good friday morning. welcome to another hour of "squawk on the street" live from the new york stoxx. today earnings season kicking off as banks begin to report. wells fargo cfo will be with us. >> and plus nathan sheets calling for a hawkish hold. and we're live on the ground in israel as the idf prepares for a possible ground offensive ordering advantage and i was more than one million civilians from the north in the next 24 hours. but we begin with the market. next guest says it is a close

call as to whether the u.s. gets a recession, but he is still expecting one, predicting that we could get rate cuts before the end of next year if the economy slows. joining us now is nathan sheets. good to have you. we've had a day or so to slice and dice cpi. a lot of discussion about shelter away from home and so forth. how does it feed the fed i guess communication over the next few weeks? >> yeah, i think bottom line on this cpi report is that it was a reminder to jay powell and his colleagues, yes, they made some progress on inflation, the road back to 2% will be long and challenging. and they still have some work to do. and as a result of that, i think now the fed is going to be kind of shifting its discussion from how high go we do we need to bew

long we'll keep the rate above 5%. and i think ultimately it is going to be a while. we ought to get used to 5% plus short term interest rates. >> are you not of the school of thought that shelter at least, or owners equivalent rent, will follow sort of the more recent data out of zillow and new rents and so forth? ne in other words, the notion that shelter will come to play in the next few months? >> yes, absolutely. i would characterize the readings we got on shelter and owners equivalent of rent as somewhat anomalous relative to, you know, what i was expecting and what we're seeing more broadly. but even so, i think that there will be other surprises. and specifically i think that this report signaled that that nonshelter services component of inflation is still moving forward at a pretty rapid pace.

and nonshelter services notably is a larger share of core pce that the fed watches even more closely. and i think ultimately for the fed to really make progress and get traction on the shelter and nonshelter inflation, it is going to require a loosening of the labor market. and that kind of brings in this discussion of recession risks. >> so is the point, nathan, that we can't get both, the market didn't have its cake and eat it too, it can't get a soft landing with a decline in inflation all the way down to 2%, that doesn't happen? >> if something like that happens, it would be unique relative to the past 60 years in the u.s. economic history. and this is something that we've looked at very carefully. over the last 60 year, we

identified five similar episodes of rapid wage growth and high inflation. and the end game of all five of those episodes was a march rise in the unemployment rate and a recession. so i don't want to say it is absolutely impossible, but it would be historically unprecedented and would require us to answer the thorny question of is this time really different. >> nathan, how about employment? we're beginning to look at some 2024 forecasts. seeing some data that suggests maybe we trough in the 50 5k pe month range, others saying maybe 100 k for the last three quarters. to we ever get negative on nfp? >> in a recession scenario where the unemployment rate is rising meaningfully, then i think that we are likely to see some negative numbers. and recession at some point in

2024 remains my base case. so let me say yes, i'm not going to be sure priced. it will be painful, it will be challenging. and i won't be sure priced if we see some negative monthly prints on nfp. but as i say that, it will also take a discreet slowing of the economy relative to where we are right now. and dynamics of how we get from the relatively resilient economy into that slower economy where, you know, you are seeing negative payroll prints, i think that that is the big question. and that is one that quite frankly i'm struggling with. >> did you guys have concerns about who is going to buy all the u.s. debt? yesterday we saw a weaker auction and i think it turned the whole market around, led to some weakness. and there are increasing worries with there not being a speaker of the house, with there potentially being a government shutdown on november 17, with no real plan in terms of tackling

the debt and deficits and in fact more calls for increased necessary spending on defense, do you worry about treasuries? >> i have to say that this question of who is going to buy the debt is one that is important to reflect on. and it is a very challenging question. over the last 20 years, we've had similar kinds of periods where we said, you know, something shifted. japan won't buy as much, who will buy. and it has always been the case that new set of buyers has stepped in. but in this episode, it is probably not going to be purchased by china and other large foreign reserve managers. it feels like banks are deleveraging, reducing their balance sheets and securities holdings. you know, i think that there is still some scope for asset managers to be longer duration

than they are at the moment. but ultimately i think that the answer of who is going to buy the debt, i think that it has to rest on ultimately on households who are saving and preparing for retirement needing long duration safe places to store their money. and i think that is where it is likely to come from in this episode. but i'm watching this closely and the political backdrop against which all of this is occurring heightens these questions as to who is going to be willing to buy this debt in coming years. and the issuance will be substantial. >> nathan, it is interesting to see how the house view at citi feeds your views on commodities and certainly equities. we've been talking to you guys quite a bit. appreciate it as always. thanks. tightening sanctions on russian crude and escalating tensions in the middle east has oil jumping. pippa stevens has more. >> that's right, and wti is up

