and "squawk box" begins right now. good morning. welcome to "squawk box" 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. happy monday, folks. here we go again. let's look at what is happening with the equities. green arrows for the dow and s&p. dow with a gain of 96 points. s&p up 6. nasdaq is down fractionally at this point. we are talking about coming off the week where the nasdaq was actually lower. s&p up for the second week in a low and dow up higher for the week. if you look at what is happening with treasury yields, that is the big story.

we saw weaker thereasury yields last week. the 10-year treasury at 4.7%. the 2-year treasury at 5.07. meantime, israel and hamas denying reports of a cease-fire to allow foreign national palestinians to cross the border to egypt from gaza. today, the temporary border was an supposed to allow temporary aid to enter. it is unclear if the border will open. last night, president biden spoke on "60 minutes" and warned of the mistake they would make of occupying gaza. >> we are going to do everything within our power to find those who are still alive and set them free. everything in our power. i'm not going to go into details of that. we're working like hell on it.

>> senator chuck schumer visiting israel over the weekend. he posted on x that the delegation was rushed to the shell toter to await out rocket fired. he plans to lead a bipartisan senate package for israel. let's get back to the congress. the senate returns from the week-long recess today, but without a house speaker. no legislation can pass in congress and go to the president's desk. there is no movement on funding for ukraine, israel, taiwan or border security until the house elect elects a speaker. opponents are setting the stage for another unpredictable floor vote this week. there were 55 republicans who said they would not vote for jim jordan. the question is whether or not they can get that passed when it

is going to the floor. >> who comes in? >> there have been reports that potentially patrick mchenry. not as speaker, but give the speaker pro tem more powers. democrats would go along with that to start moving legislation. authorize it on a six-week basis. that is not something the republicans are fond about at this point. this is the second week you are going into a house without a speaker and without a speaker, nothing gets done. let's talk about rite aid. filing for bankruptcy. the pharmacy chain is saddled with billions of dollars of debt and lawsuits. the company is saying it raised $3.45 billion to fund the operations while in bankruptcy. rite aid stores around the country closing, but it will continue to operate in stores and try to serve customers. rite aid secured a restructuring deal with the major bond

holders. another tale of what happens when you get too much debt and on the wrong side. shares of pfizer under pressure and slashing earnings guidance. it is failing covid demand. it expects sales to come in between $58 billion and $68 billion. pfizer is warning dragging down industry peers moderna and novavax. pfizer has an investor calling scheduled for 8:00 a.m. today. pfizer is off 2.8%. moderna and novavax down more. moderna down 4.3%. novavax down 4%. and this is a story that people are paying attention to. starboard value building a stake

in news corp and looking for changes. that is according to the wall street journal. they are the target of this in some regards as being owned by news corp. it plans to push for a spinoff of the distal regital real esta division. let's see if the myurdochs want do that. we will talk to ben smith in a few minutes about all this. i'm sure he would say -- >> good luck. >> good luck. >> no way are you giving it up. you knew that before you bought t the shares. >> is it possible that news corp is under valued? yes b yes, because the real estate piece doesn't make sense. 100% discount relative to the

peers. no question. the question is would the murdochs be willing to give up dual class? anybody they would give up real estate. if this is just enough to push that piece. that's not going to get through the total mult iple change. i don't think. we will see. >> hey, we want your votes. murdoch family will say forget it. taylor swift's eras tour concert film brought in $126 million. that fell short of the box office analysts expected, but it was the biggest ever concert film released in the united states. it topped "never say never" which hauled in $73 million in 2011. according to movie data firm intelligence, the average ticket price was $20.75.

a whopping 60% of tickets were bought in advance compared to 40% pre-sale rate for films and nearly 80% of the audience is female. >> very hard for hollywood to model what this film will do the next week and week after. films in week one is a big premiere and they model the dropoff over the next couple weeks. apparently this film is very difficult for everybody to figure out because it is an amc project and it is a different issue. what you were talking about in making reservations for the seats. does it hold over to the next week? >> do you see it two or three times? >> you see it one time or two times or never? is it the people who wanted to see it the first week missed the

concert? >> it will be interesting to watch. it has been an interesting ex-pe ex-pe ex-experience. >> it is a different experience. if you go to see one of the movies -- everybody is standing up and dwancing and singing. >> the interesting thing is they had so many events. "barbie" and this. if you can create this event after event and that is what you need. >> this keeps them rolling this october for sure. folks, when we he come back treasury secretary janet yellen is meeting with counterparts in l

luxembourg this morning with wilfred frost. a blast from the past. how do you find happiness for all this? that is his expertise. we will talk to arthur brooks about all of those issues. you are watching "squawk box" and this is cnbc. >> announcer: this cnbc program is sponsored by truist securities. experience. expertise. execution.

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treasury secretary janet yellen is meeting with her european counterparts as the global finance chiefs deal with higher rates and continued inflation and geopolitical t tensions in the middle east. wilfred frost sat down with her for a con kconversation. wilf, we missed you. tell wus what you learned. >> reporter: great to hear your voice, voice. thank you for having me back. yellen is at the foreign affairs forum in luxembourg behind me. i asked about any conditions attached to the crisis in israel and gaza.

she is clear about that. she said america stands behind israel period. i went on and asked about whether this unfolding situation in the middle east is impacting the global economy. >> i think it's too early to speculate when whether or not there will be significant consequences. i think, importantly, it depends on whether the hostilities extend beyond israel and gaza and that is certainly an outcome we would like to avoid. >> and you and the treasury department are preparing for an eventuality and what it might do to the global economy if the conflict broadens out in that way? >> it is very early days and we are monitoring the situation at this point. >> reporter: of course, given the u.s. is already supporting another war which is of ukraine and russia, i asked if america could afford to support two as

once. her answer was absolutely. she was confident about the situation in the u.s. economy. >> the american economy is doing extremely well. inflation has been high and it has been a concern to households. it has come down considerably at the same time where with we have about the strongest labor market we have seen in 50 years with 3.8% unemployment. we have seen a burgeoning of investment, especially in manufacturing and industrial renaissance in the united states. we are creating good jobs, especially for people who have don't have a college education and have been left out of really economic progress in the united states. so, the united states economy is

in a good place. >> reporter: now becky and andrew, i heard you speaking about the situation in the house of representatives at the top of the show. as it relates to that and getting support through congress, she said i believe there is strong bipartisan coalition in congress in favor of support for ukraine. it is a top priority for president biden when the speaker is back in place. she said it is in the u.s. national interest to help ukraine. guys. >> she has the immediate concerns about what happens in israel and ukraine. she has to think about what happens if the house is not able to get some budget passed. we are looking at a potential government shutdown in a matter of a month's time. at this point, they can't get the republicans in the house to elect a speaker. >> reporter: she blamed that on the republicans, as you might

expect, given the current news and being here in europe and i did not push on that over kevin mccarthy losing his position. on a more optimistic concern as it relates to the global economy, i asked if she felt the floor was in or the bottom was in as it relates to the strains with the relationship with u.s. and china. she said perhaps. she went on to say that we have certainly improved our communication. she spoke warmly of the conversation with the governor of the central bank of china last week. the tone was more constructive. >> wilf, we miss you. we have not seen you back here e

time. >> reporter: i would love that. my best to all of you back there at cnbc. >> see you soon. join us now is the multiasset cio at neuberg. last week was an up week for the s&p and nasdaq. people might be priced by that given the global political back drop. the bigger issue is rates. that is the short-term motivator for what is happening with the markets. where do you think rates are headed next and as a result equities? >> the thing about rates is the fed is most likely done, but we are in this environment of higher for longer and the market is starting to price that in. we would say the ten-year treasury is 4.50 and 5% on the yield. we are potentially going to see more steepening of the yield

curve with the price. this has to do with the notion of fiscal dominance. we are running a 5% to 6% budget deficit even in the environment where secretary yellen points out that the overall economy is good. the unemployment is good and inflation is coming down. it will be stickier than what the fed or other forecasters expect. that could lead to not just higher for longer, but more of a premium and steeper curve. that will challenge investors as we go into 2024 in terms of equity earnings and economic growth. >> i know it is still about a month off before you are going to have to face another issue with the government being shutdown, but how much does that weigh on what you are thinking about when it comes to the markets, erik? >> i just wrote a blog that is

being published this morning of the challenges of geopolitical risk in portfolio construction for the long term. our take is it is hard to trade around specific events. the tragedy that we're seeing in the middle east would have led us to believe the markets would have acted differently. oil prices are down as you said with yesterday being an up week for equities. it is hard to, you know, forecast and trade specific events. humility is a key word for investors right now. this is part of the broader trend of deglobalization and increasing segmentation and this is going to lead to more likely higher inflation and headwinds to growth and greater volatility. that is the real message in

terms of building and making portfolios more robust in the environment. >> that means buy on the pullback? >> there is that. be prepared for volatility when you build your portfolio. bonds can now hedge against certain shocks. growth shocks in particular with the yields. bonds can be an important diversifier. you think bonds or higher quality bonds in the 2 to 7 yield curve is attractive. >> corporate bonds? >> corporate bonds and treasuries. with yields where they are and the yield curve is moving. the broader indication over bonds to help helpdge the exposure. for those investors who can lock up capital, those are attractive opportunities in private markets because of other investors

pulling back from the capital standpoint and doing less in the areas of private credit and other private markets. being able to be a liquidity provider and soclve problems is an attractive opportunity. >> erik, thank you. >> my pleasure. coming up on the other side of the break, we will talk about starboard taking aim at news corp and pushing for the end of the dual class structure to give that family control. ben smith will join us. and later, dennis lockhart will join us on ato wh texpect from the fed's next meeting. all that and more as we roll on.

