good tuesday morning. i'm sara eisen with mike santoli live from new york stock exchange. u.s. tightening curves on chinese tech this morning adding to the already existing tensions. >> later, critical house speaker vote just one hour away. we'll break down what's at steak with a budget deal up in the air. first, to markets, though, we actually have an intraday rally from the opening lows. the s&p was down 0.75%. we're still up around 483 on the ten-year but the small cap russell 2000 up 1.1%.

yesterday the s&p was up more than 1%. so, kind of putting on a brave space treating good economic news even with the headwind of what's happening. >> i'm watching financials which were lower and in reaction to more bank earnings and have turned higher. i don't know if it's yields. there's a lot in there because bank of america and goldman sachs were better. >> they were better. as i was saying, when it comes to the banks, if the economy is going to be okay, the banks should probably be okay. if your biggest concern is recession, we pushed it off a little farther. and home builders up 0.50%. >> energy and cyclicals. let's take a look at the state of the consumer. i spoke with bank of america brian moynihan, and his assessment is the fed is working. >> we'll have $4 trillion plus of our consumers moving

accounts, writing a check, taking cash out, spending money with zelle, so $4 trillion plus a year. in 2021 that grew over -- to 2022 growth rate was 9% to 10%. in the early part of this year, '23 first quarter of last year's first quarter sort of say 9%. it's now down to 4%. a little over 4% to 4.5%. that's held true in the month of september and also october. that growth rate, to put it in context, is consistent with where we were in '16, '17, '18, '19 which was low growth, low inflation economy. the consumer activity has slowed down. it moves around from which categories but across $4 trillion, 37 million checking customers it slowed by half which means the consumer is being slowed down by the interest rate environment and what's going on. >> good snapshot of real-time consumer information and the slowdown on consumer spending. he did say they're still not expecting a recession at this point. for more on what this means for

the markets, we're joined at post 9 by ubs alignment partners managing directly alli mccartney. great to see you again. it is confusing. we've had a batch of strong data. we hear the consumer is slowing from the banks. and the market is sort of waffling between the soft landing, the hard landing and the rate scenario. what are you telling clients? >> we are actually highlighting that sort of -- the binary nature of what's going on. you have one narrative that's driven by a lot of -- actually, brian moynihan and a lot of the banks have pointed out both sides. you have rates are catching up, u.s. credit card debt is going. he pointed out middle income houses are, you know, starting to show signs of weakening. then you have that other narrative, but the consumer still goes. we just saw great retail sales numbers, you know, we're seeing actually in the rear window, we have earnings recession, so we think that's behind us and would

he moving forward. it is very much a confusing time. i think ultimately the question is, is the fed going to continue to drive markets or are fundamentals, because what we're seeing in fundamentals are still very strong both on the corporate earnings perspective and individual households. remember, in the u.s., 70% of gdp is driven by households by individuals and their spending. >> would you tell investors that it's safe to be buying cyclical stocks like we're seeing today? >> yes. so, today is that cyclical day. you'll see a lot of them. what you're seeing is hedge funds get behind that trade and a lot of the asset manager is not. they're leaning more into bonds or longer term. most of the last 15 years for investors, the market was a beta trade. there were years that were faang and years that were not. in general, if you bought the markets, you bought the whole market.

i think that is not going to continue. you have to get behind going forward secular themes and laggards. we expect this to be a great earnings season and lead into future earnings growth. we do think that's going to be driven by the magnificent seven. we also think that he will allow them to grow into their multiples as opposed to shoot to the moon. right now i think it's about balance, a balance between stocks and bonds, about balance between commodities and more traditional assets, it's about balance between private and public equity. >> you talked about expectations. i wonder if you just pan out and say, the stock market measurement of the s&p has done nothing for two years but given you 10ish plus percent over five. bond yields are the highest in decades, but giving you an opportunity potentially in a port foal, capture yield, maybe have an offset to equity risk down the road, and enable you to maybe hold more equity.