3.5% today wrapping up a volatile week as the market focuses on the war's escalation and as well as the first enforcement of g7 sanctions against russian oim. treasury imposed sanctions on two shipping companies that it said violated the press cap by carrying russian oil priced above $60. from the start the intent was not to take russian oil off the market completely, but rather to limit their oil revenue. still in a very tight global market, any threat to supply will have an impact. but it is the israel/hamas war that is driving prices especially with the wild card of iran including unconfirmed reports that hezbollah may become involved. rbc also noting that as the war escalates, the white house will likely come under significant pressure to tighten enforcement of the sanctions against the nation. finally, bok financials dennis kistler telling me there is also short covering going on with wcht ti moving back above the 50 day moving average.

and with so much uncertainty, traderses don't want to be short going into the weekend. >> yeah, a lot of headlines that might change before we get back to work on monday. pippa stevens. and still to come, why a c-suite change has one wall street firm updating dollar general. and then we continue to monitor the situation on the ground in israel. the latest as israel orders the evacuation of more than a million gaza residents in the north. "sawonhetrt"etnsquk t see rur in a moment. meet gold bond daily healing. a powerhouse lotion that moisturizes, heals, and smooths dry skin. with 7 moisturizers & 3 vitamins. and... new gold bond healing sensitive. clinically shown to heal & moisturize dry, sensitive skin. gold bond.

israel ordering the evacuation of more than a million gaza residents from the north in advance of a possible ground offensive. allison barber is on the border

with the latest. >> reporter: hey carl, i just lost ifb, the sound to hear you, but i think we're on together so i'll just talk to you a little bit about what we are seeing here and forgive me if i'm not answering your question directly. we are on the border with israel and gaza. you can see gaza the smoke plumes in the distance. we have just heard this constant bombardment inside of gaza. at the same time we're hearing and seeing israeli helicopters circle overhead where we are. if you look up with me a little bit, you can probably see this helicopter that has been hovering in this area, patrolling around this part. as we stand here and listen, it is really just every few minutes you hear the boom of what is happening inside of gaza. you see the smoke plumes there. right now we know that there are millions of civilcivilians, hun

of thousands misplaced within gaza as israel moves more toward launching what we expect to be a full ground assault. yesterday i was speaking with a spokesperson with the israeli aga defense force and i asked if it is fair for us to characterize this as saying a ground assault is imminent. he told me we have been very clear on our intent, we have mobilized over 300,000 reservists. he says the majority are at the border with gaza. some are up north dealing with the possible threat of hezbollah. but he said in terms of gaza and possibly going inside, that they have been very clear that they are prepared and ready to do what is needed and they fully intend to ensure they say that hamas no longer has any sort of operating capability to carry out strikes and terrorist attacks like they did this weekend. >> thank you very much. we continue to follow your reporting there live on the border of israel and gaza.

continuing our coverage of the israeli/hamas war, let's bring in senior fellow and director of research and foreign policy michael ohanlon. there are reports that they are rejecting the calls and not letting people leave. can you describe what we're seeing and give us some historical context? >> on that last point, i don't think that there have been too many cases in history where it was ever deemed even remotely realistic to ask an entire population to move out of the way of a pending assault. when i think about for example to the u.s. operations during the surge in iraq when we went into ifallujah, so forth, i dont recall that we did it, certainly not a city wide level. there was no place for people to go. in this case there really isn't either. and hamas will imspeed this one

