing it. so a lot of this is going to happen through law enforcement. >> that sounds like they're a flat out fraud. i can imagine a bank charging me more to send that to me every month. >> sometimes they're not even providing the alleged service. >> is it wrong to charge a fee if they're sending it home? >> if you're getting some legitimate extra service, that may be something, but we also want to look at how is it priced? is it through the competitive market or are they just pushing it on you? >> is the goal to remove the fees and lower prices for american consumers? is the goal to make the whole process more transparent so people know up front this is what the airplane fee costs and, by the way, you can't bring a

bag on or if you're going to bring a bag on, it's going to cost that much more? >> philosophically, is it ultimately to lower the fees for american families or ultimately make it more transparent? or think it might have the same effect? >> we've seen it reduced by billions just in banking. here's the big picture. we want firms competing by providing great products, great services at a competitive price. we don't want them innovating on how they can actually cheat or trick people. if i'm an investor and i'm looking at firms today, especially in banking, i'm looking at that fee revenue and saying is it going to be stanab sustainable over the long run? >> that sounds really good. to andrew's point, i'm not sure i understand in reality how it plays out. does that mean the airline can't charge you for extra bags? i know if i bring a bag i'll

have to pay $35 for the first, $50 for the second or if it's over 50 pounds i have to pay a surge charge and if i'm a member of their loyalty program, i'm not going to have to pay any of those things. >> part of it is getting rid of the hidden part. making sure it's all up front. >> in many cases you do but i've gotten thousands complaints where it's tacked in on the very end. a family called and said it was never disclosed the entire time and they had a resort fee charged for their stay at the desk. >> meaning you can't have the resort fees or can't have it without advertising? >> you have to show it all in. >> on the one hand i understand getting hit late with a fee you didn't know was coming or for a service that you were never provided with. that sounds very different than

having a business that is built around fees that a lot of these companies do. is it going to be illegal to have those fees? >> is it a legitimate service or is it not? i'll share with you, we have found, for example, bank of america, wells fargo, several others charging multiple insufficient funds fees for the same single charge. we have seen them reordering the transaction so that they can trigger three overdraft fees instead of one. >> but overdraft fees are legitimate. you just can't do multiple charges on that. >> you have to do it in a fair and transparent way. sometimes it's about showing and disclosing but sometimes it's the way you're actually doing it behind the scenes. and the truth is -- >> how often does that happen? i would be surprised -- >> we've seen it go down by billions of dollars. i think what happens is they star seeing competitors doing it

and regulators who have been asleep at the switch and it becomes a race to the bottom and that's exactly -- >> in particular on that kind of thing, what banks are you looking that? >> we're not going to disclose what our enforcement investigations are but we've done big actions against wells fargo, bank of america and regents banks recently totaling hundreds of millions and banks are cutting the insufficient funds fee by $2 million because they see that's not a legitimate service. >> what happens with the supreme court ruling? when i talked to people about this and look through it, they say just the funding mek chanis is the problem. that's what the supreme court is looking at. are you allowed to get funding for an agency without going

through congress in. >> well, the solicitor general made the argument before the supreme court. many people are wondering -- i think if you look at our history we have had a situation where congress decides how agencies are funded. mortgage lenders across the country are worried that if all of the cfpb rules are validated, how are they going to know how to make a loan legally? >> it's a more complicated question. >> we need the hidden fees on health care services gone, that's what we really need. >> coming up, the top competition watch dog, bobby kotick. big hour ahead after this.

good morning. bank earnings kicking off. we've heard from jpmorgan and wells fargo. we're about to get new results from citigroup. oil prices jumped on tightened u.s. sanctions against u.s. exports. this is pushing things back towards $90 a barrel. we'll talk about it. and microsoft and activision.

we'll speak live with ceo bobby kotick as the final hour of "squawk box" begins right now. good morning and welcome back to "squawk box" right here on cnbc. we are live from the nasdaq market site in times square. i'm becky quick along with andrew ross sorkin. joe is out today. it's friday, last hour of the show for us. so far u.s. equity futures are hanging in there. you're going to see dow futures have turned around after starting out by about 45, 50 points. that comes after strong earnings reports we've seen this morning.