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the big news in merger world and news world and media orld. activist targeting news corp. according to the wall street journal, which is owned by news corp. starboard is planning to push for changes and doing away with the news corp dual class structure. with us is ben smith of semafor. editor in chief and media denzian and other things. ben, does this make sense to you? is there any chance in a million years the murdochs will say to the activists, great, come on in? >> it doesn't make sense. the murdochs control the

company. act activists usually stay out of companies like that. there are broad criticisms of the news corp and operations and the belief that the wall street journal which is the jewel in its crown could be better run and more valuable. it is not really clear what starboard can do to get the attention of the myurdochmurdoc. >> ben, this is a multiple story. you look at "the wall street journal" and news corp and look at "the new york times" and there is a massive delta, of course, i write for "the new york times" if you don't know. the point is one of the things that starboard is looking at is maybe they capture the higher multiple if they didn't have the real estate business and if they were somehow different.

the question is wdoes somehow different look like and how important is the real estate business? >> there is a fair amount of debate about the real estate business. the journal looked at selling part of it last year. news corp did and it did not succeed. there is a digital real estate of realtor.com. >> a big part of the business. >> absolutely. then there's dow jones. the journal and other stuff. we don't know what the journal's numbers are. it is assumed the most valuable part of the business. it is not clear from the outside how it is going over there because it is within dow jones. this is an activist who has been very aggressive in the past and famous for taking over the olive garden parent company after the huge public campaign after an the pasta not being salty

enough. >> there's an idea. use a salt shaker. >> there is a path to control here. >> what do you think they are really after? one of the observations i made to becky is this is a public campaign around the real estate piece. if you just spin that piece off and capture a higher multiple. maybe that is one or two turns. maybe. >> that is the most logical answer and most entertaining answer is in the background is a huge succession family drama and the wing of the family that would like control and circling. you have to wonder if they are talking to james murdoch or gotten his advice of how he would like to structure the com company. i reached out to a spokesperson last night who did not get back to me on that. that is certainly in the background. >> let's take the background and make it the foreground. the problem is, of course, it

doesn't come to the foreground until there would be a momentous event and i'm not sure, you know -- >> if rupert is not calling the shots, it seems lachlan is -- rupert is happy with lachlan at the head of this thing. the question is if he wants to do this. obviously, lots of speculation if he likes any of the businesses. >> i think there's -- rupert is in his 90s. lachlan spends a lot of time in australia. there are not people subject to it at all. media reporters have spent careers of what happens after rupert passes away. there are a lot of questions of how hands-on he was and

abilities to run the company. maybe he is the new ceo and could take dra matic steps. >> ben, just think of rupert murdoch being told what to do. if he sells the real estate, he would say forget it. you are not going to pressure me. >> hard to think of what an investor would have to say. >> benn smith, we will talk to you again. thank you for waking up early. >> good seeing you. when we come back, chaos at the capitol. we will take you live to washington for the latest on the race to be the next house speaker. "squawk box" will be right back. >> announcer: executive edge is sponsored by at&t business.

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on this squawk planner, earnings season is heating up. tomorrow, we hear from goldman sachs and bank of america and johnson & johnson. on wednesday, p&g and travelers and morgan stanley all reporting before the opening bell. we will hear from tesla and netflix. on thursday, at&t and blackstone and american express is reporting on friday. as for the data points this week, you have september retail sales due tomorrow. we will get housing starts on wednesday and then the fed's beige book with jobless claims and existing home sales on thursday. now washington and the latest on the race for the next house speaker. emily wilkins joins us for what we can expect this week. emily. >> reporter: good morning, andrew. last week, house republicans officially nominated jim jordan to be the candidate for speaker. it is not clear ifjordan has

been able to get the 217 votes that he will need. last week, when republicans voted behind closed doors, 55 lawmakers said they would not be able to vote for jordan. jordan and allys are making calls and putting pressure on lawmakers. it is not clear if they have enough to have jordan to become speaker. the house is scheduled to vote for speaker this tuesday at noon. of course, if jordan cannot get to 217, there are other members who have shown an interest for running for speaker. waiting in the wings is the potential for the republicans to make a deal for democrats to pass bipartisan legislation. this can fund israel and keep the government open and hakeem jeffries laid out what is a concern on "meet the press" this

weekend. >> we want to make sure votes are taken on bills with substantial democratic support and substantial republican support so the extremists cannot dictate the agenda. we can change the rules. >> reporter: republicans are expected to meet later this evening. guys, we expect to find out if jordan has secured enough support for if the next plan will be to step up to see what happens to get a speaker of the house. >> emily, thank you. we will watch all this and debate it during much of the show today. we appreciate it. when we come back, earnings in focus this week. we get you ready for the bank reports we still have left. including bank of america, goldman sachs and morgan stanley. later, don't miss the in interview with aei president

arthur brooks. reminder, you can get best of squawk pod by listening to your favorite podcast. "squawk box" will be right back.

all right. the bank earnings are in focus again this week. we will hear from goldman sachs

and bank of america and morgan stanley this week. on friday, we are heard from a lot of the banks. jpmorgan chase was one of them. it reported stronger than expected results. the ceo jamie dimon expressed caution on the company earnings call. >> we are facing so many uncertainties. you have to be cautious with what are you facing. the other thing about the green shoots, regardless of that, we try to run the company so we serve the clients day in and day out. better products and services and securely and safely and all those things. that's the ultimate goal. >> joining us with more is jason gol goldberg. the senior equity analyst. jason, let's talk about what is happening with the banks. better than expected results from every one of the banks that reported on friday. most closed higher on a down day in the market. it has not been a great year for the banks. you look at march and the financial concerns with the financial sector and think we

are headed for a recession and you will see bad loans popping up. where do things stand? >> you look at relative to date with the s&p 500, we have data back 80 years. this is the worst year on record if it ended today. >> wow. >> it is not easy. you look at friday's results and net interest income and provision for credit losses were better than expected. a lot of concerns with the deposits with the failure of silicon valley have come down a bit. we look for loan losses to increase. they are going up at a measured pace to allow banks to absorb it. >> you hear comments like jamie dimon who is one of the best risk managers out there. he is always cautious to some extent. how much of that is warranted? how much do you worry? >> we do. banks are a reflection of the economy. there are a lot of unscertaintis

given what is going on in the world. as long as the fed has a soft landing, this will remain profitable and continue to grow book value and recover off the lows. >> goldman sachs and morgan stanley and bank of america. we will hear from all of them. with bank of america, it is looking at the bond portfolio and the unrealized losses to this point. >> certainly. if you look at all four banks that reported on friday, you saw the increase with the realized losses with the back up of interest rates. that being said, you know, the vast majority of securities with mortgage backed securities are maturing. the unrealized losses will dissipate as securities mature or as rates trend back lower. >> in each case though, it is not these banks are going bust as a result, but it will hamper the earnings results because they have these times timed out.

>> you have low yielding longer duration assets on the banks balance sheets. as long as deposits hold, they don't have to realize. they have assets re-pricing higher. there are some points with the margin bias will be lower. it is quite manageable. >> what do you want to hear most? >> i think there is focus on the shift to deposits. credit quality as you mentioned. in late july, the fed put out the end game rule which is the capital proposal. it is something the industry will have to grapple with. >> bankers don't like it. >> it puts upward pressure on cap capital requirements. >> if the stocks have been underperformers this year, what are your favorites? >> we hee did like the results friday with net interest income

and loan provisions better than expected. as we look to this week, you will see similar trends from bank of america where some have concerns. you will see high single digit income growth and loan losses below historical averages. >> most of the banks which closed on friday closed higher. pnc did not. it was down 2% to 3%. what do you think of the regional banks? >> we think as the week goes on, we get the smaller banks repo reporting. it will be challenging. net interest income will be down leading all banks. many in fact third and all in the fourth quarter. as the deposits re-price higher and regional banks are more exposed to that. it is not going to be absolute sailing from here. it is certainly the group under performing significantly. >> the banks have been paying more to keep deposits there. it is not the same as buying a

treasury. they have started paying up more in terms of what you get for a savings account or beyond. is that good or bad? >> certainly banks are grappling with higher deposit costs. one thing you saw with the banks reporting on friday is the increase of that is beginning to slow. it is pressuring the net interest margins, but the deposit costs peak a quarter after the fed stops hiking. >> jason, thank you for coming in. >> thank you. before head to break, shares of lululemon will replace activision. the change is set to take effect on wednesday before the market opens. when we come back, a new view on the china economy saying the fears of the major downturn

could be overblown. we are looking at the latest on the china beige book after the break. you can watch or listen to us live on the cnbc app. this is a beautiful otsh of the capitol on this monday morning. "squawk box" returns after this. with comcast business... it is. is it possible to help keep our online platform safe from cyberthreats? absolutely. can we provide health care virtually anywhere? we can help with that. is it possible to use predictive monitoring to address operations issues? we can help with that, too. with the advanced connectivity and intelligence of global secure networking from comcast business. it's not just possible. it's happening. power e*trade's easy-to-use tools,