way or the other. even if hamas doesn't physically shoot people as they try to move south, it probably has more sway over its own fellow palestinians than ralzisraeli would given ha is not universally unpopular. so i would think the goal is probably not realistic and as much as anything, it is so that israel can ska it tay it tried mitigate the potential indirect harm for civilians that will happen with an invasion whether anybody likes it or not. so in that sense it may be as much for public relations as the realistic prospect of achieving that movement of people. >> so based on your study, long term study of the conflict here, what do you think israel has planned and what do you think the end game is here? >> well, first of all, i think whatever israel has planned has

developed over the last week to a large extent because while israel has gone into gaza, many times before, several times before, if has gone in for limited purposes in places where it had specific targets in mind and certainly worried about what booby traps and other kinds of ambushes or problems it could encounter along the way but it didn't need a comprehensive plan to try to take down hamas. it had a live and let live attitude. but now it needs to develop a response to an attack that it obviously didn't see coming and still is shocked by the magnitude scale and brutality of the attack. and what that means is i don't think that the military plans previously existed for what israel is now going to attempt. and therefore i think that there will be an element of improvisation along the way and they will have to see what kind of costs they suffer to their own troops and what costs to the innocent civilian population in terms just how far to push this effort. because what they want to do clearly as prime minister netanyahu said the other day is

basically take down hamas comprehensively. and really do an intelligence oriented operation that begins by hitting targets they know about and tries to develop more information along the way with each additional place they find each additional prisoner they take, they will try to extract more information and do a relatively systemic effort to demilitarize much if not most of gaza. i think that is their intention going in. but again, not really a plan that they have developed in detail before as best i can tell. >> i guess the question then would be how much peril is involved in this kind of improve s ization as you put it. and the comments that they are ready to contribute to their side of this effort on their own time line, how dangerous is that? >>s if d it is definitely dangei think odds are 50/50. but we'll see. even though it is an improvised approach, i think the real problem here is that whether you improvise it or not, that has

some good at hiding, it is good at ambushing, it is good at booby trapping. and an urban environment provides lots of opportunities and locations and topography xwraef and approach for that to be effective. and when we've looked at places where people have tried to clear large fractions of urban areas, you think about the united states and iraq and we took hundreds of fatalities and efforts to do that, you think about putin and he just leveled entire blocks and sections of the city, obviously had no qualms about the lives that he would extinguish in that process. president of syria with russian help, same kind of thing. just taking down entire buildings. and israelis can't do that, so they will have to do something more like what we did in places like fallujah and ramadi. it is doable, but you can suffer a lot of fatalities. so i would conclude by saying anbar province in iraq is not same thing as gaza, but in terms

of numbers of people, it is not entirely difference in magnitude. and when we went into iraq in 2007, again, we wound up absorbing fatalities on our own side that were into the hundreds. and i think probably wound up inadvertently killing maybe dozens if not hundreds of innocent iraqis. so that is the kind of magnitude that i think we have to be prepared for here. >> secretary of state antony blinken is in jordan today after he went to israel first. he is meeting with the jordanian king and then going to qatar, bahrain, saudi arabia. a pretty extensive trip. do you expect anything to come out of that productively as far as helping the u.s. and israel? >> yes, but i don't think that it will reap the rewards right away. first thing that will happen as i think that we're all resigning ourselves to or expecting and with some understanding that the israeli response. and the looming siege of gaza. and i think no one is really expecting that they can stop that. in our case, i'm not sure we

even want to stop it. in the case of the king of jordan, i'm not sure that he thinks it would be realistic. but the question is at what point do you try to persuade israel that it has gone long enough. so anticipating what kinds of solutions and end games could be envisioned sort of the complete demolition and overthrow of hamas. which may be the goal for a while, but they may find that they can't really do it, i don't know. the other question would be if and when hamas is overthrown, or at least largely neutered and rendered less powerful, what kind of political rule will then emerge within gaza. and should it be a u.n. trustee ship, should it be a coalition of other panhandle groups who are already there. and what security force would be relevant to make sure that things stay as calm as possible. those kinds of discussions could be happening between king abdullah and tony blinken right now. but we may not hear about the contents for a little bit.