just about every report we've seen has beat expectations, including unh, which is a do you component. s&p futures have improved, down by only about 2 points and treasury yields are a little bit lower. the 2 year is just before 5% at 5.03. >> leslie picker, what you got? >> you can add citi to that list of company beating expectations. city reporting 1.52. including divestitures, it would be 1.63. generated $20 billion and

analysts had it pegged at 19.3. they mentioned organizational changes the firm announced a few weeks ago. she said when completed, we will have a similar firm that will act faster, better, and unlock value for our shareholders. there aren't any specifics however, of what it's going to cost or save. there will likely be a lot of questions on today's conference calls about this specifically. as for q3, citi is highlighting its quarterly beat. the division does cash management for large corporations, had its highest revenue quarter in the last decade. rates had their best quarter in a decade and investment banking stocking up but citi also had

mandates on the arms are instacart and clavio. city has been streamlining and divesting international businesses the past two years or so. two-thirds of the process is complete with the taiwan consumer banking closing in the third quarter. shares up about 1.5%. they were up as high as 2.2% right around the time that release crossed. >> so question for you, which is when you think about the earnings here, why is it the provisions that we've been seeing in these reports, they seem a little counterintuitive with more cautious tones from ceos in statements thus far? >> it's a good question, andrew. so you have the diamond commentary from this morning where he talks about how, you know, we're in kind of the most dangerous time we've seen in decades given all of the geo political aspects in ukraine and

now of course in the middle east and then here we've got some commentary from wells fargo, which is hosting their media call, which issued the same cautious tone surrounding geo politics and yet in these releases we see a little bit of release of reserves. so there is kind of a disconnect there. you have to take a step back. a lot of these banks have been provisioning for more in the last few quarters or so, just with the expectation that there could be some sort of a recession on the horizon. that recession keeps getting pushed down the road, pushed down the road, pushed down the road. they're just trying to adjust to that and their various models are doing the same thing. >> leslie picker, thank you very much. it has been a big week of inflation data. on wednesday we got that first report that showed that producer prices were up more than expected last month and then yesterday we doubled down on it. we got the latest read on consumer prices. that index came in hotter than

expected, too. joining us to talk about what the data could mean for the federal reserve's next interest rate decision is former dallas head richard fisher. richard, hotter than expected inflation numbers but it hard to take that in a vacuum. you have to add on the situation in israel and concerns what may come next in ukraine as well. all of this together, what do you think the fed does next month? >> if i were still sitting at the table, i'd say we sit still. we've had tightening occurring along the yield curve, fiscal policy, massive borrowing, planned treasury auction schedule tentative but 1.7 trillion, new issuance is tightened policy. some will show you if it goes up

20 basis points, we've seen a lot of movement here. in july the 10-year was at 3.6, now at 4.6. the pressure seems to be upward. one of the things that led to a reduction in yields right after the attack by hamas and the war that's occurred now between israel and hamas within the gaza is -- we saw people rushing to dollars and we saw yields come down. now they're coming back up. so i do believe we're seeing a flattened of the yield curve. i'm not sure investors or others are thinking about it that way, are ready for it. in essence they're doing the fed's job and i don't think there's a real need to move. i wasn't surprised, as you know, that we get these -- surprised by the up side on inflation, but

still we're moving in the right direction. i would sit here and i would watch and let the curve do the tightening for me and i would also continue to reduce the balance sheet, which is now under 8 trillion as of last thursday night. so the market's doing the work of the fed and therefore they don't have to do a whole lot. i would still have a relative hawkish statement. what you say is as important as what you do and make it clear you're still going to be able to get that inflation rate down to the 2% target over time. >> let me read you commentary from jamie dimon this morning. he's a risk manager. he's concerned about issues like this. he seems to think that inflation could run higher and as a result rates could run higher, too. he talks about how you've got a really tight labor market. you don't know what's going to happen with ukraine, what the additional impacts will be between there and israel and just points out the largest