how are you telling people to think about that? >> that's the right question. it's a conversation that hasn't been had in a very long time. again, going back to this investor muscle memory. if you look at what our expectations are, relatively soft landing, rates probably stay where they are for, let's say, another year and go back to this, quote, unquote new normal of 2% to 3%, then basically what that says is, we're about to face an environment where stocks, bonds, cash and commodities can perform. not only can they perform, but because there are different themes and narratives and tensions in the market, the other thing that can happen is they can actually balance each other out. again, we're trying to get people to do two things -- be diversified and discreet. know what they own, transparently own those things in separately managed accounts. like we've been talking about with the banks, you're not stuck

selling bonds, know what you own in the stock market, make sure you're more equal cap weighted than market cap weighted. and really just, you know, use cash as a place to deploy when those opportunities come up. >> i noticed your speck lar themes, which you say are necessary in this environment. you had the obesity trade on there. that's already worked so well. do you still think there's room to run? >> here's my response to that. there's probably not the same amount of initial upside, sort of similar to the a.i. trade and what happened in the first quarter of this year. but we are talking about a theme that i think if you actually dig into the numbers of the health care system and the issues in this country, there is definitely still room to run with true commercialization and sort of acceptance of these drugs. again, i think similar to a.i., there's not a broad understanding systematically of how they're going to affect the world. to get back to that, when we think about investing, you

really have to look at the intersection of history and graphics. when you see some of our themes, reshoring, industrialization, you think about not only government spending and what consumers want, but you think about the demographics of this country and others that play into those themes. >> alli, thank you. good to get an update and some thoughts you're sharing with investors. turning to the latest in the middle east, president biden expected to visit israel tomorrow. kelly cobiella is in tel aviv with the latest. hello, kelly. >> reporter: hi, mike. yeah, at this moment secretary of state antony blinken is meeting with mahmoud abbas, palestinian authority leader, in amman jordan, for the second time, i believe. the president is set to meet with muhaahmoud abbas after stopping here in israel. it is a very important visit.

somewhat of a surprise given the security situation on the ground, but the president set to arrive here tomorrow. the national security council spokesman don kirby saying the goal is to give the president more of a fingertip feel on the israeli plans and how things are going on the ground. the president has been involved in this diplomatic effort around the area, trying to get all leaders to talk and try to contain this war between israel and hamas, talking to iraq's prime minister late yesterday and as i said, a series of meetings tomorrow, of course, with benjamin netanyahu here in israel and on to amman, jordan, with more diplomatic meetings, more push to open up some humanitarian channels for gaza. in the meantime, israel continues to hit hamas targets. in gaza that has had a really tragic effect on some civilians.

particularly in southern gaza where people were told to evacuate two -- nearly two dozen people killed. more people dead as well in rafa, where that border crossing is with egypt, the very place where hundreds of people, including foreign nationals, including americans, have evacuated to, hoping that that border crossing will at some point open. negotiations have been ongoing now for days. and there's still no sign of people being allowed to cross over or of humanitarian aid being allowed to go in. >> kelly, thank you very much for the latest from israel. still to come, the u.s. to tighten curbs on china's tech access. the impact for nvidia, intel, amd and others coming up next. exposing a crypto billionaire and its not sam

bankman-fried. the largest government bcoitin seizure ever. details next. "squawk on the street" is back in a moment.

united airlines reporting after the bell. revenue expected to be strong after strong summer travel. the concern here for the street is rising fuel prices, which delta also warned about that would eat into its fourth quarter profit. cowen tells us they are watching for updates on business travel. united shares have been bumpy with the stock down double digits in the last month. for nearly a decade it was one of the biggest mysteries in crypto, who stole 50,000 bitcoins which would be worth more than $3 billion from a dark website called the silk road. no one knew until the man behind the crime made a costly mistake. now a new cnbc documentary "crypto 911" exposing a bitcoin billionaire provides never before seen footage and the