>> michael, thank you very much for joining us from the brookings institution. and also wanted to highlight some of the companies we've been covering here on c natinbc seei donations. jeffries announcing that it will donate $13 million to ten charities providing aid. and oracle donating $1 million to israel's emergency medical service group and pledging to double funds raised by employees. seeing actions from sdidisney, citigroup and more joining the list announcing donations for israel. and humanitarian crisis there. >> let's hope the list gets longer. meantime wells fargo getting a nice bump as earning beat the street to benefit from higher rates offsetting slower lending activity. we'll talk to the cfo later this hour.

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united health one of the few nonbank earners this morning. beat on the top and bottom lines. unh also slightly raising its annual guides an guidance. and boeing is moving in the opposite direction. phil lebeau has more. >> more issues with the 737 michael jordan planes. that is the problem. boeing announcing that it is expanding its inspections of 737 max-8 models, those are models

in production but not yet delivered. the issue, problem? with the supplier with nonconforming drill holes in the bulkhead. not impacting automatic max 8s but some of them. they need to go in and do the insp inspections. remember they were already doing inspections for other nonconforming parts. spirit ire r arrow supplier is e in question. and they replaced their ceo last week, replaced with pat shanahan, formerly a boeing executive and now in charge of spirit. he has his work cut out there because there have been a number of issues when it comes to spirit and the fuselages that they are providing on the maxes. as you look at shares of boeing, the question for wall street, whether boeing has to amend its guidance for delivery of max planes this year after last quarter. they said it was 400 to 450. because they report in a couple

weeks, they are in a guy either period, so we won't know if they have to amend that guidance again. but that is the question going into their earnings report. >> phil, thanks. now a news update with silvana henao. >> the biden administration is looking for a way to get americans and other foreigners out of gaza. and to set up for safe zones for palestinians. the "new york times" reports the u.s. is talking with israel and egypt to arrange safe passage for foreigners through an egyptian border crossing and that the u.s. is working with the red cross and u.n. to set up the safe zones within the palestinian territory. secretary of defense lloyd austin on the ground in israel today assuring israel that the pentagon is ready to deploy more aid to israeli forces as they prep for what any international

observers believe is a likely ground invasion of the gaza strip. and house republicans are again meeting mind closed doors this morning after steve scalise dropped out of the race for speaker. jim jordan said today that he is getting back in the race but it is far from certain that his chances are any better than scalise. just five members can block his path to the speaker's gavel and several moderate republicans have said that they will not vote for him. meantime an upgrade in return of former ceo has shares of dollar general higher today, right no on pw on pace for the day since may of last year. and analysts behind hershey and campbells soup will join us. is it possible? with comcast business... it is. is it possible to help keep our online platform safe from cyberthreats? absolutely. can we provide health care virtually anywhere? we can help with that.

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netflix removed price target. analysts concerned about 24 and

25 growth prospects and sl shrinking margin expansion. tech stocks are weaker overall. >> yeah, not the first down grade. and a call on dollar general, upgraded to buy on return of the former ceo hoping to turn around the dismal margin and comps numbers. the stong down more than 60% since the beginning of the year. was as high as 260 last year. analyst behind that call is joining us with the new target of 140. great to have you. what turned out great on this second run? >> yeah, i think there is a lot of mistakes that were made over the past couple years some of which were under todd's watch and over the past 12 months with jeff owen. so some changes needed to be made. and in our upgrade notes we outline a number of initiatives which we think they should undertake. we think they need to more invest in price and labor to get

back to what dg was the past decade. and todd has been there since 2008. knows the business probably better than anybody. so we like the move here by the board. >> how do you best explain the performance of the dollar names in an environment where the thinking is that there is degradation in the consumer especially at the low end? >> yeah, a really great question. if you were to say two years ago which subgroup would do the best in this environment, you'd think it would be the dollar stores. and i think the real big change is what we've seen from others like walmart, so much better than they were five to ten years ago. they are focused on the low end customer. so that is the big difference. second is that we're not seeing a lot of trade down like we did in 2008. 2008 there was a culture shock to the system. and it is very different right now. the companies are not seeing trade down like they were then. so i think those are probably the reasons. >> but there has to be something in management or execution-wise that was lacking here that got the market so excited about a new ceo. it is not just a category thing,

is it? >> well, from a company specific perspective, you know, really think that dollar general got really, really loose with labor. they didn't invest enough in their stores while they added a lot of complexity to the stores. at the same time, they took their prices up late last year and for that low end customer, value is key. and when you do all those thing, you start to lose your customer and you lose traffic and that is what we've seen the past year and that is what has happened with todd coming back today. >> chuck, thanks. it will be interesting to see. meantime some buying opportunity from the desk of stevens today, initiates hershey at overweight, bullish on the key dominant position in sweets and salty snacks. and they also like campbells. optimistic about the supply chain. they go to overweight with a target of 50. and analysts behind both of those initiations is joining us.