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welcome back to "squawk box," a new report krgcontradicg the notion that the chinese economy is on the verge of collapse. this is the other side of it. china beige book ceo joins us this morning. there are so many reports that you've seen about china's sort of imminent collapse, we've gone through so many different sort of headlines even over the last

week about sort of a true slowdown taking place in china. you say that that notion is misplaced. >> it is misplaced. markets did not get the recovery they wanted the first half of 2023 and because markets are bipolar on china everything is great or terrible. now we're in the terrible phase and we've been dealing with this three, four months of people speculating that china's economy could be on the brink of collapse. property sector weakness is sharp, confidence is very, very low, and so people are very justified in being a little bit gloomy on prospects for the economy, but sequentially it has been improving in 2023. everything except property is better than 2022, so you're seeing a recovery. it's just not the recovery everybody was expecting. >> i'm reading a headline from business insider this morning. it's official, the era of china's global dominance is over. you buy it or not? >> well, they quote me a bunch

of times in that article, so i buy some of it. look, the idea that china is going to be this strong economic engine at high levels of growth, that's over. the idea that china's going away or it's going to collapse, that's also incorrect. so the idea is that, you know, people are too bearish cyclically on china. they've seen the economy come apart. they think the government doesn't have a plan. there is a plan. but people should remain pretty bearish structurally. they're too bullish structurally. so this is not china going away. it's also the era of china promoting high levels of growth, you know going forward. that era is over. >> so let's say that part of it is over. how does an investor that's outside of the united states likely somebody watching this broadcast now think about china, and then also, let's talk about how this relationship to geopolitics and their power given all of the different battles, wars, skirmishes and

strange bedfellows that have taken place over the last decade or more on the basis that china was going to keep growing to the heavens. >> yeah, look, those two things are very much interrelated. china investing used to be to some degree set it and forget it, at least for the big tech companies. you innocent in tencent, and every quarter the chinese government provided support, and things went up. that changed a handful of years ago, and we're not going back, and if you add onto that the fact that supply chains are being pulled out of china because people are worried about things like covid zero shutdowns. they're worried about geopolitics, they're worried about trade wars, rising export controls, this has made it more and more difficult to invest in china, and china hasn't made it particularly easy for foreign business to operate on the ground. these combination of factors don't mean you can't invest in china. it just means the days of investing the way folks used to,

those are over. you've got to be very sophisticated right now. >> help us get sophisticated. if you were going to invest in china today, how would you do it? where would you do it? and layer onto this another issue, which is that at least in the united states there is an overhang or we cannot about whether the chinese government is going to crack down on business in china, but whether actually the american government is going to crack down on investors investing in china. >> well, that's going to be looming over us. if you're investing in china, you should be producing for chinese consumers. the idea that you're going to be mixing these supply chains in a haphazard way, that's gotten increasingly dangerous because of the geopolitical risk, because of the export control risk and other things. if you're producing in china for china, that's a positive step. if you are -- if you're producing something the government wants or the government needs, services for the elderly. if you're producing some sort of technology that hasn't been

banned yet, then you're in a better position than if you're trying to sit on the ground competing with chinese firms. that's what's happened at wall street. they've gone in, they've thought, hey, we're going to conquer this landscape, beijing wants those firms there as long as it needs them and then it's good to scar them. >> so what businesses do you put that category in? you know, there's a lot of financial services companies that think they're doing business in china. where -- how do you think about financial services in china? u.s. firms that are trying to be there. >> the idea behind financial firms going hard into china was that there's not that many ways for the chinese households to save money for the long-term. so there's a sophistication on wall street that was going to be shared with china, was going to be ensconced to the chinese financial system. there are opportunities for that. the question is whether with geopolitics and all the other problems, beijing is going to be welcoming with open arms all these american institutions. i think they want their know

how. then the question is will they keep them around. it's a much dicier situation than it was a bunch of years ago, when all the firms said look, it's a meriatter of years before we get these back. >> we always appreciate talking to you. it's a big issue and one that's not going away. thanks. when we come back, pfizer shares are falling after the company slashed its guidance. we'll talk about the new guidance with the an analyst straight ahead. check out that stock. it's off by about 2.5%. and later, former atlanta fed president dennis lockhart will join us with what to expect on the fed's next meeting. "squawk box" will be right back. at pgim we can help you rise to the challenges of today, when active investing and disciplined risk management are needed most. drawing on deep expertise across the world's public and private markets

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good morning, the humanitarian crisis deepens in gaza as israel prepares a ground assault. we will get a live report from the region. pfizer shares falling after announcing a cost cutting program amid declining covid vaccine demand. we will speak to an analyst about the sector. and while segments of the economy appear to be cooling, the housing market remaining red hot. ceo of one of the largest home

building companies will join us live. the second hour of "squawk box" begins right now. ♪ good morning, and welcome back to "squawk box" right here on cnbc. we're live in the nasdaq market site in times square on this monday morning. i'm andrew ross sorkin along with becky quick. joe has the day off. take a look at u.s. equity futures at this hour. we do have a lot going on. s&p 500 up about 12 points. the nasdaq up also we'll call it 11 points for now. got a whole bunch of earnings reports we're going to be bringing you as well. treasuries, which everybody's been keying off of, we saw an interview with janet yellen. the ten-year at 4.691. take a look at oil as well, wti

crude, if you want to buy it by the barrel, it will cost you about 87.69 unchanged this morning. israel and hamas are each denying reports of a cease fire that would allow foreign national palestinians to cross the border from southern gaza into egypt today. it's unclear if that border crossing will open. clashes with hezbollah will continue and fears are growing that another front may be developing there. matt bradley is in lebanon. he's got more on that front, and this is a story that gets more convoluted, not clearer. >> reporter: yeah, indeed. all eyes are on the gaza strip and israel and rightfully so. that's where the preponderance of violence has been for the last week. there's been a very little sort of a low simmer at the border behind me. you can see just over this ridge line, that's where we see israel's border. but the fact is that simmer could turn into a roiling boil

and boil over at any moment. this is a very volatile boarder and has been for decades. now we're seeing so much fighting in israel and the gaza strip that there are other international actors waiting in the wings who could potentially join at any time. and just yesterday we heard from the israeli defense forces. they said that hezbollah, which is the dominant paramilitary force here, though in many ways it resembles more of a national military than a militant group that they were firing antitank missiles across the border into israel. one person, a civilian had been killed even after the israelis had demanded that all people leave a 4 kilometer buffer zone along that border. there have been casualties on both sides in more than a week ever since hamas launched that deadly attack around southern israel. we've seen israelis being killed, mostly soldiers. two scivilians here in lebanon and at least four fighters from that group hezbollah including

others from palestinian islamic jihad jihad. we even saw a reuters camera man who was killed about two days ago, which is a tragedy here for all of the journalistic community here in the middle east. we've got to zoom out and look at what's going on in the wider region. we're seeing diplomacy on a grander scale, antony blinken has been traveling around to six arab companies. today he returns to tel aviv and israel after all of those meetings. at the same time, in parallel, we're seeing the foreign minister of iran making his own routes to places like syria, beirut here in lebanon, qatar, he's meeting with the heads of their proxy groups, hamas and hezbollah and making deals, making conversations. all of this is going on at the same time, as we're seeing this border heating up. now, the potential here is very, very deadly. if this boils over as i mentioned, we would be internationalizing the conflict.

we'd be tdragging in another country. lebanon. more military groups. the reason why this is so dangerous is because hezbollah is, as i said, there's more resemblance to an actual military as it does to a military group. it has advanced weapons. it has seats in beirut's parliament. it his ministerial posts. and its leaders and fighters enjoy movement throughout the world, and they have control of airports and ports so they can bring in goods, they control borders like the one with syria. they've been bloodied in nearly a decade in fighting against islamist militant groups. when we talk about the potential for violence here, even though the violence is searing in israel and gaza. here along this border it could become an international war. that's not made any better by the fact that the united states has just parked a carrier group of naval assets just off the coast here off my left shoulder in the eastern mediterranean.

the u.s.s. gerald ford and its other ships are here waiting as a deterrent against any internationalization of the conflict. we know that's true, we heard it from u.s. officials that they will fire in case this internationalizes, and we don't know where that fire would be, but it could drag in more than just lebanon, places like syria or iran, and that would be very threatening to everybody in the region. this is a place. this region is weary of war, but they may get one whether they like it or not. becky. >> we've heard an awful lot about the anger and shock and horror that israeli citizens have felt over the attacks from hamas. what's the mood in the streets there in lebanon? >> well, to be honest, the streets here in lebanon, what we've been seeing so far is we've been going to hezbollah rallies. so that is kind of a biased view. we've been seeing a lot of people who are rallying behind the hezbollah flag and the

palestinian flag, which is what we saw on friday. the day of rage. we saw protests coming out around the muslim and arab world in solidarity with the palestinians, and some of them in solidarity with the terrorist group hamas in the gaza strip. it's hard to know, though, whether or not that support, that solidarity, goes and bridges the gap between wanting to help, wanting to express political support and wanting to go to war. that's a massive differences those are two things it's hard to gauge. when you've talked to people, they're filled with bella koes language. they say, oh, we're ready to fight. we're ready to go against israel. we're not afraid. whether that translates into ordinary citizens whether or not that means they want to do that, whether or not that means they'll stick to it is an entirely different question and one that leaders throughout the arab world are trying to gauge. this isn't just about giving help to the palestinians or solidarity with the united

states. this is also for many of these arab leaders trying to determine whether or not there will be an upswell of anger that they will have difficulty containing should the israelis proceed with their plan for a ground invasion into the gaza strip. remember, in most of these countries there is a vast gulf of opinion between the way the governments behave, almost all of these governments are unelected, either dictatorships, autocrats or monarchies. that's something that a lot of folks here, a lot of leaders are trying to figure out. will these people become so angry that they will rise up and start to not only attack israel and other places but their own governments. becky. >> matt, thank you. matt bradley from nbc. we want to get over to frank holland. he's taking a look at this morning's premarket movers. what's happening? >> good morning, becky and andrew, we're going to start off in the biopharma space. down about 2.5% after pfizer cut its full-year eps, specifically

the drug maker taking a $4.6 billion charge on paxlovid. at the same time, jeffries actually upgrading pfizer. you don't hear this very often, the note titled you got to zig when they zag. a more than 20% upside from where it's trading right now. shares of pfizer down more than 2.5%. lululemon moving higher as the upscale retailer is set to join the s&p 500 on wednesday. shares are up 5.5%. lululemon is going to replace activision blizzard required by mft microsoft. lulu announce dpeloton. goldman sachs taking a look at two homebuilders. they start with an upgrate of dr ho horton. you can see shares are fractionally higher right now. analysts say they expect dhi to