story behind one of the biggest heists in history. eamon ja javers has the story. >> reporter: jimmy, how do you feel? why did you steal the money, jimmy? >> a spectacular crime. >> there's a lot more money we don't know about. >> in a small town. >> shocked. i was shocked. >> reporter: why? >> i was so surprised. >> a 28-year-old secret bitcoin billionaire. his private jets, wild parties and dark secret. >> it was just a real feeling. with jimmy, there were no limits. >> this is the story of one of the biggest crypto heists of all time. >> he's living this party lifestyle with no visible means of support. >> right. >> with clues dating back to the earliest days of bitcoin itself. in a story that reveals a dark truth about the hackers and coders who created cryptocurrency in the first place. >> huge amount of bitcoin is leaking out of the system and you have no idea where it's going. >> it's a huge question. >> and the man who could have

gotten away with it, except for one phone call that led to an abrupt end to a nearly decade long manhunt. >> clark county 911. what is your name, sir? >> it's jimmy zhong. >> that's just a sneak peek of the documentary. in it irs criminal investigation, the agency that investigated the case, takes us behind the scenes and shows us how they cracked the story. we also get a detailed look into their interactions with zhong and a look into thinks bizarre life. you can check it out now on cnbc.com or scan this qr code at the corner of the screen for a link to the whole story, guys. back over to you. >> eamon, you said it's a bizarre life. who is this guy, jimmy, who is at the center of your story? >> he's a brilliant hacker and a brilliant coder. investigators who met with him and talked to him said they saw his fingers flying across the keyboard as fast as they had ever seen.

he never used a mouse because he knew the cheat codes to get it to work on the laptop. he's a guy that lived with his laptop and had was a party boy in athens, georgia. he hacked his way to a $3 billion secret fortune and it didn't change his life in exactly the way he expected. >> amazing. ea eamon, look forward to checking out the full story. >> thanks, mike. after the break, opportunity in the housing sector. wells fargo laying out the names the firm would buy right now despite rates rising and sentiment dropping.

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wyndham shares surging as choice hotels goes public with a take overbid. choice claims wyndham suddenly broke off negotiations. choice is asking wyndham shareholders to approve the bid which offered a 20% premium to wyndham's last closing price. "the wall street journal" reporting minutes ago wyndham will officially reject the takeover offer. both stocks halted. wyndham had been up 10% ahead of that halt. the semiconductor names are seeing a big move lower with the semi etf seeing a drop off the lows on the back of news that the u.s. is planning to further restrict chip exports to china over national security concerns. kristina partsinevelos has been following this one. what do we know?

>> these new export controls are not meant to impair china's economic growth but stop its military from advancements in a.i. this is according to commerce secretary raimondo. a year ago they first introduced export controls to china and the commerce department today is broadening that scope to include more advanced computing chips. companies that also want to export chips to china or other embargoed regions will now have to notify the u.s. government. additional chip equipment will be restricted impacting names like kla and implied materials. kla is down 1.5%. that also means nvidia's a-800 and h-800 made specifically for china are now restricted. nvidia said one-fourth of data revenue comes from china and mizuho flagged the potential for 6% drag for 2023 estimates because of the $3.5 billion in sh sales to china.

nvidia spokesperson said, quote, they don't expect a near-term meaningful impact on their financial results. whereas it's not necessarily the same case for asmo. they put out a statement saying these export control measures will likely have an impact on the regional split over system sales in the medium to long term. intel, i just reached out to them, waiting for a statement. they also have an a.i. chip for china, which could be restricted. intel recently pointed to improved demand for china as one of the key underlying factors for a.i. revenue of $1 billion in 2024. that $1 billion number could change. shares are also down 1.5%. and amd that has been working with chinese hape hyperscalers. these new restrictions are effective in 30 days and come at a time when president biden plans to meet with xi jinping in just two weeks. maybe setting the tone. >> thank you very much.