peacetime fiscal deficits we've ever seen are increasing the risk, that and government debt levels. whether or not the fed acts, we could be looking at much higher rates. are you worried about that? >> i am worried about that. we're seeing higher rates. it's creeping out the yield curve. i disagree with jamie. he said in india a couple years ago he could see the 10-year at 7%. i am not that bearish, but i could see a 10-year that moves towards the 6% range, maybe pop through it. again, let's say the fed decides at some point next year to reduce fed fund trading. again, i could see a flat yield curve or maybe a rising yield curve. i'm not saying it's going to happen but is within the realm

of possibility. all the uncertainty, it's the enemy of decision making and creates volatility. so i don't disagree with all that. >> i don't see a 6% or 7% yield on the 10-year is that frightening of a situation depending on the timeline. how soon do you see something like that happening? >> well, look at the move we've seen this summer and since the spring and then the 10-year. look further inward on the curve, where the 2 year and the 5-year are. this is a very attractive, risk-free environment from a standpoint of the investors that's a little worried about the uncertainty out there. it's a place to park your money. money market fund are yielding 5% plus and if you want to go out a couple years, you're still getting 5%. it just changes the way you have

to discount the present value of future cash flows and now you have a big opportunity cost when you're doing that valuation. when the rates were free, you could think forever and go out as far as you want. go deep into venture capital. well, now the rates have come up and they're getting closer to their historical norm. decades before. right in the middle here, a little bit low relative to history. and i think we're seeing a normalization. it changes the way investors, people have to value properties and it's still under way. if you look at those bank reports, wells fargo in particular, they're talking about commercial real estate, cre. and we're hearing that across the board. it started with the venture world, now moving to the real estate world, particularly commercial office properties. so we're going to have some adjustment here, becky, and it's not going to be very pretty for

those assume rates will stay low. they have to readjust to the real word and i think jamie dimon is right. >> what do you think the impact of quantitative tightening is? is the fed going to continue with quantitative tightening even if things look a little hairy in other places? >> they gotthe balance sheet down to under 8. >> whoo-hoo. >> we'll see what happens to the next one. i'm not sure they should defer that mission. the one thing i'm very confident about having sat at that table for ten years, knowing the chairman very well and knowing many members of the committee very well, they will not give in to the political pressure that i'm sure will be exerted and started to be exerted. >> who's putting political

pressure on them? >> well, all you have to do is listen to the senator of massachusetts. >> elizabeth warren? >> yes. but it's just -- >> that's not new. >> no, it's not new at all. however, they will not succumb to political pressure. it's just not part of the mentality. this is a fiscal issue, fiscal authorities have to deal with it. they're not. there's total chaos on the fiscal side, massive issuance. the market will determine the price of the yield on that new issuance. and that's the way it should be. >> richard, thank you. >> have a great day. >> i'll take it. thanks, richard. when we come back, we do have some key takeaways on this morning's bank earnings and a look ahead to next week. there's 50 s&p companies on deck, five dow components. stay with us for bobby kotick on

the u.k. acquiring microsoft's bid to acquire his company. stick around. you are watching "squawk box" and this is cnbc.

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welcome back to "squawk box." i want to show you what's going on here. most of the stocks up across the board. joining us with key takeaways is david jordan, senior analyst. you look at wells fargo -- well, citi up the most. jpm just up. david, your impressions and most importantly the takeaways as you individually go through these stocks and what they're going to mean not just for these three companies but the larger economy. >> sure, good morning, andrew. hope you're doing well. appreciate you having me on. these earnings this morning despite all of the sentiment and banking crisis we had, jpmorgan did $13 billion in earnings, wells fargo 6 billion, pnc 2