grow closings by 6% next fiscal year and take some market share from their smaller rivals. also seeing a downgrade of kb homes. bigger move here, down almost 2.5%. almost moving into neutral. analysts citing the build to order strategy as risky and the current higher for longer environment. becky, back over to you. >> thank you very much. okay, let's talk markets. earnings season picking up steam this week with more than 50 s&p 500 companies and five dow components set to report results. joinings right know is ed eed g ed gardeni. how are you setting yourself up? >> to tell you the truth after hearing that report that you just -- we all just heard from the middle east, things look basically horrible over there. yet, you know, the markets's hanging in there pretty well, and i think that's because we've

had several of these crises and conflicts between israel and hamas that led to cease fires pretty quickly. this one looks like it's going to linger. and yet the price of oil hasn't really shot up, but i'm accentuating the positives here in terms of what the market's focusing on, and that's -- as you said, it's earnings. i think it's very likely that when all the earnings come in that the third quarter is going to be at an all-time record high for s&p 500 earnings, which is pretty impressive all in all, since the sesmost widely anticipated recession of all times has been a no-show. >> i know it's impossible to put these things together with what's happening in the middle east and what you think the larger geopolitical implications are and therefore for the broader market. it's not even just what's happening now, obviously stock

prices are looking out call it 12 months, 18 months out, where are we then? and how does this situation factor in? recognizing interestingly at least from the academic studies i've seen, you look at charts over the years, you know, with the exception of what was taking place in israel 1973, for the most part, when there have been problems in the middle east, they have not impacted the stock market as negatively as you might imagine they would. >> correct. well, i think the obvious example of when the middle east really did have a tremendous impact on the global economy and certainly on the stock market was back in the '70s when we had two energy shocks in 1973, and that was related to a war between israel and the arab states, and then in 1979 when the iran revolution occurred, oil prices soar ed a lot more. as a result, i think the market is looking over the next 12 months concluding that this too

shall pass. one way or another the situation will be stabilized, and if that's the case, then the outlook for 2024 is probably pretty good. >> okay, but here's the thing. prior to a week and a half ago, where was it -- a different debate about not whether -- putting what was happening in israel aside because it hadn't happened yet, there was just a fundamental debate about whether we were headed twrowards a recession, how deep the recession would be and whether 2024, or 2025, whether it was going to be bad. a lot of people were concerned about that. >> the business cycle hasn't been, you know, forever banned, and i do think that the outlook for now is pretty good. i mean, the economy has proven to be remarkably resilient. it's true that we've seen this tremendous increase in short-term rates in the bond yield, and yet the consumer

continues to spend -- there's still a fiscal policy stimulus in the pipelines. companies are investing in artificial intelligence and so on, and as you know, we had a really strong gdp during the third quarter, which is why earnings are probably going to be at a record high. i think the economy has proven that it can live with 4.5 to 5% bond yields. if we go a lot higher than that, jamie dimon of jpmorgan has been saying these are extremely dangerous times, and yet his bank reported tremendous upside surprise earnings in the third quarter. >> ed, i want to thank you as always, it's great to see you. >> thank you. >> appreciate it. when we come back on the other side of this, pfizer implementing -- calling a cost realignment program as it prepares for revenue drops for its covid-19 and paxlovid as well. we're going to speak to an analyst about the company's new guidance after the break. and then later, political

and business leaders dealing with the israel hamas war. american enterprise substitute and harvard university professor arthur brooks will be our very special guest. "squawk box" returns after this. >> announcer: this cnbc program is sponsored by baird. visit bairddifference.com. ever since she was a little ki, all maría wanted to do was bak. i'm maría alvarez, owner of maría's cakes. and i'm axel, proud to be her state farm agent. her baking superpowers have brought sweetness to our community. i make delicious cakes to make special occasions even better.

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pfizer making some headlines

over the weekend after slashing full-year revenue guidance by 13% on friday. the pharmaceutical giant said dwindling demand were responsible for the updated guidance. for more on this, we want to bring in east square capital management's health care portfolio manager. he's here to weigh in on everything we're hearing. and les t, this was kind of miracle vaccine people were waiting for back in 2020. i guess the answer is now that people aren't worried about this. there's a lot more natural immunity out there. and as a result there's far less demand. what do you think in terms of what this means in terms of the stock? >> for the stock, i think the direction of travel is down or flattish. i mean, i guess this earnings is sort of telegraphed. i think we were all waiting for it, but i guess it's good that they've come out and finally

admitted sofrtrt of the obvious. i would say it's actually great that we don't need as many treatments or vaccines as you alluded to because there's less covid around as it appears. >> but in terms of the bet that the company made on this, i mean, this has taken -- >> in our judgment, they probably should have taken that cash that they made at the last few years and made a different series of investments. they've done some very large acqui acquisitions, one of which was biohaven which we own. i think that they would have been better served if they'd done some smaller acquisitions for pipeline rather than bigger acquisitions for revenue. we might still be here, but at least we'd be looking at some positive pipeline catalysts in the next year or two. >> that's why you think the direction of the stock will still be down from here, just in terms of what the hopes for the future are for the company? >> i'm not sure it's come off a

lot. so i'm not sure it goes down much more, but down to flat, and i would also add on the macro side we're heading into election season, which has generally not been that great for major pharma just because of political noise. yes, i think that they would be better served putting more money into r&d and smaller pipeline acquisitions. >> the year-to-date down 30%, how much of that is a reflection of this covid vaccine shortfall, the less demand for it, how much of that is a reflection of what we just talked about. the political landscape and all the talk about medicare being able to directly negotiate with all of these drug companies. >> that's an excellent question to proportion declines. i think it's been a little bit of both, although i'd highlight it against a lily, which actually do own that one. they've done very well despite

the macro headwinds, which proves that good pipeline overcomes the bad macro, but pfizer unfortunately has a little bit of both. >> what do you think of companies like a moderna that has much more of a pure play at least right now this terms of the covid vaccine. moderna has been pretty vocal about how they are trying to use the vaccine technique to do all kinds of other things thiinclud a cancer vaccine so to speak. >> right. they, again, proportionally are -- and we don't own modernmoderna, but they're very exposed to covid franchise. if they can make the turn, and you know, development products, they should be okay, but we have to see more evidence for them and like pfizer that hasn't happened just yet. >> outside of lily, any other stocks you like in the sector? >> well, you know, we own united health. we think they are a beneficiary from, you know, a lot of the

positives that are coming from less utilization. and i'd argue that the medical device companies also have been overly punished due to concerns about declines in utilization due to the obesity tdrugs. it's going to take a while before the drugs find a way to reducing procedures. companies like boston scientific and striker are very well-positioned i think, going into next year pending some macro headwinds from politics. >> all right, les, thank you very much. good to see you. >> thank you. coming up, while parts of the economy showing signs of cooling, there's one segment that's been a fly in the ointment, and that is housing. we're going to speak to taylor morrison, president and ceo of cheryl palmer and where mortgage rates may be headed.

warning, they might be higher. "squawk box" coming right back. here in hawaii there is always time. there's time to spend with family, time to enjoy with friends. there's always time to listen or lend a helping hand. here we have all the time in the world, but no time to waste.

welcome back, everybody. american workers priorities are changing given the financial stressors in their lives.

a new report from the employee benefit research institute shows how much high inflation and a possible recession are impacting the workplace benefits that employees value the most. sharon epperson joins us right now with more on that report and how employers are responding. hi, sharon. >> hey, becky. you know, workers are telling their employers that having savings for an emergency and paying monthly bills are now as stressful if not more so than saving enough for retirement. that's where many employers have focused their financial benefits. the ebri workplace wellness survey asked workers where they would put an extra $600 provided by an employer. well, they'd spread it out if given that option. first, funding retirement as well as emergency savings. only about 10% of employers offered emergency savings account in 2022, but more are now understanding the benefit between the worker and the workplace. >> when you do need that money for an emergency, you're gnat taking a withdrawal from your

401(k) plan. you're not missing a student loan payment, you're not getting evicted, you're not having your water shut off so that you can actually come to work without having to worry about all of that. >> a new federal law secured 2.0, will give employers more flexibility to offer emergency savings accounts and other financial benefits in 2024, indicating matching student loan repayments with 401(k) contributions. dan houseton sees financial benefits as an important goal not only for workers but employers. >> i can't think of any more satisfying metric to knowing it might work for us, not only do they do a great job servicing my customers, but do you know what? they're on a path to financial success. >> now, a few years ago workplace wellness focused on employees' physical health. now benefits to improve their financial health have become key perks to attract and retain employees, becky. >> all right, i have to admit, i

have never heard of companies setting up emergency savings plans before. on the one hand, i think it's patern paternalistic. give me the money, i'll figure out, but i guess paternalistic things worked for me in the past, like when my company forced me to sign up for the 401(k) unless i opted out. >> that's how companies are thinking about it, delta, starbucks, they already have emergency savings accounts for their employees. now through secure 2.0, starting next year, more companies will be able to set up an emergency savings account, allow you to basically build an emergency fund up to $2,500, and then they may even match that based on their matching contributions to the 401(k) account. yes, you should do it on your own, but many people don't. at this point, so many people are using their credit card as their de facto emergency savings, or they're withdrawing money from their 401(k). >> can i take out the emergency funds anything i need? >> anything you need four times a year without any fees. >> and there's no tax benefits

to it at this point? >> i should say you can take it out monthly. >> no, it's an interest bearing account, roth designated so that yeah, it's after tax money pulling in there. >> sharon, thank you very much. >> sure. still to come, a lot more taylor morrison ceo cheryl palmer joins us for a check on the housing sector. straight ahead, we will talk mortgage rates, where they're headed, how high they could go. and former ai president, all things happening, arthur brooks on everything, it's hard to find the silver lining in all of thrks we this, the hamas war, the house speaker race. everything that's going on, he's got some really important thoughts we're going to talk to him about in just a little bit. you're watching "squawk box" and this is cnbc. is it possible? with comcast business... it is. is it possible to help keep our online platform