what does this latest move mean for the future of u.s./china relations? joining us is kyle bass. kyle, we turn to you on china. you've been a long-time critic and advocating for tougher restrictions like this one. i do wonder about the timing, though, ahead of this much anticipated xi/biden meeting in november. >> yeah, well, hi, sara. it's a pleasure to be here. you know, something that got lost also in the news flow, given the atrocities of the hamas invasion of israel, on october 12th there was a congressional committee reviewing the strategic position of our nuclear -- our nuclear arms and our nuclear strategy. and it was bipartisan commission that actually list china and russia as our two top adversaries. not our friends, not our competitors, not the countries janet yellen is looking to engage more cooperation with.

they listed them as a nuclear peer nation and adversary. when you talk about me being a critic, i believe we need to apply realism to what's happening here. these new chip restrictions, if you look back to the biden administration, i think the c.h.i.p.s. act was the crowning achievement of the biden administration's foreign policy plan. here we have about a year later some more interim final rules. if you read what i've read so far, it looks like this affects only the highest end chips and those just below. it will grab nvidia 800 series and some others. if you remember once october 7, 2022 happened, you saw the chip companies parading to d.c. saying you can't restrict us, restrict our sales. these ceos do not look after u.s. or european security. they look after their bottom lines. so, we can debate the economic effects, but to your point, the

national security aptly matters. and i think the world -- we're at a hinge in history here where the economics won't drive the next 20 years like they drove the last 20 years. national security and geopolitics will drive the next two decades. we need to have leadership, hold their ground when they make crowning foreign policy achievements like the administration did last october. stop allowing the private sector to, i guess, push back on these sweeping restrictions, in my opinion. >> it does get us to what's happening in the world right now. and as we speak, putin is in china meeting with -- i mean, rare for him to even make a foreign trip right now. he's there to support the belt and road forum in china. this is the new sort of international world order. both of these autocrats have been aligned in terms of criticizing israel's response in gaza. they called for a cease-fire as president biden makes his way over to there. how do investors wrap their arms

around all this? >> i mean, as you know, i've been asking that for a long time, sara. we have china, xi jinping, publicly declared a limitless partner with the world's number one war criminal. they are working in concert in every way. as they've said, nothing is off limits. here we are talking about, oh, which chinese stock should we buy? which company do we have our 401(k) invest in because we might make money investing in china? in the end, westerners won't make any money in china in the long run. they've already prooun that in the last 15 years. we have to wake up and realize that this -- that the world's bifurcated and the bad guys are all working together. it's obvious what they're doing. if you listen to the director of national intelligence or you look at the nuclear commission report that we just put out, it is clear as day who the enemy is. we need to start defining the enemy as the enemy and stop talking about the economics and what that would do to our

economy. there's no easy button. it's the semihard or really hard button we'll be pressing. investors need to be aware that's coming with their chinese investments. the u.s. is the best market in the world to invest in. you should refocus your efforts there and stop investing somewhere run by an authoritarian dictator, a genocidal mad man who has a partnership with the world's number one war criminal. these are easy things to see. i just don't understand how people don't see it. >> kyle, national security concerns at this point are always going to be the stated motivation for any restrictions like this that the biden administration is imposing right now. does it matter to you where the line is between, yes, genuinely there are national security considerations and we're trying to protect our advantage in certain technologies for our own industry? >> yeah, it's such a hard question. you know, look, i am not a quantum computing expert or hypersonic expert, but last -- november of '21 was the u.s. military and u.s. intelligence

community sputnik moment when the chinese circumnavigated the globe with a hypersonic weapon. it re-entered the atmosphere, tushd and hit the target. we thought they were a decade behind that. they showed they could do so and they did it with our advanced chips. when you draw a line -- as secretary raimondo said today, these are dual use technologies. you can use them in mill military and civilian applications. we just figured out a lot of these chips put together and develop quantum superiority, or at least quantum peer a adversaries and hypersonic adversaries. with china's belligerence, how they have a limitless partnership and turning the propaganda machine against the u.s., against europe, against israel, it is so obvious to see from 10,000 feet, and yet we had