billion. i think these numbers are really proving the resiliency of these business models and their ability to absorb not only higher deposit costs, andrew, but higher costs as the economy normalizes following all the covid stimulus and removal of the stimulus. >> so when you break down the jpmorgan, wells fargo and citi results, is there a takeaway here? >> we do think the capital markets activities are going to be recently healthy investment banking revenues. equities were down about 10% so it's going to be kind of a flattish season. given where stocks are trading,

expectations are hopefully low and we expect to see some green shoots going into 2024. >> how do you feel about the regional banks? there's been a lot of concern about the regional banks and folks said we're going to get to 2024, 2025 and all of a sudden it's going to get complicated when you start to look at some of the real estate issues they may very well have. that conversation has almost stopped. i don't know if that's stopped for a good reason or not. >> we feel pretty good about the regional banks. that's really where we think the opportunity lies. the regional banks are reasonably cheap. many are two times or four times the precredit earnings. the deposit flows are the deposit flight panic we experienced has largely subsided

and we think over the next few quarters, you're going to see a bottom in net interest income and a positive reprices benefit in the form of higher loan yields as banks feel the benefit of loan and asset reprices over the next four to six quarters or so. >> you want to pick one? you like one the most? >> yeah, our favorites andrew are truist and comerica. truist is extremely cheap and has extremely good up side, we think 67% up side. comerica would be our favorite and wells fargo in the big cap mega group as well. >> why do you think wells fargo has not moved? wells fargo had been the great hope for a very long time and

the hope has not realized? >> actually, they continue to make a lot of progress on the cost side. obviously this regulatory head w wind than any of us could have and anticipated. as a practical matter, this deposit cap has actually really helped them in this silicon valley fall-out. they had to work out a lot of what i would call non-operational deposits over the last couple of years so that has positioned them as a counterparty of choice on the west coast. so we're quite optimistic on wells and the progress they're making. >> we got basically 30 seconds left. what is the jpm number to the degree it does portend for bank of america? >> i think it's going to be, if i had to point to one thing, i think capital market is going to be reasonably good and the manager income trends were encouraging. so i would say income and credit

would be positive. i would expect a trade up on the heel of jpmorgan's numbers. >> when we come back, activision blizzard bobby kotick, acquiring the gaming giant after what was a very lengthy soap opera. this is the fin alale. be right back.

welcome back to "squawk box," everybody. we want to get over to dom chu. he's been taking a look at some of the big market movers in the premarket. dom, there's a lot to go through this morning. where are you taking us? >> to earnings for sure. i'm going to lead the big banks to leslie and you guys to the analysis here. we'll start with the big dow mover of the morning so far outside of jpmorgan chase and that's united health, which is right now higher by just about a percent and a quarter, about 20,000 shares of premarket trading volumes. it also raised its full-year profit forecast. that was thanks in part to better results at its optum health management division. on the consumer front, some news headlines. we're watching shares of discount retailer dollar general higher by about 7-plus% this

morning, about 75 shares of volume driven in large part by news yesterday that the new boss is the same as the old boss. they are tapping the former chief ted basso to return to that roll. investors have watched the stock fall by roughly 57% over the course of the last 12 months. the board said the move is to return confidence and stability. dollar general up about 7.25% there. and we'll end with a consumer story as well. shares of albertson down by half a%, kroger down by 1.5% and this is as they're worried their plan to buy albertsons could lead to higher prices. his office is looking into

whether to try to sue and block that deal. kroger says that albertsons and that deal will benefit consumers and help maintain unionized jobs since grocery competitors like walmart are non-union entities. i'll send things back over to you guys. >> up next, we do have breaking economic data. and then a can't-miss interview with activision o ceafter the last roadblock has been cleared for that deal with microsoft to go through. "squawk box" will be right back. ? (fisher investments) nope. we use diversified strategies to position our clients' portfolios for their long-term goals. (other money manager) but you still sell investments that generate high commissions for you, right? (fisher investments) no, we don't sell commission products. we're a fiduciary, obligated to act in our client's best interest. (other money manager) so when do you make more money,