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this probably isn't breaking news to most of you, but the united states is going through a housing affordability crisis. several housing groups, the mortgage bankers association and the national association of realtors sending a letter to fed chair jay powell urging the central bank to stop raising interest rates to try to get a little relief on that front.

joining us to talk about housing and the concerns about volatility in the sector is chsheryl palmer, the ceo of the fifth largest building, taylor mor morrison. anybody who is either looking for housing or knows somebody who's looking for housing realizes what a big problem this is. there's not a lot of inventory, nothing out there on the market, the homes that are out there are getting bit up and then you have to pay a higher mortgage rate too. >> you're right, becky, there's not a lot of inventory today. and then you have to look at the inventory that's on the market, if you look at the resell market, the average inventory is something like 40 years old. >> so it's -- when that's the average -- >> that's the average, so that's why consumers are choosing new for a number of reasons. one, when i think you look at the way those houses have built the age of that inventory, their ability to customize at least the design features, and then builders are able to help consumers, as you just mentioned, on overcoming some of

these affordability concerns and helping them with, you know, finances to help them get into a mortgage. >> how do you do that? >> we've always done that. we've always helped with closing costs, potentially discount points, but today what you're really seeing is assistance on some forward commitments to bring to help consumers get below market rates and have the confidence that they know what their monthly mortgage payment is. so when i look at our programs today, we have just the normal where we're helping them with either closing costs. it's really about personalizing the experience to the individual consumer. they all have slightly different needs, right? it might be assistance on closing costs, maybe discount points to help them buy down their loan. it might be forward commitment th s. and our newest program that's been tremendous is this buy, build secure, which allows them

to lock in a rate today for up to 12 months, a below market rate today so they can pick the lot, build the house and have the confidence on what their payment will be. we can give them a float down, a free float down. >> i would assume that you don't have to give away as many of those insincentives as you migh have in the past. it definitely seems like a sellers market these days. >> it's a tale of multiple consumers. when i look at the impact of that most affordable, that fha consumer over the last two years, it's a very deep pull. the first time buyers, i think about our buyers, about 50% are millennials. if you look over the last two years, their monthly payment has almost dboubled. >> that's huge, right? our income, we haven't seen that. between higher ltvs and then there's been so much demand, prices have moved further, and then you look at rates moving into the mid to high 7s, this

had a disproportionate impact where other consumers that move up that resort lifestyle active adult, 55 plus, whatever you want to call them, they have more levers to pull. they might have equity they're pulling out of their home. >> the first time home buyers are the ones that are really getting squeezed. when you don't have a home -- >> disproportionately. and the underserved market. >> how nervous are you, or do you think there's a moment that's going to come, probably not now, but a year or two from now, folks who have five-year, seven-year arm, ten-year something that all of a sudden are going to look at the payments and say i can't do it. there's actually going to be a spiral. >> you know, a big difference to what you might remember from 15 years ago, yeah, where folks today -- first of all, arms have not been price that had well, so i would tell you over the last few years, we really haven't seen many arms as a percentage of overall financing. two, if you are -- and i think

we're actually going to start seeing them more now than we have over the last maybe 12 to 24 months, but people are being -- consumers are being qualified on the final rate. so actually that's not something i'm tremendously nervous about. >> what do you mean by that? >> so let's say you're doing a 3, 2, 1 buydown, you're actually being qualified if it's a 3.5, 4.5, 5.5, you're being qualified on the 5.5, so when we get there, you'll be fine -- >> when you say we get there, you're saying when we get there, meaning if the rate increases at that pace. >> yeah, so if your first year at 3.5%, and your second yearis at 4.5, and then 5.5% becomes your third through 30 years. >> right. >> you're being qualified on today's income at that 5.5% interest rate, so i'm not worried in three years we're going to have some default. we are seeing a few more defaults on that first time

buyer in general. once again, since folks are being qualified on the higher rate, i'm not very nervous about that. >> sheryl, what have you been doing? because i'm thinking back to the financial crisis when a lot of the homebuilders stopped buying land, got rid of some of that land, are you able to get loans just looking at the financial system and some of the troubles that have happened there? are you able to get loans to buy m as many lots to do as much building as you'd like to? >> we are very active in the market. once again, i think what really carries the day and what people need to take away, becky, is we are -- we are short supply in this country. we can talk about for sale or for rent, but we just don't have enough rooftops, and you know, the numbers are pretty wide range, but if i -- if i believed the lower end of the range, 2.5, 3 million, deficient today, and we're continuing every year

because of the labor environment to build on that deficiency, we need to keep building. i think we're going to continue to see the resell market locked up because of what -- you know, where rates are in that, you know, 75% of consumers are sitting on a rate less than 5%. >> so they're not going anywhere, they're not giving up that rate? >> most of them. i mean, there are reasons, life changes. people need to move. probably about half of our buyers have an existing home today. but we need shelter in this country, so it's really a very good time because builders are helping consumers get qualified. >> there are places you can't build like here in the northeast where there's not a whole lot of space that's left. >> there's not much inventory on the resale or the new in certain parts of the country. we're actually seeing great movement because of some of the affordability to smaller markets across the country. we generally build in the smile

stat states, taylor morrison. we're not here in the northeast. i think you're right, i think land supply is very, very tight. let's talk a little bit about a gift, a donation you all are making to the m.d. anderson cancer center. this is coming, and it's something that's pretty personal for you. 13 years ago, pfriday was the date of your surgery for a brain tumor, and thank god you're here. >> thank you. >> love to hear it. what are you doing for m.d. anderson. >> it's very personal to me and i believe our organization. taylor morrison is dna of giving back to the community. i think that's our responsibility. i am so excited about this project, becky. we broke ground about two weeks ago on 16 homes, they're adjacent to, like you said, banner md anderson, and these homes are two bedroom homes. they're inspired by our yardly for rent brand. two bedroom, 1,100 square foot homes that patients and their families can live in while they're getting care. and that care might be they've

just come through surgery, cancer of some sort. that care might be a stem cell transplant, which is also very near and dear to my heart with recent family issues where they have to go the hospital every day or every other day. when you're going through something like this, the support system of your loved ones, of the hospital, and think about, you know, 16 houses where patients and their families are going through the same thing and they have the support system. right now many patients can't get the care because they can't afford a hotel. >> right! and by the way, even if you're in a hotel, your immune system may not be able to be -- if you have a compromised immune system, you can't really be around a lot of people. >> these homes are literally adjacent, steps away from the hospital. so patients will be living there for weeks or in some instances months. the average savings for these patients are thousands and

thousands of dollars not having to pay for that hotel stay. but once again, a place where the patients and their families can feel safe. we broke ground, like i said, just a couple weeks ago. we'll be breaking ground or starting construction at the end of november and have these houses in the spring. >> thank you, it's great to hear a good news story, especially with everything else going on in the world. sheryl palmer, thank you. >> thank you so much. thank you. when we come back, professor, podcaster, author, arthur brook ss going to be here to talk about leadership during a crisis and finding the right path for a response to the israel-hamas war. 50 s&p 500 companies and five dow components set to po results. we're coming right back with all of it after this.

♪ all right, let's take a look at the futures this morning on this monday morning after a week where the s&p and the dow both closed higher. in fact, the s&p has been up for

two weeks in a row, nasdaq was down slightly last week. this morning there are some green arrows across the board. dow futures up by 173 points. s&p futures up by 17. the nasdaq indicated up by about 35. a reminder for you, you can get the best of "squawk box" on our daily podcast, follow squawk pod on our favorite podcast app, and you can listen atinyme. we'll be right back with arthur brooks.

welcome back. as the israel hamas war enters its second week, areas are under pressure to respond appropriately to the violent conflict. for a closer look, i want to bring in arthur brooks, the president e mer tes of american enterprise university, a harvard university professor. his latest book is "build the life you want." he co-author it had with oprah winfrey. we could use his wisdom on a morning like. this it's great to see you under circumstances that are a little -- a lot less great. help us just in terms of thinking about -- and i want to talk about sort of what's happening in the middle east, but i want to talk about what's happening here and the conversation, the rhetoric around it, especially in the university setting, there has been a lot of debate. we had mark rowan from apollo on the broadcast last week who famously has sent a letter calling for the ouster effectively of the head of the university of pennsylvania for

not condemning a palestinian writing festival that he believed was anti-semitic. others have made similar calls. this is a debate that's happening around the country and what the right language is and how people should or should not be held accountable. >> that's right. good to see you, and great to be with you as always. this is a really tricky situation that has grown out of the advocacy wars regarding business and universities over the past decade or so, in which there was this idea perpetrated on leaders all over the country that silence is violence. i mean, it's sort of catchy, and the whole idea is when something is really controversial, we need to weigh in as leaders. leaders of corporations, leaders of universities. all kinds of leaders have to weigh in. if they don't, that shows that they don't care. it might be interpreted as having i guess the wrong opinion about these types of things. the truth of the matter is that silence is not violence. silence is simply silence, and

it's often prudent. what we need at more universities and certainly corporations is that we need leaders to say i don't have an opinion about everything. i do personally, but my corporation is not competent to be weighing in on everything. we need policies of saying less about current events. we need policies of saying less about political issues. now, what's happening is that activists are bullying leaders. they're bullying them to say things that they want them to say, and if it looks like they have enough power, then when the leaders are leaning into this, they wind up actually getting on the wrong side of all kinds of issues. >> let me give you two examples where maybe it comes into business. maybe you believe it's about character. you talk about character. you talk about morals, about people having a moral code. you saw bill ackman last week similarly now ken griffin in today's newspaper saying i don't want to hire people like this. i don't want to hire people who