on this program talk about every day, well, where could we draw the line where it works economically but helps us on national security? in the end you'll see a full decoupling. i'm telling you that's coming. >> the administration has tried, sending secretary yellen and raimondo. kyle, you're an investor. if investors that are watching agree with your world view and see what's coming geopolitically, we get it, you don't want to be in the chinese market. where do you want to be as a safe haven? do you want to buy lockheed martin? the swiss franc or gold? what's your preferred hedge? >> i mean, look, the best investment in the long run is in the u.s. marketplace. whether it's the s&p 500 or whether it's in, you know, in the next decade, probably the defense industrial sector. and the defense tech sector. if you're trying to be specific. but in the long run, you want your money where there is a firm

rule of law, where there is a respect for human rights, where we try hard to respect human rights, we try hard to respect the law. it's not perfect. but, you know, we are the best place in the world to invest. europe, unfortunately, has tethered themselves to russia on the energy side. europe's going to have a really difficult decade going forward. remember, europe has only grown their gdp 7.5% in the last 15 years while the u.s. has grown ours 70? europe is a great place but they have significant challenges. u.s. is still the innovative energy for the world. i just think we've allowed china to get behind our gates and now we finally realize that, you know, that the enemy is behind the gates and we need to figure out how to extricate some of these relationships with the private sector and the chinese public sector. we need to start severing these relationships. unfortunately, yes, people will lose money. some of these companies have made bad decisions in the long run. but many companies in the u.s.

haven't. and i think that's where you want to invest your money. heck, you guys were showing this money the 10-year is almost 5%. they're going to get inflation down below 2% given the restrictions they put on the economy. you can buy a 10-year at five and inflation at sub 2, that's interesting. stocks are interesting because the u.s. is the best place to invest. so, broadly, you just want to refocus your portfolio away from, let's say, the robes gallery of dictators and authoritarians and probably back to somewhere where democracies work and capitalism works. >> don't tell that to starbucks and nike and apple and so many other major american companies that do have extremely important ties to china. kyle, we'll leave it there. i know a lot of our audience agrees with you. we're getting a lot of mail. kyle bass. time for a news update with contessa brewer. >> russian president vladimir putin made a rare trip outside

russia, landing in beijing today to meet with chinese leader xi jinping. the kremlin says it's to highlight the no limits partnership between those two countries. putin has limited his travel since the international criminal court issued an arrest warrant for him in march. ukraine used u.s.-provided long-range missiles for the first time against russian forces. the associated press reports these missiles have been secretly delivered by the u.s. nearly a month after president biden promised them, fulfilling a request from ukraine president volodymyr zelenskyy. the president approved those missiles when zelenskyy visited the white house last month. and republican jim jordan is facing a vote this afternoon on whether he'll be the next speaker of the house. jordan needs 217 votes to win the title. he can only afford to lose four republicans. the house has been without a speaker for nearly two weeks after kevin mccarthy was ousted. drama in real life on capitol hill, mike. >> for sure, contessa. thanks much.

up next, wells fargo initiating the home builders. the top ckarne athpis e xts e s&p 500 goes green. - [soldier] take a look at this! - they've left us a gift. - [soldier] i think we misjudged them. - i love horses. (birds chirping) - [soldier] we should open the gate. - let's see what charlotte thinks. - [narrator] at crowdstrike, we monitor trillions of cyber events to detect threats and prevent breaches before they happen to keep your business from becoming history. we stop cyberattacks. we stop breaches. we stop a lot of bad things from happening. crowdstrike. protection that powers you.

we're about two hours into trading. the s&p 500 is now positive after being down about 0.75%. let's go post to post with bob pisani. >> this is a great turn-around. we have three problems -- higher yields, tepid reaction to banks earnings and problems with the semis today. i want to show you vmware, which has gotten clobbered. vmw is being acquired by broad com. there's some speculation, perhaps, that china could block this acquisition in retaliation for what the biden administration is dooing. this is all speculation. that's the reason that's down. elsewhere, if you look around, some other tech stocks have turned around. shor service now up nicely. jp had nice comments.