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welcome back to "squawk box." ring santelli here with the last set of breaking news items for this crazy week. import prices for the month of september expected to be up half of 1% are up significantly less, up 0.1 of 1%. that's the smallest change since it was light lly negative in ju.

if you strip out petroleum, it gets much weaker. down 0.3, expecting 0.1%. you have to go to july of last year. finally year-over-year on import prices, we've had seven months in a row, minus 1.7 makes it eight months and that is bigger than expected. minus 1.7 actually is the least negative going all the way back to actually the beginning of the year because the smallest negative we've had thus far was minus 1.1. so that equals that in february. so you have to go back to february. month over month, positive 0.7, up 0.7 on export prices month over month and if we do year over year, it's minus 4.1%, very close to expectations.

do keep in mutual fund, worse than 5.7. this is the sixth consecutive negative month on year-over-year export prices. to summarize, mostly weaker on the price side of the equation and if you look at those auctions this week on 10s and 30s, they settle next week. it will be important to see if it brings in any selling or buying. 4.61 is the 10s and at 4.61 we're down 19 on the week on a 10-year and 30-year yesterday had a very high yield because it was such a messy auction, just shy of 4.84%. if you bought into that, right now 4.76%, you have a tidy profit so look for a little selling to come in based on some of those auction results yesterday. andrew, back to you. >> hey, rick, thank you for that. meantime, the big headline of

the morning, a breaking deal and it's now been approved. the green light to microsoft's billion dollar takeover of activision blizzard. it comes close to two years after microsoft first proposed buying that gaming giant. the so opera has been going on. this is the finale. bobby kotick is here. we should say congratulations. we've been talking about this a number of times at this table before. >> thank you for having me. it's a little hard to celebrate anything right now given all the events in the middle east, especially in our business where our responsibility is to bring joy and fun to people around the world. >> this has been 22 months in the making, maybe more now. i just want to take you back to the beginning. if you had known this is what was going to happen, would you have done it?

>> well, we were concerned about what the regulatory climate would be but we never thought that there was any, you know, real reason that was legitimate why these two companies couldn't combine. there's so many competitors that are bigger, more successful with more advantages. so i think we ultimately always believed that just on the merits of the transaction that it would get through. >> but given just two things, actually how strong your business has remained and the length of time of this whole process and all the commotion, frankly, before you did this deal, which i think had actually hit the stock of what was happening inside the company, do you ever go back and say should we have stuck it out and kept doing this ourselves? >> no, i think there are a lot of great reasons. we weren't looking to sell the company but as we started to see how difficult it was going to be to fuind the type of specialize

talent in a.i. machine learning, realizing we're competing against big companies like sony, nintendo, and we started to think about how much of an advantage it would be to be a part of microsoft, i don't think after that we ever thought it was anything other than a good idea. >> for all the ceos watching you now, what is the lesson over the last 22 months? a lot of people are wondering should i pull the trigger on a deal? even if i have the same fate and actually get to the finish line, is it worth it? >> i would say -- you know, one of the things over the last 20 some-odd months that i've seen is microsoft, they have created a company that really is about partnership. a lot of people say that but they've operationalized it at scale. so having that skill and ability

to be able to understand when it's a regulator or labor or workforce or corporate partner, really being able to embrace the idea of partnership and being able to listen and understand and figuring out how to conciliate and mediate, they do better than any company i've ever seen. >> what's it going to mean with this new combination. you talked about a.i. and i've even herd yoard the neurolink i it's baffling the idea that people will control games with their thinking. >> i think it's a long way off. there are billions more people we would like it see play our games. i think one of the benefits of these combinations is we can take games that have been in the library for the last 30 years

and remake them. i think a.i. will make games more accessible. on phones in particular that have these a.i. processors, you'll see richer, deeper experiences so it will broaden the audience more. >> one more regulatory question. >> quickly, a deal is official microsoft is saying right now. >> microsoft is saying the deal is official. >> you heard it here first. >> the checks are going to clear. probably right now. i just want to read you this. this is what the cma said today. they approved the deal, which by the way is something they rarely do after rejecting a deal because you're effectively coming back to the same people. they did say businesses and their viadvisers should be in n doubt that the tactics by microsoft are no way to engage with the cma. microsoft had the chance to restructure during our initial investigation but continued to insist on a package of measures that we told them simply wouldn't work.