are part of these groups that have signed letters saying that israel is responsible for what's happening there, that it's not hamas, people who are not condemning hamas, and saying why should we have these people working in our offices. otherwise have come out, you know, larry summers has said some of those folks who signed those letters might have made mistakes. you can see how this becomes a business issue quite quickly. the people who are signing letters on one side or other of the conflict, they're responsible for their own signatures, but the university itself or the company that actually houses these groups is not responsible for them. we have to make a policy of saying that people can't speak

for us, don't make any mistake about it. these are not our opinions. >> this whole idea of silence, you know, especially on an issue like this, which is so barbaric and to me so disgraceful and so straightforward in my mind. maybe there are people who can disagree. there's a fair debate, what that looks like, how that works, i think people can have that conversation. but at the same time to not look at what hamas did to these israelis to be dragging grandmothers and shooting kids, it's just so horrific. why should a corporation be silenced? shouldn't a corporation stand up and say this is absolutely 100% wrong? >> yeah, no this is absolutely 100% wrong. it's absolutely the case. i believe we should stand with our sisters and brothers in israel in the face of this barbaric terrorism. i don't think americans are

sitting around their homes saying i wonder what the ceo of kentucky fried chicken has to say about the terrorist attacks. people have these opinions. people have i think normal opinions. they have the right opinions for the most part, and we don't have to look to corporations or even universities that are dedicated to inquiry, not to advocacy. i think we can imagine the decent people are on the resigh side of these things so we don't have to say everybody has to be on the record all the time. >> arthur, how do you separate what the leaders of these corporations say from what the organizations themselves? and i guess i would say we have so many people who come on this show and say that it's the business community's responsibility and business leader's responsibility to stand up and show real leadership because they say they find it lacking in washington, they find it lacking in all kinds of other places around us. what's a business leader to do?

>> yeah, a business leader has to actually focus on the business and talk about the actual values of the business as opposed to current events, social events and political events of the day. there are lots and lots of cases where world events will impact the business itself, and in that case, it's absolutely appropriate. if there's something that's happening around the world and the companies involved in that part of the world, especially as it impacts the business, then they have to say something about it. when it's unrelated it's a distraction from what they're trying to do. the business of creating the product and jobs and opportunity and growth and to say that everybody has to weigh in on everything all the time is a real distraction from all of us having the conversations that we need in this conversation, especially as citizens. >> okay, but turn this around. we had jonathan greenblatt on the show from the adl, antidefamation league. he's circulating a letter that he's been asking ceos to sign. there's clearly -- and a lot of them, there's clearly silences,

violence, there's a view, and maybe you think he is a bully. i don't know. i happen to agree with that side of things, which is to say that i would think that a letter that says that you condemn what hamas did would be a relatively easy thing to sign, but i can't tell if you're saying that maybe you shouldn't sign that because then it gets you into all sorts of other places and frankly, from a business perspective, it's unrelated. >> yeah, so i've been asked to sign many letters. as you knows i was a ceo for a long time. and there were a million letters that came across my desk with all kinds of things that i absolutely agreed with and i didn't sign them. the whole point of that was because i was leaving an organization dedicated to inquiry but all different types of things and each of my scholars and employees had their own opinions. but my organization didn't have an opinion on things outside of the competency of what we were actually doing. so i agree with this. look, i agree completely with

the letter that the adl is promoting. i completely agree with it. i would sign it as an individual. i'm just saying that corporations don't have the competency to actually take the organization in that direction. >> arthur brooks it is a longer conversation and i hope we have an opportunity to continue it. it is always very good to see you. thank you. >> thank you, andrew. still to come this morning, we will talk markets and this week's earnings expectations, and later, former atlanta fed president dennis lockhart will join us to talk about what's ahead for the fed inhe t wake of last week's inflation data. we'll be right back. ♪ is it possible to fall in love with your home... ...before you even step inside? ♪ discover the magnolia home james hardie collection. available now in siding colors, styles and textures. curated by joanna gaines.

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good morning, dow futures went higher. the first positive week. israel perhaps for a ground invasion of gaza. the secretary of state is back in israel. president biden may visit the region. rite aid filing for chapter 11 after fueling the opioid crisis. all of that, still ahead.

squawk box starts right now. >> joe is out today. we have been watching the u.s. open futures. the dow futures are up by 555 points. the nasdaq up by 25. and then you have treasury yields. yields are down a little bit. they are right back at it faster because of inflation numbers rising last week. >> okay, let's get over to the

stock exchange commentator. what are you watching this morning of the opening bell? >> the market is going to firm up. in anxious market. the index did not really do a whole lot. they are showing a little bit of turn to the downside. it has been a somewhat uneasy range. the market has held up for this pullback for this level on the s&p. many have been watching. you are also trapped below the 4400 level. we are kind of in between here. if you want to make it a little more dramatic, these are the bigger trend lines where we have to figure out where they are going. s&p is down since late july. yields are higher. take a look at the stock market relationship it has diverged from the corporate bond etf.

the emerging-market index has tracked very well with bonds. high yields have taken a bite out of prices and valuations in other parts of the market. largely some ordered by those balanced sheets. they are not acceptable to yields. or every little turn in the macro cycle. we will still be getting some bank earnings, we got them on friday. look at the financial sector as a whole, as well as the banks only. this is over the last year. since the market low last october, there is not been a new market without banks participating. they are down after the shock in march. financials know that things like insurance has done okay. they are not financial at all, the largest component.

you can treat that how you like. trying to stay off the low in the bank stock as well. >> okay, mike, thank you. we will keep an eye on all of it. >> joining us is oksana at j.p. morgan asset management. let's talk about the economy and what it means for rates. that is driving every decision that you are making right now when it comes to the fixed income. >> was really fascinating to me, we are pushing or 90 on the 10 year period we had a couple treasury auctions. things like equity and credit risk have moved up unabated even though in the middle east we are seeing the treasury rally give up this morning.

this is about the push and pull between the geopolitical risks in the u.s. economy. including technical challenges to the bond story and read story and the fact that there are larger treasury auctions. trying to finance tremendous deficits when the largest sources of demand are stepping back >> the massive deficits they need for more money to bring more treasuries into the market. it was surprising to some of the things in the third year. what you hear from clients? do they raise the same questions and concerns about what is going on with the deficits and do we really want to be buyers at these levels? >> these questions are coming through. the long end of the curve has been pushed up. it has been raised since may.

this tremendous push in the top end. they are noticing the financial underpinnings and it has not been able to get inflation under control. reuniting full inflation because of some pressures. we will see how that plays out. the technical picture is an important one. 30% of treasury is over the next year and you have the fed selling treasuries. the largest foreign buyers. lightning their load since 2021. banks that are not the consumers of treasuries. this all happens is the treasury is trying to finance 1 trillion dollars worth of deficit spending. when you look at the horizon. we are likely to see more

pressures with respect to inflation, if you look at demographics in the green energy initiatives, the populist trend, globally, all those things. they are inflationary in the long term. >> when it comes to the treasury and the yields on some of these issues. we saw on the cbc conference, not touching the lower bonds because he thinks the trend is only up from here. >> makes a lot of sense. the tenure has been the sum of growth and inflation. that should bring us 5%. i have been saying, ooking at the tenure, it is priced for a 2% inflation world. if inflation does settle oser to 3%, that will repricing.

>> is our jamie diamond get some of the remarks that he makes. >> we are in agreement with that statement. i cannot speak for jamie. generally we are in agreement that tech goal pressures with respect to inflation and the fed is fighting the policy with content to demolish this unhealthy relationship between asset prices and fed policies. investors waiting for the punch bowl to come back in the event of a slowdown will be fully disappointed. unless we see the economy, in some kind of freefall, yes, central banks will get re- involved. a garden-variety slowdown will not be a risk. >> what are you telling investors to do right now? this has changed the paradigm of what we've gotten used to

not 15 years or so. >> absolutely. the next 10 years are going to be nothing like the last 10. there will be a lot more volatility to bonds. this is settling where we used to live. really, it is where it used to live before. we are saying, look, in the form of liquidity, it is paying. you have to attack opportunities as it arises. lately due to the banking sector, real estate, and continues to move along. one area where there will be a meaningful repricing is r break credit risk. we saw this morning, this year was in the top five or six years of default. we are three months away. >> absolutely not. they are wildly optimistic about the default process. tripling defaults since the start of the year.

the default cycle is underway. we will hear the drumbeat. there is going to be some really interesting opportunities to get involved. right now you can clip that coupon but there are things to do with liquidity in the toolkit to take advantage of the volatility. >> not the sunniest news but interesting news for investors. house gop members will meet tonight in their quest to find a new speaker of the house. unclear of the front runner has enough support to take a vote tomorrow on the topic of the gop. we have some news, nbc news will be hosting the third primary debate that will happen wednesday, november 8th, 8:00 p.m. eastern time and you can catch it on nbc television streaming and digital platforms as well. nothing qualifies in the coming weeks. when we come back, the latest headlines from israel and conversations about the

country's intelligence gaps. and how counterterrorism can change as a result. this is squawk box on cnbc. this is spring semester at fairfield-suisun unified. they switched to google tools for education because there's never been a reported ransomware attack on a chromebook. now they're focused on learning knowing that their data is secure. ( ♪♪ )

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welcome back to squawk box. 1 million people have fled their homes in gaza. the head of the israeli invasion. last night president biden said that he thinks he will be a big mistake for israel to reoccupy gaza. the president is planning a trip to israel in the coming days. tension is on the border trying to get supplies in right now. the intelligence failures joining us right now. a former senior official in the u.s. office and the director of national intelligence. good morning to you. let's talk about the failure.