that's a nice move for that stock. i've been talking about tepid reaction to the bank earnings. moynihan is in the soft landing camp. good numbers overall from him. we opened at 27 on bank of america. it's been moving up a little bit. this is the first day we're seeing, okay, finally moving up on decent bank reports. the reactions have been very tepid recently. that's another good sign. banks starting to move on the earnings. finally, remember these high yields. take a look here at the high-yield etf we're seeing here. remember, the spiking yields because retail sales are strong. that's not bad for the goldilocks scenario. a stronger economy means higher interest rates. that could mean higher defaults on high-yield stuff. more defaults on high-yield stuff later on. this is near a 52-week low. that's an indicator for a weaker economy. again, the economic news is excellent right now. so, a big debate, are we stronger or going to be weaker? it's hard to figure out right now. back to you. >> always is.

bob, thanks very much. home builder sentiment dropped to a ten-month low this morning but a slew of ini initiations from the desk of wells fargo grabbing our attention. the bank naming dr horton as a top pick, saying it is best positioned whether the near -- the near-term rate storm, but with mortgages at a 23-year high in yield and rate, buyers could be under some more pressure. join ng us now, cnbc's diana olick to sort all that out. >> hey, mike. dr horton is the largest home builder in the u.s. they're essentially a manufacturer. they'll have to push product. whether that means mortgage rate buydowns as incentive or lowering prices, that's what they're going to do. it's interesting because in the builder sentiment report today, they did note that builders are using more incentives. i was talking to housing analyst ivy zellman yesterday and she said 70 plus percent of those incentives are mortgage buydowns because rates are at such a high right.

>> it's amazing, diana. everything happening in housing and in the bull case is pretty clear, works to the benefit of new home builders as to existing homes. i just wonder how much longer that can essentially go in this time of scarcity. >> well, look, we have a massive shortage of homes for sale in general. so, the builders really need to step up. they have a long runway. the question is if affordability is hit this hard and builders can't get buyers in the door, we saw buyer traffic incredibly low. on the builder sentiment, 50. anything below is considered negative. the buyer traffic was in the 20 range. that's not good going forward. we just simply need more supply, but again, if the affordability isn't there, you'll see more people stay renters longer. right now rents are coming down. that's a little bit of a bright spot in the market. again, you know, we need more people to sell their homes to get the existing home inventory up. why would you do that if you have a 3% rate on your 30-year fixed and trading up to 8%? >> it's a log jam for sure.

thanks much. well, a number of companies releasing statements and making donations to relief organizations in the middle east over the past week. but recently brands have faced backlash for speaking out on cultural issues. a story we've been covering here at cnbc. courtney reagan at post 9 with new numbers on what consumers say impacts their loyalty to a brand. something that companies try to figure out. >> yeah, this is a really tough subject to tackle at any time, but especially right now with this very polarized nature of the country. it's harder for companies to take a stand without risk of alienating some portion of their consumers. while the war on israel has caused some donors to academic institutions to cut off donations, many corporations have not yet taken a stance. a new survey shows when consumers were asked what positively impacts their loyalty to a brand, 36% said when it stays away from political issues.

that's just second behind a brand's longevity. when asked what brands could do to lose loyalty, 20% said take a stand on moral or ethical issue that is at odds with my values. selling poor quality was first at 45%. anheuser-busch and target both saw negative impacts after selling pride merchandise. neither were the companies' first forray into selling those. quality director told us timing played a part. these campaigns were around contentious state legislations with many anti-lgbtq bills. light had been a predominant sponsor of pride festivals. this was the first time it pulled back after the hate from the trans influencer. target had little choice but to move merchandise when shoppers

came into store harassing employees, threatening employees. and it's not without consequence. it's putting the community back into the closet. >> courtney, it's seemed to me companies face this fix of trying to seem responsive to their own employees. >> exactly. >> not just customers, not just the world at large. especially at a time -- it was standard to think, okay, younger employees in particular want to feel like they work with a company that's aligned with their beliefs. it's tricky for them to nav dpat. >> the human rights campaign keeps this index of companies and corporate responsibilities. a lot has to do with what you're talking about, how inclusive they are for their employee base, what they're offering to their employees. many top fortune companies have a perfect score in that area. it's when they take a stance to the consumer base for which they're selling their products where it gets a little murky. it's gotten harder, frankly, for these companies. >> yeah. it's different, though, i think.