dragging out proceedings in this way only wastes time and money. i'm curious what your reaction is. you've been living inside the bubble of this the entire time. >> you know, i would say had we been able to better understand what the right structural remedies would have been, we might have been able to propose them sooner, but it was a learning process and they were very thoughtful and they were very deliberate and i think there's a legitimate reason. the u.k. is a really important country when it comes to gaming. it's a unique place. you have extraordinary high-quality k-12 education. you have creative talent, you have technical talent. you have the home of european a.i. you have companies like sinclair, the bbc that pioneered computers. so you could understand why they were really careful and cautious about what the future of gaming and competition would be in their market. and i have to say, i was incredibly impressed every step of the way. they were thoughtful, they were deliberate and could we have

done some things differently? possibly. but we got some good results. >> do the concessions make it a less competitive company? >> no, look, they've given up a lot but i think it will encourage competition and this gets back to the willingness of microsoft to engage and listen and respond appropriately to the concerns of government and i think they did that in the eu and i think they did that in the u.k. and not back to your original question, no many companies really have the patience and the resolve and the willingness to actually do the things that are in the best interests of both government and the company. >> we're going to press the pause button as they would in the gaming world. we're going to ask you to stay with us. we're going to talk a lot more about the world of gaming, media and the entire sort of eco sphere. and we be back with bobby kotick. congratulations.

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welcome back, everybody. we are speaking with activision ceo bobby kotick about the news that microsoft has blessed the takeover of activision. the deal is official, microsoft

and activision closing that deal after a very, very long time, 22 months of happening. bobby, i wanted to go back a little bit because this company has been your baby. you go back to 1990 when you and brian kelly first bought a 25% stake of activision that was in bankruptcy, on the verge of bankruptcy. you bought that 25% stake for $440,000. you've been the ceo, we're talking 32 years later what has happened? you are going to do what now? what happened with building this company and what do you do next? >> the most gratifying thing for me has been having access to the most extraordinarily talented people over all this time. and i think the reason why we've been so successful has been that, you know, focus on making sure we attract the most capable people in our industry and in the world and that's been the secret to the success. so for the people who work at our company, they're now going

to have an opportunity to get access to new resources and partner with different types of talent. i think a big part when you look at the legacy of ceos is how well do companies do once the founders and the ceos leave. and i think this company is really set up for great success in the future. >> you're a microsoft employee now. have you ever been an employee anywhere? >> i was technically an employee of vendi for the time vendi controlled the company. i'm making sure the integration goes smoothly. if i had to pick a successor, i couldn't pick a better person. he's an enthusiastic gamer and a really fantastic leader and i think their team is going to do a great job and all of our people are staying. for the most part, they're

inheriting a really, really talented group of people. >> we were talking during the commercial break just how it feels, like how it feels to hand over something like this in this way on an emotional basis. because we have a lot of ceos, founders who watch the show who think often times this is the gre greatest moment and i know years later they say, it's so uncomfortable, i have this thing, what do i do? you've had two years to think about it. >> i'm not one of those people that looks backward, i look forward. you always have some remorse where you think about, well, you know, what could i have done if i continued to run the company, but i think i had gotten to a place where i realized that this is a company that needed stewardship from somebody other than brian and i. and we were very lucky. we weren't looking to sell the

company when sati and phil called. it made a lot of sense and so i'm excited about the next chapter. i haven't really had a chance to -- >> what is this going to be? >> i haven't really had a chance to focus on my family philanthropy. when i look at the world right now and you think about the things that you can have an impact on, i think k-12 education in america is something that i really care deeply about and i think a.i. and machine learning are going to have a big impact on our ability to educate kids better. right now i think hate and intolerance is something that, you know, needs to be fought and i think that supporting those types of organization initiatives, i'm worried about the tensions between the u.s. and china so figuring out how to help do a betterjob of us connecting, engaging with china is important. and then the one thing i think we've seen a lot of loss of