in the context of the relationship that israel is trying to announce with saudi arabia. they looked at israel is one of the great national defense and intelligence companies in the world. this is putting that into question. when you look at the failure, where does it start? >> i think first off what we need to focus on is not bringing any intelligence service, israeli or any of the allies. i think we need to zoom out here. we need to recognize that there is a much broader policy failure and a public perception failure that they are acting as a rational and responsible administrator in gaza. more than 15 years to administer gaza and prepare the terrorist attacks and ambushes,

make human shields, proof of life in any indication of movement with hostages and also prepare to protect innocent civilians that will be in the way of a very significant ground offensive that will be coming. that is all sides. too many people live in these regions where we will see a ground war. again, 200 hostages for more than 30 countries. we are actively monitoring chatter by terrorist groups aligned by omron. by the criminal activity that can threaten those people in the region. the policy failure, that is what is inescapable for the

conclusion. with intelligent services not just in israel. >> you work with 50 different governments, 50 of the world's largest banks, what is your firm in all of this? >> this terrorist attack took the world by surprise. one of the lessons we are watching, a couple of things. we saw significant and sick -- cyber attacks. right in the immediate wake of the launch of the terrorist attacks, we are actively monitoring a number of activist groups some of them ligned with iran in the past. we're looking for any expansion of cyber activity. the concerns that we have,

those actors are backed by states and adversaries in israel and other allied nations could ask late and start attacking critical infrastructure which will make life even worse for the innocent civilians that live in gaza. we really have to keep an eye on all kinds of issues. the last one i would add, the global expansion of violence. the local law enforcement in those 50+ countries that we work with and federal law enforcement. we are actively monitoring and looking at lone wolf terrorism, we've seen violence in france in the united states targeting people of these populations on either side of the conflict and we are seeing a spike in anti- semitism here in london and elsewhere. there is a lot to watch out for. those governments on the private sector, actively

working to protect cyberspace and also their physical resources here in the world. >> we keep hearing all of the lone wolf concerns and warnings about these things. is this more of a warning or a watch at this point? is is a watch versus a tornado warning? >> that is a very good analysis. tornado warning were to need a watch when it is on the ground. we are very much in a watching terrorist groups. we are watching acceleration is groups all over the planet. here in london, in paris, new york city. any other global capitals where there are demonstrations forming. we know that adversaries of the united states and of free societies like the united kingdom, we know there adversaries i will seek to accelerate conflict between

groups. we are supporting our clients with help identifying misinformation or disinformation campaigns and we are cautioning everyone, not just our clients, everyone, to be cautious in terms of believing what they see on social media in the short term. we are seeing misinformation and propaganda campaigns from all over the planet. anyone can contribute to that chaos even if they are not in the middle east. >> thank you for your perspective on this this morning. thanks. >> coming up, joining us to talk about energy volatility. stay tuned, you are watching squawk box and this is cnbc. ever since she was a little ki, all maría wanted to do was bak.

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we wanted to bring more things to harlem and young guys. we face troubles from guys from the way you look, the way you talk. being able to offer a service for the community makes me feel good. if i made it, so can others. >> welcome back to squawk box. look at futures. the dow is up . 14.5 points. the nasdaq up, 46 points. news this morning on the market. phil joining us with our special guest. >> good morning. we are here at the national business aviation association

big conference. the new cj three gentoo. carrying 10 passengers. what does this say about the market right now? >> this is the display area to show. we are seeing with this press release going out, major upgrades to this airplane. it is the jan 2. this is the most comprehensive of gray that we have done. it was designed by the customer advisory board. we are really excited about this airplane and the modern avionics. skylights, externally serviceable lab. great upgrade for this airplane. customers will be very excited. >> this is the heels on you walking in the order for 1500 jets. big expansion, huge order. what are you nosing with the

market overall for the demand for corporate jets right now? >> 40 year partner, we have been discussing for a few months. this is an extension of the current agreement. 15 years, they will buy new attitudes and latitudes. which we just announced the base earlier this year. they will have a third airplane. that is more volume going to that. they are very strong right now. that part of the market is very strong. private aviation, they chartered the airplane for business or leisure travel. seeing the benefits they will move into fractional ownership. >> what about those who want to go to a certain location or a manufacturing plant. >> not that much of an efficient way if they have fractional ownership or their own judge. >> the biggest market is north

america. if you are going to a small or medium-sized city with medium connectivity on the airlines, travel there is very difficult. i think people are seeing a big benefit of that. they are adding a share so they can go point to point. maybe a business that had no airplanes. maybe a second or third. the need for the sales person, customers, et cetera. >> ceo so you are talking to in this company, are they saying that they will hold off on ordering a plane? >> this recession has been coming for a long time now. it is not materializing so far. >> ramping production? any questions about supply chain? >> all industries are worried about these light chain. the availability of labor out there in all industries. we are not immune to that.

the ability to ramp up the supply chain all the way up to jet engines, that is run by the skilled workforce. workers will benefit from that in terms of the increased pay. we will all advance in that when it comes to the workforce. >> they introduce new aircraft here. the cj 3 jen 2. we will send it back to you. . thank you new manufacturing numbers, will bring you those numbers and will look at the next set of decisions facing the federal reserve. you are watching squawk box and this is cnbc. in the u.s. we see millions of cyber threats each year. that rate is increasing as more and more businesses move to the cloud.

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welcome back to squawk box. we are seconds away from the looking at the new empire state manufacturing service. watching closely to see the economic duty here in the united dates. seeing if there is a slowdown. other manufacturing numbers that have slowed down recently. out of that, some pretty strong moves in the market.

futures for the dow up by 135. the nasdaq is up 514. if you are watching yields, you are seeing higher yields this morning. for and six seven. the 30 year is 4.84. rick is standing by for cnb news chicago. >> less of a drop than expected over the month over month basis. a very volatile series. up nearly 2%. the month before that, we are down 19. these are strictly numbers based on calculations. it is not a percent. just to give you an idea this year that it was january. and the most positive was 10.8. that was in april. you can see -4.6 in.

becky is correct. we have seen a lot of the is turning a bit lower. all around the country. this should not be surprising. we want to pay particularly close attention towards the difference between the manufacturing. as for the yields. it is virtually unchanged on the day. the further down the curve you go, the bigger the moves are. it is a steep and her. -44. it has been -35. it is currently -37. treasury yields have taken the lead. it should not be surprising. over the week there was not as many stories that many were nervous about on friday. not to dismiss the human toll that is going on in the middle east. from a market perspective,

friday many traders were reluctant to go home with any major positions especially on the equity side. that explains the green going on. yields are also moving higher. at some point, we will see those markets have a relink. the driving force is going to continue to have higher rates on the long end. i will pressure some of the green. andrew, back to you. >> thank you very much. we have some hotter than expected inflation date of this week. it is clear that the slowdown of inflation is a trend, not just aim moment. joining us now. a professor at georgia tech. is austin right? who is right in this? what is going to really happen? >> i see it the way that austin sees it. we are in the this inflationary

trend. the month-to-month numbers, sometimes they jump around a little bit. the last report that came in, i thought it was consistent with that story. there was not a lot of new news in the report. i think we can say, yes, there is a diss inflationary trend on the way. >> this trend on the way that leads you to believe the economy is where? in 6-12 months? >> weaker than it is today. we are coming off the third order and by most accounts, it is extraordinarily strong. as rick was pointing out in his report on the empire state series, it looks like there are some indications that the economy is slowing. it is from the feds

perspective. i do begin to pick up indications that maybe the economy is turning over to something weaker in the fourth quarter and going into 2024. >> weaker is good in this kind of perverse way? >> it is good in the sense that they have been predicting that they could not get to to present without some weakening and without some effect on employment as well. there is a certain scope from desired slowing and desired worsening of the economy. after that, it changes dramatically when you get into the undesired steam of thing. the middle east developments, is that it could put some downside risk into the picture.

>> at this point, when you look at the possibility of interest rate hikes, what does it look like for you? >> i think the hold in november. given all the circumstances in play at the moment, they would prefer to simply watch how the situation evolves and there is not a compelling case for the november 1st meeting. in my expectation and many people in the market believe this as well. they will not raise rates in november. >> dennis, we had someone from j.p. morgan was with us earlier, talking about how things are going to be putting a floor under the treasury yields. there are so many things that are happening. the government has to raise

more money to fund the deficits. in the death that is racked up. is there a floor on this? you only go higher from here? >> the term reads under the adverse circumstances related to the israeli situation could go lower. that will push yields down as people are buying treasuries and buying the dollar as well. i would expect volatility to continue. it is unpredictable. it depends a great deal on something really far outside of the scope of fed control. that is the geopolitical events. >> the fed is really in a position where he wants to read

this that the fed will always be here to put the punch bowl back. when the economy softens, rates will not come down and they will not be doing that especially to help asset prices. >> yeah. i can see that argument. you said they are kind of thinking about how to interact with the market. in my experience over several years, it is now fairly dated, there is not a lot when it comes to the market race. it is so difficult for the fed action to actually produce a particular result in the market. in a general sense, you are right. there is not a lot of tactical thinking about how to get a particular rage level work at

the market to behave in a certain way. >> there is an expectation among economists that we might have to have cuts at that point. is that still in the cards for you? >> still in the cards in the sense that the overall environment today just has so much uncertainty and a great deal of risk as i said earlier. the israeli situation has injected a new element of risk and there are some orioles where it can affect the u.s. for . is in the recent data. it is hard to see the recession coming. the economy is going on very strongly. the situation is well below 4%.

of that, by the way, it gives confidence to consumers. consumers drive the economy. it's hard to see a recession in the near-term hearing you cannot rule out the total mix of is here today. >> dennis, i want to thank you for joining us this morning. rite aid is filing for chapter 11 bankruptcy protection. they will restructure to reduce debt. a plan that includes evaluating the retail footprint for the underperforming locations. they will extend $3.5 billion to provide liquidity. they have faced slowing sales when it comes to fueling the opioid epidemic. following demand for the covid vaccines they have also if the company operations. something that pfizer warned about on friday.

last we looked, i was down again today. the u.s. will restrict access to advanced computer chips and machines and make semi conductors. any new measures would be in addition to restriction. accusing the u.s. of abusing export control. when we come back, the state of the global energy market oh in the wake of the attack on israel. will happen as it escalates to a wider conflict. a reminder that you can get the best of squawk box on the day ilpodcast . you can listen any time. we will be right back. our

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welcome back to squawk box. take a look at futures. the dow is up over 100 points. the nasdaq is also up. >> checking the shares of charles schwab. they are lower this morning. they are experiencing a five- month low with five order results. this was three cents better than they were expecting. revenue is down 16% from last year. i wish i have expectations. new accounts broke from last year. down 7% from the prior quarter.