it's totally different what's happening in israel to some of the cultural things you're talking about now. that's just condemning a terrorist attack. but clearly, this is a hot topic. >> yes, exactly. not exactly the same thing. very good point, of course. when we've heard from donors like ken griffin and huntsman family taking their stance. that's not a company's, per se, but understandably in that same vein. >> for sure. courtney, thanks. up next, tech focused on margins as earnings season kicks off. linkedin, the latest to announce layoffs. ♪ explore endless design possibilities. to find your personal style. endless hardie® siding colors. textures and styles.

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visit coventrydirect.com. [ heavy breathing ] [ lights buzzing ] [ music builds ] [ screaming ] another round of layoffs might be hitting the tech sector as they gear up for earnings season. that's the focus of today's "techcheck" with deirdre bosa. >> good morning to you, mike. for a few months this month tech employees could relax. companies raced to prove their a.i. propositions. now, however, another shift is

happening. linkedin just laid off nearly 700 employees. qualcomm is planning to cut 1,200 jobs. it all raises a question, could more cuts be on the way? mega cap tech has been all in when it comes to investing and generative a.i. microsoft's deal with openai, amazon and google pouring billions into anthropic. most of them rising capex to build out new data center capabilities. as one analyst put it, the hype is here, the revenue is not. and the street is starting to notice, too, that tech's spending discipline may have been short-lived, leading some to wonder if the strong margin rebounds in 2023 will hold up. take meta, for example, b of a expects the company to guide to $100 billion in costs and possibly $40 billion in capex. morgan stanley expects microsoft's capital spending on things like data center and spending could hit $50 billion

in one year. at the end of the day, the mega caps are still profitable. free cash flow generating cash-rich companies which are arguably more defensive. big tech has already made cuts in response to the macro back drop. this round of layoffs is hitting another subsector of the tech space and could continue to weigh. linkedin's biggest revenue is recruiting fees and startups may be reaching the end of their runway if they last raised money in 2021 when money was easier to raise. more of a case-by-case basis. the space to watch may not be mega cap, but it may be small and medium cap where unprofitable and economically sensitive stocks are getting harder by rising yields. names that rebounded in the first half of the year, they lost momentum and backtracked over the last month. open door, carvana, affirm, block, chewy down between 10% and 30% over the last month.

of course, they were hit hard post-pandemic, but they did hit some rebound earlier this year. that has pretty much disappeared in the back half of the year. >> dee, i wonder for those somewhat smaller companies that maybe have tried to get profitability up and haven't succ succeeded, the other way out is succeeded. the other way out is to sell and participate in m&a and i wonder what the appetite is now broadly speaking, if they are also in margin preservation mode. >> yeah, good question. activision blizzard, if you have the appetite to go to court, you can get the big deals through. i don't know what the appetite is for some of the other companies that may not fit into their sort of strategic aims. hard to imagine a carvana or affirm or one of the open doors being acquired by big tech. they're looking to generative ai to boost themselves there and

even video game fits into that push that is one way. we've talked about this as well that some of the smaller deals, even by p/e firms provide hope perhaps for a buyout. it'll be interesting to see how the rest of the year plays out, if that rebound can still be sustained because a lot of the names i mentioned in the small and medium cap have had terrible second halves of the year so far but they're still up because of the rebound and earnings season, of course, will be important for the mega caps. >> all right, deirdre, thank you. deirdre bosa. after the break, vote for house speaker kicks off. why washington insiders are saying chances of a prolonged crvernment shutdown do greatly inease if jim jordan is elected. that's next. ♪ ♪ every day, businesses everywhere are asking: is it possible? with comcast business... it is. is it possible to help keep our online platform