jim, great to have you. man, the whole sector is whip sawed by the glp 1. can they escape the tractor beam? >> thanks for having me on. i think what you need to look at across the staples space is everyone has gotten beat up by the glp 1 drugs. so you had a pretty attractive buying opportunity for companies either like campbells we think is way oversold so you can get attractive valuation with nice risk/reward. or in a case like hershey's whether you have a best in class retailer that you can get at essentially the same multiple as the peer group. so a lot of attractive opportunities. and i think now is a good time to start ticking through the wreckage. >> even if the market is overestimating the impact of the obesity drugs on these names, there is still the rising rate problem. this is a group of bond proxies.

and that has been a part story too, hasn't it? >> yeah, so i think that one of the things that you have to consider though long side rising rates is which companies perform well in an environment with a challenged consumer. in the case of hersheys, confectionary and salty do well in a con tkconstrained environm. and k5campbells may be doing we with those tro who trade down t high protein content. and in addition to that, you know, we looked at the historical valuation and right now the up side to one standard deviation below to their trading multiple is still roughly 30% which is where our price target is at. so i think the risk/reward setup is favorable. and for campbells, almost a 4%

dividends. so we agree that they can trade down with higher interest rates, but at the same time we think the overall pressure on the space is a little bit overdone. and in hershey's case, here you have a company that in three categories that have all grown faster than total store. so structurally is positioned to grow faster than kind of the ove overall pack and shoot beverage universe. so you can get a best in class operator at an attractive value. investors are always looking for good entry points and we think this is a good opportunity for hershey to capitalize on that. >> assuming prices has gone about as far as it can, do these guys grow through organic or is it going to be some bolt down m&a like campbells has done recently? >> yeah, so hershey i think optionality is probably limited to the salty snacks business just given kind of their

dominant market share position in confectionary. but still that is always an option. we've seen a fantastic job with dots pretzels that has boosted their portfolio. with campbells, we think that they had an excellent acquisition for the company. and the spaghetti sauce brand really well positioned with consumers. and now it gives campbell's the ability to have kind of the mid to opening price point option with their existing portfolio and premium option as well. when you look at premium brands and how they performed, raos has still done exceptionally well. and tying back to what we mentioned, food can represent an affordable luxury. so if a consumer identifies a brand that is having high

quality and unique flavor profile, it makes it all the more attractive to them. >> for sure. and they say they won't change the recipe. one of the most important things. jim, thanks. continuing to watch the financials as q4 earnings season gets in to full swing. jpmorgan having its best day since april. up almost 4%. wells fargo cfo mike santomassimo joining us in a minute. some things are good to know. like...where to find the cheapest gas in town. and which supermarket gives you the most bang for your buck. something else that's good to know? if you have medicare and medicaid, you may be able to get more healthcare benefits - through a humana medicare advantage dual-eligible special needs plan. call now to see if there's a plan in your area - and to see if you qualify. all of these plans include doctor, hospital and prescription drug coverage in one