51-14 it is down 25% for the one year, i should say. crude oil, fairly calm this morning. posting the biggest daily gain since april. close to 6%. they wave the possibility of a wider middle east conflict. they are up $.55. brent is above $91. dan jurgen is joining me right now. how much of this idea that this could be the expanding conflict on the middle east is priced into the oil market. >> it is the expectation and the worry about it. the u.s. is putting a sanction on u.s. and russian oil. this volatility is your if this is a limited conflict and if it spreads. >> it is surprising that oil vices are not higher. after a pullback that we have seen recently.

>> that is the demand side. they were pulling down the oil crisis. now it is holding. no question if there is geopolitical risk in the pricing there. >> you have made some really interesting comparisons. tomorrow, that is the 50th anniversary of the arab oil embargo. the attack from hamas on israel is 53 years after the 1970 war. what is the same in how are we different? >> what is the same, the massive surprise in intelligence. policy failure. it is choosing a jewish holiday when people are home and not supposed to be at work. it is not the nationstates that carried out the groups. the second thing is that --

thirdly, very interesting, and 73, arab countries that did the embargo, they have dialogue with israel. in 1973 they are now the real adversary. >> these are groups, not nationstates but they act like nationstates. >> yes. how much was iran specifically involved in it ? there is no question that these are one of the groups. >> if we have those distinct differences and it plays out differently if the conflict expands. >> the concern is the disruption and what happens to iran. the u.s. could tighten the sanctions on iran. they could sees tankers and all of that will rise. i think we will really start to see you're in the market

because people do not know what will happen. is holding this geopolitical tension. >> what worries you the most? >> if this is not contained, if it spreads and it becomes larger across the middle east. >> what is concerning on the front, hearing from everybody reporting from israel right now. people have sources there. this time is different, because the attack was so brazen. it will solidify the is really sane -- israeli sentiments. >> it is a shock. the papers that are recovered from the assailants. october of 2022. this was being planned for two years. it was assumed that hamas was

looking inward. it is an incredible surprise. >> we know what a lot of these middle eastern countries are saying. what they are saying publicly. 20 think a country like saudi arabia is thinking? >> the crown prince had said the other day that day by day we are getting closer to retribution by israel. you can see the dislocation of that is a real setback. >> we are the largest producer of oil here in the united dates. it does not isolate us from huge spikes in oil prices. >> absolutely. one global market. we are one year away from a presidential election. it could be very significant

what happens. in 1973 the u.s. was in a political crisis. we are in political disarray when you look at congress right now. people around the world are seeing that too. >> we are not isolated from spikes because of the global market. we are heading to the election. gas prices will be very sensitive. we do not have the spr to fall back on now. >> would be harder to use it. right now there is spare capacity. it is in those countries that are keeping a flow into the price of oil. if you decide on the conflict, it is not china putting pressure on the market. it is less growth and less production which is matching

the growth and demand. >> it is really complicated to try to figure out where oil prices are headed. what would year we're looking at prices in the mid-80s range. >> that's the best case scenario? >> yeah, that's right. in terms of a conflict, that spreads and starts to affect disruption of supply, disruption, also, of infrastructure that's necessary for the production and transport of oil. then we see the spikes, and there's -- the only buffer is really in the middle east right now. >> and the other problem with that is what it does for inflation around the globe and the -- >> right, exactly, all the thinking about inflation and where we are has to be revised and also the impact on the economy. >> i have a question that has nothing to do with the middle east, but i'm just curious what you think about it. the other big issue that we have been talking about over the last several weeks is the uaw strike,

and part of that has to do with evs and the like. and this idea that maybe evs are not going to come as fast or it's going to be very expensive for them. how do you think about the ev world right now in the context of the strike and how that's going to affect -- >> the strike is also what's going to happen to the jobs because you need less people to produce cars if you're making evs. the thing that i focus on is the constraints on evs that every electric car has two and a half more times copper than a conventional car, so metals become a strategic commodity in a way they're not. when you look at the numbers that are projected by 2035, you see a lot of stress on the components. >> component parts. >> yeah. >> but not -- and you think oil has no -- almost no impact? >> i think when you get prices high, then people start to look at electric cars. now we're seeing signs that people are not as enthusiastic.

the push to electric cars is primarily being driven by policy, saying, you can't sell non-electric cars in california after 2035. that's a pretty strong message. >> the interesting part, though, is we've seen this in the past where suvs and big trucks were not popular when oil prices would go above $5. right now, they're the profit center for the big three. >> they're keeping the auto companies afloat. >> it's what everybody wants, but that's because oil prices have been pretty tame, and as a result, gasoline prices have. >> so, consumers, not only at the pump, but in terms of buyers, are sensitive to the price. >> dan, thank you for coming on. coming up, what to watch ahead of the opening bell on wall street.

all right, welcome back, everybody. we told you earlier about pfizer. shares of pfizer have actually turned up a little bit this morning, up by about 24 cents after being under some significant pressure on friday. that came after the company slashed its full year of

earnings guidance. pfizer now says that it expects 2023 sales to come in between 58 to $61 billion. that is down from 67 to $70 billion, and by the way, the stock was trading lower by about 2% or 3% earlier this morning too. as i mentioned, it's turned around and is now up by about 25 cents. pfizer's warning, though, dragging down industry peers. moderna and novavax, in particular, because those two companies are much more reliant on covid vaccines than pfizer is overall, but you can see the picture here. moderna shares this morning, off by about 4.4%. novavax shares down by just 10 cents right now, andrew. >> thanks. meantime, starboard value has now built a stake in news corp. it's fascinating because they plan to try to push for strategic and governance changes to that company. that's according to "the wall street journal" this morning. the activist planning to push for the spinoff of the company's real estate division and most interestingly, perhaps, it plans

to try to urge news corporation to collapse its dual class share structure, which gives the murdoch family voting power in excess of their economic ownership. hard to imagine or understand why that family would do such a thing, but lots of questions are going to be brought to bear this morning because david faber is going to be speaking with starboard ceo jeff smith a little -- i shouldn't say later today, but tomorrow, about all of this and doing that at the active passive investor conference. also check out a tweet from bob iger, pointing out that this is the 100-year anniversary of walt disney, points out that a century ago today, walt disney and his brother, roy, officially founded the disney brothers cartoon studios. so, there you have it. 100-year anniversary. joining us in the markets right now, we want to bring in ju julie biel. she's a cnbc contributor, and she has a particular pet peeve.

julie, i'm going to say something, and you go ahead and go off on a rant about this. hey, earnings have been surprisingly strong. we had a lot of beats last friday. >> yeah, i mean, if i hear it -- it's always heard for probably the last four quarters, wow, earnings have been surprisingly strong. the consumer has been surprisingly strong. i don't think anyone should be surprised, guys, when you think about the level of stimulus that's been pumped into the economy. but i think going forward, it's hard to say exactly where the growth is going to be coming from, but i think what you want to be focused on are businesses that have quality earnings going forward, and that are protected in terms of being able to price against their goods and services. i think we are starting to see cyclicals peel off because investors are recognizing that in tougher times, these businesses are going to struggle. >> we are looking at the dow futures now, indicated up by about 200 points this morning. i hear your point about being frustrated by beating lowered expectations again and again. that's certainly what we've seen

to this point. if you're saying that you want businesses that have pricing power, where do you look? i think one of the big questions on wall street has been, yeah, you have had pricing power to this appointpoint, but will it continue? >> i think that's a critical point. if we think about where profitability has been, margins have already contracted about as much as they do in the average recession. it's been the dual pressures that you have been getting from higher wages and also commodity costs. for us, we like places where margins are a little bit more stable. i think the smaller, niche software players that haven't gotten as expensive as some of the larger a.i. plays or interesting, i think of a tyler technologies, which is serving the public school market, which is pretty stable in terms of its funding or bentley, which does infrastructure software, those are places that i think are more compelling, and they have real earnings already. >> julie, thank you for being with us and thanks for getting

through a lot very quickly. we appreciate it. very quickly, let's take a check on the markets because we have seen the futures pick up. we started with the nasdaq in negative territory. it's now indicated up by about 53 points. dow futures up by 204 points. s&p futures, up by 23, and we'll continue to watch this throughout the day, and we will see you right back here tomorrow. have a good day, everybody. right now, it's time for "squawk on the street." good monday morning, welcome to "squawk on the street," i'm carl quintanilla with david faber and sara eisen at the new york stock exchange. the market watching for headlines on israel-gaza. we'll get 15% of the s&p this week in earnings. our road map begins with the big week ahead for investors as we get set for all of these results, including b of a. as we said, netflix and tesla in there as well. we