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we're just a few minutes away from another house speaker vote, two weeks after the ouster of former speaker kevin mccarthy. jim jordan of ohio the front-runner right now. questions remain whether he'll have enough votes. joining us now is an economic policy analyst at the america enterprise institute, cnbc contributor as well and author of the new book "the conservative futurist." jimmy, good to have you here. let's assume, i guess, if we can try to assume, jordan ends up as speaker under whatever terms and agreements. what do you think the implications of congress tackling this budget issue? >> i think it's an interesting situation kind of like the fire department hiring a guy whose only experience is using a flamethrower. that's kind of the situation. this is not a recipe for having

no shutdowns and coming together on bills. listen, jim jordan's a hard-liner who is going to get this job, if he gets it, because of other hard-liners. that is a recipe for conflict, for a long shutdown, and not much else getting done for a long time. >> well, he'll get the job because of hard-liners, but with the at least agreement initially of moderates who seem to want to make sure we don't have some kind of prolonged government shutdown. so you don't have a lot of trust in that process? >> yeah, well, i think these moderates, what they don't want is to have the united states house of representatives be leaderless, be completely nonfunctional for an extended period of time when we're already backing one war, when we have another war breaking out. it just seems that is not sustainable, so there needs to be someone occupying that

position. i would be very surprised if the moderates think, well, if jim jordan is speaker, we avoid another shutdown. i think that's a leap. >> well then play it out for us then. assuming you get a shutdown of some duration, usually wall street says ignore it. they usually pass, but we get by them because we have to ultimately, but do you think it's going to create anything different in spending levels or just going to be let's fight a lot along the way, the inevitable? >> yeah, i don't think at the end of the day republicans are going to get lower spending. i don't think at all. the only thing that is for sure is that they will get a lot of political blame and there will be a lot of suffering politically, which i think jim jordan is prepared to take on, but i think an extended shutdown -- two, three weeks -- i think wall street is generally

right that, you know, this doesn't make a huge difference. it's not like the debt ceiling deal which had huge political and economic implications. it could have huge implications for 20 24 and that does have economic implications. >> what will happen to defense spending? >> if you look at what the cbo says, we're supposed to be on a gentle glide path as a share of gdp. it really, to me, does not seem like that is very likely to happen given the world -- you can look at asia, the middle east, look at europe. spots are already hot, others getting hotter and ones where it's easy to imagine them becoming white hot. >> all right. >> it only seems to go in one direction, jim. thanks a lot for the time. appreciate it. >> i want to check in on the banks before we go. two big movers and two big

announcements. stocks were both a beat, though. bank of america doing better, raised their net interest income forecast. we talked to brian moynihan determined to close the gap and priced to book between him and jpmorgan, put some of the concerns to rest about marking any of those securities on their balance sheet that people were worried about, the health and securities in long-term treasuries and talked about how they're going to get more competitive and the pipeline looks strong. goldman sachs has a lot of -- has a few of those issues from the consumer banking than they're writing off, but the beat came in the core business, which is more than 70%, and it's a billion dollar beat on trading and investment banking. >> it was a good business in capital markets. it's not always the case the market immediately rewards a stock for that because that waxes and waynes. it shows you that bank of america ultimately is a call on the economy, and if you're feeling better about the economy and the consumer and how they're

navigating it and stand in the middle of it, the u.s. economy, you will reward a company trading at book value. >> the commentary from david solomon at goalldman, a little more muted because of rising geopolitical tensions. which we report on every single day. thank you, mike. that's going to do it for us here on "squawk on the street." over to courtney and "the halftime report." thank you, sara and mike. welcome to "the halftime report." i am courtney reagan in today for scott wapner. front and center this hour the semi smackdown, chip stocks whacked. our investment committee is standing by. joining us for the hour brenda vingiella, joe terranova, amy raskin and jim lebenthal. let's get a check on the market here at noon eastern. the dow and the s&p 500 are higher. the nasdaq slightly negative. we're looking at tefrls almost al