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new headlines today around openai, the company behind chatgpt and one of the biggest ai startups in the space. deidre bosa will wrap some of that up in tech check today. >> carl, no shortage of headlines around openai, so we'll round them up for you. first the information is reporting that the startup is

now generating revenue at a pace of $1.3 billion a year, that is up 30% from just three months ago. but let's put those numbers against last year's reported sales of $21 million. the growth is staggering. more than 4500%. making it more of nvidia than a microsoft in the sense that nvidia is expecting a huge spike in sales this year and microsoft has yet to convince investors that it can monetize in the near future. it comes largely from subscriptions. it is a critical tool among developers and businesses like marketing teams to creative copy. now, broader usefulness still an open question and key to whether this kind of growth can be sustained. some of the recent conversations i've had with founders center around an end application that we can touch and feel as consumers. the idea that yeah, chatgpt is fun and also kind of useful if

you are diligent about fact checking but this is supposed to be the biggest shift since the internet or the mobile phone. there has to be more to it than just chat bots. and this is reportedly being asked inside google as well. a bloomberg report that week says going the employees are debating effectiveness, utility and huge amount of resources going into its chat bot on discords. for openai, it is full steam ahead and reportedly close to signing san francisco's biggest office lease since 2018. it would be a large piece of uber's headquarters near oracle park. and a new deal that could value the startup at $90 billion, we've talked about it before, that would certainly support the physical footprint but adding yet another element to the story, the "post" says the deal could depend on money from the middle east raising the question

post-israeli attacks if it will attraction more scrutiny and certain openai wouldn't be the only startup taking money from the middle east the last few years. >> and i was curious if there was an angle here on so microsoft which owns part of openai was finally able to close its deal with activision blizzard and whether there is a link there with ai plans for the games space and whether microsoft just got a huge leg up up. >> and this goes in to the idea of what are the end applications. will there be chat bots in video games. i think no one really knows. everyone is making bets on what they think will be the technology to drive the applications if we don't know what exactly they are. and of course openai, it is all about the researchers and it is seen as sort of the best in the space as well as anthropic. so microsoft is making a big bet on that and certainly you can see that these two could be at a cross roads in a beneficial

would i if they can incorporate some of the openai technology into now its much bigger video game footprint. and shares of wells fargo highs of the day following a beat. the stock now green for the year. and cfo will join us next. and also keeping an eye on know knovo nor disk. they say it reflects views of lu ithunedtas.vomen e it ste

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one of the stories of the

day, wells fargo moving higher in today's session delivering a beat across board in q3 and guidance into year end. but noting it is seeing a slowing economy resulting in modest declines and loan balances and chargeoffs. joining us is wells fargo's ceo mike santomassimo. >> thank you for having me again. >> how would you describe the current environment? clearly the market likes what it sees, especially that raised guidance on net interest income. >> look, when you look at the overall economic environment it's been more resilient than we would have expected. it's certainly true and you can see that come through in the results. consumers we saw a little bit of modest deterioration there. consumers are doing well. the commercial side the same.

commercial real estate in office, it still feels very good. when you look at our results, you can see some of that coming through both on net interest income, performance, as well as the fee side and i think overall it still feels like the economy is doing quite well and customers are doing well so far. >> you guide for the full year up 16 versus prior 14% gains. can that go even higher in this environment? >> i think as we've gone through the year it's gotten better and better the last couple of quarters and what's been driving that is what we're seeing with clients. deposit levels overall, the mixed shift that's happening across deposits as well as pricing. we're still in an uncharted environment for many in terms of the pace of rates went up, the level of rates, the quantitative tightening that's happening there. so you can certainly potentially see some upside over time.

i think what we gave in terms of our guidance is what is our best guess at this point in terms of the way the year will end up. it will be a function of where everything shakes out on deposits and pricing for the rest of the year. >> mike, it sounds like there are some fresh levers to pull. can you characterize whether that would be a reinvention of what you've already done or more of an extension of it? >> it's more of an extension, carl. we started three years ago now laying out priorities across the company to get more efficient, and we laid out a $10 billion plan of gross saves and we're on path to execute that. as you sort of go through a program, you find more and more opportunity as you go through that. the old adage of peeling the layers of the onion, you get more opportunity. that's the case here. we have more to do across most

of the company. some areas more than others. i think we do have more to do. i wouldn't say new levers or new ideas. more of continued execution across each of those things and it just takes time to do that in a reasonable, thoughtful way. i think it's not just about saving money and being more efficient, it translates into serving customers better. we can be quicker, faster with clients. more responsive to their needs. the efficient brings a lot to customers as we execute. >> there were comments from your colleagues on other banks that reported today the deposit reprising was happening more slowly maybe than they had originally expected. can you talk about that? >> look, what we've been seeing across our book, you start on the commercial side, pricing has been competitive there for a while. it's not getting less or more competitive, but it's been competitive consistently now for