trust in government institutions and a lot of it has come from corruption that really needs to be rooted out and there aren't enough effective resources with the complexities of government today and so i think, you know, helping support organizations, institutions that actually protect the trust of institutions is something i think will be interesting for me. >> bobby, we've spoken recently with a lot of people who have concerns about what's happening with interest rates. they have concerns about what's happening with fiscal deficits and the nation's debt level. jamie dimon this morning with a release of his earnings put out his own concerns on some of these things. we just talked about how he can see interest rates running much height higher from here. when you look at the economy, what are you thinking about? how are consumers doing right

now? >> i'm very concerned. i grew up in new york in the 1970s so i remember when new york municipal bonds were 16% and that was triple pac and we saw triple-digit interest rates, a 33 trillion deficit, a deficit that's 50% greater than gdp. that's very concerning so i have a lot of concern about the economy. >> just in terpsms of the consumer, jamie dimon says the consumer is doing well but they have run down the buffers. what do you see of concern in activision blizzard? >> we viehaven't seen that yet. the game industry has done well. i don't know that it's necessary

that we're a recession-proof industry as much as things happened like those moments in time like the introduce of new gaming hardware. you know, the smartphone democratized gaming. so things happened at these moments that might have been the reason why the businesses did well in recession, but, you know, at some point i do expect that we're going to see something that's very recessionary. >> what do you think the gaming industry and media landscape will look like in a couple years from now? given this regulatory environment -- by the way, we all thought we were ultimately going to buy game companies at some point. haven't. do they eventually -- do you think they merge? do you think this gives some of them confidence thoo do a deal? >> you know, i think one of the things we've seen structurally is that this, you know, race to streaming has created economics that defy what actually creates

value. >> that's a fancy way of saying bad economics, right? >> bad economics -- by the way, do you think that's true of gaming? my kids, by the way now, we have the x-box pass that allows we p 14 bucks a month. i don't know the numbers, but something like that. is that better economics or worse economics? we used to go and buy a dvd that cost 70 bucks each time. >> games are slightly different because they have so many different models. the bulk of our games are played for free, and so the free-to-play model builds big communities of gamers. i think that will continue. but then you have premium content you can sell, seasonal content you can sell, subscriptions like our "world of warcraft" is a subscription game. so, i think gaming has a lot of flexibility in the business model. in media, there was a lot of flexibility in the business model, but almost every area of

distribution you saw a decline in the value. and so, if you're a fundamental thinker and, you know, if you're like us where we're -- charlie munger, warren buffett disciples, you know that return on invested capital is the only objective measure of the value of a business, so i think those companies are going to struggle for a while to figure out how do they create optimized business models? >> back to what happens just with media in general. will there be more consolidation at some point, do you think? i mean, you know everybody. >> it's hard to know. i think, you know, the regulatory climate is going to play a big role in what is and isn't possible, and when you look at the ftc, intent on making new law, i think it's really hard to know. >> would that change in a new administration, do you think? because the last administration wasn't all too thrilled about

deals, especially in the media landscape too. >> you know, again, i think there's necessity for consolidation. on the other hand, i think that the regulatory climates are going to make that difficult for a while. >> bobby, want to thank you very much for joining us on this very important day. the deal official right now. microsoft and activision blizzard inking that deal and having it go through. we want to thank you for your time today. >> congratulations. >> thank you. really appreciate being here. thank you. when we come back, we will tell you what to watch ahead of the opening bell on wall street. the futures this morning have picked up across the board. dow futures up by almost triple digits. s&p futures up by ten. the nasdaq up by about five points. stay tuned. time you heard of a town named dinosaur, colorado. we just got an order from dinosaur, colorado. start an easy to build, powerful website for free with a partner that always puts you first. start for free at godaddy.com