a number of quarters. that's not changing. it's really the consumer side i think some of the assumptions people have laid out, including us in the beginning of the year, have been better than what we had modeled. some of that is a function of, you know, clients continuing to just spend money and not move to other alternatives, but it's played out better than we thought since the beginning of the year, that's for sure. >> mike, you mentioned the outlook depends on deposits. we saw deposits fall. people are seeking higher yielding instruments. where do you think we are in the process and what kind of deposit assumptions do you have for next year? >> on the commercial side deposits have been stable and on the wealth management side we saw a little bit of a decline in the quarter. the pace slowed significantly in the quarter, which is good to see. that's the area you see most clients looking for higher rates.

the driver is really -- the biggest driver is spending as people spend and are out there is driving deposits down across the book and people looking for higher rates. we'll have to see how it plays out. >> $300 million, what are you seeing there in commercial real estate, and what are your expectations about how problematic it's going to be, which regions, which parts of the market are weakest and strongest? can you give us some color? >> it's really office. when we talk the weakness, it's office space. most of the other subsectors are performing well. we're not seeing systemic stress in any of those. when you look at office it is broad based across the country where you see the weakness and the stress. i would say we're early days. you haven't seen a lot of transactions.

you've seen some but not a lot. i think it will take some time to play out. we haven't had significant losses yet. but these things, whether it's a lease coming due in certain properties or takes time to market them, i think it will be a long journey as we sort of work our way through it. i would say the weakness in office is more consistent across the country, different than a year or so ago where it was more specific to certain cities or certain parts of the country. i think it's the case across the board now. >> i know a discussion about the mort game market may not be the same today as a few years ago. i'm curious if you have thoughts how you think the consumer is viewing the market right now, if they are getting used to this new environment and whether or not the throes of daily life can carry through the cycle.

>> new mortgage originations are down. i don't think that will change anytime soon. in a lot of cases people refinance mortgages while rates were really low and it's tough for people to go out and buy a new house or refinance at a higher rate. i do think you will see origination stay low. having said that, people still move and want new houses at times, and so i do think you'll see some level of activity there, but i wouldn't expect it to pop in a big way anytime soon. >> and you know we ask every quarter because it is the question that investors want to know about the asset cap and where you think you are in that process to getting it removed when there are still political pressures on you, with senator sherrod brown and others, using you as a political punching bag. >> my answer may sound familiar, but we're focused on just

getting all the work done. it's the top priority for all of us at the company, and we're going to keep it that way until we're done, and ultimately it will be up to the regulators. we feel good about the progress we're making and have more work to do. >> didn't even get to the trading investment. mike, thank you for joining us on the heels of that report. speaking of the banks. next week we'll hear from bofa, regionals, and we'll get housing data next week as well. we'll hear from powell at the economic club of new york on thursday. >> yeah, and schwab is reporting on monday. we'll talk to the ceo about that one which is also the ones with the unrealized losses, that's what people are looking at, bank of america, for instance, is out on tuesday as well. so more information, but so far it's been a good start for bank earnings season. it's pushing back against some of the gloom we have now in the world, i would say, the fact oil prices are rising, treasuries are catching a bid, gold is higher. there's a little bit of a

feeling of a rush to safety with our eyes on the middle east. >> we have given up pretty decent sized gain at the open with the dow now negative, unh did some lions work this morning but didn't quite hold. we'll see how we trade into the afternoon 4325. have a good weekend. let's get to the judge at post 9 and "the half." carl, thank you very much. welcome to "the halftime report." i'm scott wapner. front and center this hour, the kickoff to earnings season, what it will take to keep stocks moving higher. we discuss and debate the road ahead with the investment committee today. joining me for the hour bryn talkington, joe terranova, jim lebenthal, and steve weiss. check the markets, a different picture than how it looked a couple hours ago. we're red across the board. all three of the major averages are in the red, 4.63 is the yield on the 10-year note. things are looking pretty good, jimmy, until consumer sentiment came out, which was a huge miss, and then one-year inflatio