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welcome back to "squawk." we're paying close attention to crude oil. prices are higher after the u.s. tightened sanctions of russian exports. two companies violated the cap put in place by g7 countries. that was designed to starve rush of excess profits.

check out how the oil majors are trading. also, we can look at wti crude, up about 4.5% right now, but you're looking at across the board, exxon nobmobil up 1.5%. just over half an hour ago to go until the opening bell on wall street, and joining us right now on the markets is katherine rooney vera, chief market strategist at stonex. why don't we talk about the earnings we've seen this morning? next week is going to be a huge crush of earnings. so far, so good. it looks like most of these companies are coming in above expectations, at least for the financials. >> that's right, becky. earnings expectations, you've seen come down a little bit for 3 q but rising for 4 q. my outlook is a little bit more negative. i find it difficult to imagine margin expansions and corporations doing better when you have this triple whammy of rising labor costs, energy prices and interest rates.

the 12% earnings expectation that's baked into -- or growth that's baked into the s&p 500 really looks optimistic, especially when we're talking about a deceleration in economic activity and probably earnings revisions to the downside as composite pmis roll over. >> so, what do you think? is this an opportunity, just given the momentum shift that we've seen recently or not? would you get ahead of kind of the return of the bulls at least over the last week? >> well, i'm more about optimistic about fixed income than equities at this juncture. usually, when you're at the last hike of the fed's tightening cycle, fixed income generally does very well. in fact, yields drop about a hundred basis points over the course of the next12 months, so i think that a u.s. treasury yields look enticing. i like agency mortgage-backed securities, the relative value there is remarkable. and then in the equities space, defensives generally do well at this stage of the monetary policy and economic cycle.

so, therein, i like utilities, which is generally a bond proxy. staples, health care, and i think insurance companies as well. >> and in terms of rates, look, i think this is the big question. this has been the trillion dollar question that people have been watching, especially after the lousy 30-year action that we saw yesterday. what do you do? lee cooperman told us yesterday that he wouldn't be buying longer term bonds below 5% or 5.5%, that he wouldn't touch them. >> well, look, i think that if we are entering a faphase of th economic cycle of recession and the fed is targeting real rates, there's a good chance the fed does cut rates next year. if they're targeting real rates of 2.5% to 3%, it's hard to imagine the fed keeping nominal rates as high as they are in a deteriorating economic cycle. my forecast for next year is 3.75% for the ten-year. i do think there's space to move

lower, especially if, in fact, we are at the end of the fed tightening cycle with just maybe one more hike coming in december. of course, we have geopolitical risk, so there is the threat of oil prices and their impact not only on inflation, but becky, i would argue that it's more a deflationary thing going on because it will impact consumer demand and potentially bring us forward in terms of that economic recession, which is really my base case going into 2024. >> yeah. that's what makes the market a lot of different opinions. kathryn, i want to thank you. great seeing you. >> thank you. all right, folks, let's take a final check on the markets this morning. it has been a morning of a little bit of a shift in sentiment. we started things out with the dow off by about 50 points below fair value. at this point, dow futures up by just over 111 points. this has been happening as earnings have come in better than expected, pretty much across the board. we heard from jpmorgan, wells fargo. we heard from blackrock.

we heard from pnc, united health care, a lot of numbers, and this is just the beginning of the earnings flood season. s&p futures right now up by about 13 points. the nasdaq, higher by 16. we've been watching treasurys this morning too, and those yields are slightly lower this morning, but that has been the basic ticket item. that does it for us today. have a great weekend, everybody. join us for next week. right now, it's time for "squawk on the street." ♪ good friday morning, welcome to "squawk on the street," i'm carl quintanilla with jim cramer at post nine of the new york stock exchange. david faber has the morning off. futures are holding their gains despite the worrisome headlines out of israel and gaza. you can thank a steady series of beats today. speaking of earnings, blackrock's larry fink will join us here after the opening bell. our road map begins with the banks topping estimates across the board. the