good friday morning. i'm carl quintanilla with sara eisen on the floor of the new york stock exchange. antonio neri is with us on heels of their investor day. the outlook on impact of a.i. and the cloud sector straight ahead. are we overreacting to the ozempic effect? one analyst says we are and making some stocks very attractive. he'll join us to make the case. solar edge getting crushed as preliminary results are being released. we kick it off as we always do with the markets. stocks are moving slightly lower as the focus continues to be on bond yields. the ten-year crossing the key

psychological five level last night before backing off. investors closely watching the weekly close and what these moves mean for the yield curve. mike santoli, cnbc markets commentator joins us. i did mention uninversion is happening for the wrong reasons. >> exactly. uninversion, in general, is not great. this time it's happening because people are willing to sell the long end bonds. this time there is a little bit of a bid in the short end. you have had two-year yields come down. all that being said, you know, the stock market is down a little less slightly than it was a few minutes ago. it was a very determined angle of descent down to 1% drop in the s&p 500. it just seems like markets getting a little twisted up and risk averse in advance of the weekend. there actually is a little bit of a bid in treasuries. as soon as you get maximum afraid of 5% yields, we back off 5% yields. and it's a matter of making our peace with it and why is it happening is part of the story. but just what the effect of it

is as it flows through into the economy. i keep pointing out, 4200 s&p has been the low end of this range. we held it earlier this month. we'll see if that continues to be the case. at 4200, we were there in late september. we were there in early june. the yields on the ten-year were below 4.5 in september and 3.75 in june. there's a way to get to new equilibreum on rates but it's been treacherous because of the speed and unpredictability. >> a couple days of breadth improving was encouraging, the bank earnings was nice and then the last couple of days the percentage of beats has gotten eroded quite a bit. >> percentage of beats and also the stock reaction. in general, stocks that report earnings are going down on average. if you beat on both the top and bottom line, you're not getting rewarded for it. that's been a pattern the last three quarters. what i see is investors simply unwilling to extrapolate good today into still good tomorrow.

also if you look at where earnings estimates finished up the quarter, for the most part they started much higher three months ago. yeah, it's great. we beat the number. but it was we expected in june they were going to be even better. and i think it's a case, too. the economy is strong. strong enough the fed's patient but not promising any help any time soon. but can it stay that way? it's all about the stumble after the sprint. >> i feel like the biggest question is what caps long-term bond yields. >> right. >> what is it? >> ultimately, i -- >> fed signaled it's near the end. >> it's not the fed. it's actual buyers who say the risk/reward is better right here. i get 2.5% real yield on tens right now. i can lock it in -- >> people have been saying that for the last year. >> now it's 2.5. 2.5 real, that's what's different. you buy tips today and getting 2.5 plus cpi for ten years. if you think the fed's going to

be at 5.25% for the next ten years on average, fine, stay in cash. otherwise you might want to lock some of that in. that's the argument. >> we'll talk in a few. mike santoli. busy friday after a week. plenty of headlines to dig into from the fed chair's speech yesterday, reiterating that inflation is still too high and rates may have further room to climb. take a listen. >> does it feel like policy is too tight right now? i would have to say no. i think the evidence is not that policy is too tight right now. so, and 5.25 to 5.50%. >> that goes against our next guest's view. he says the fed should not and will not raise rates again this cycle despite what central bank officials say. joining us, thank you. what makes you sound so certain? >> we think those lagged effects of the fed prior interest rates

are about to kick in. we're seeing that in some markets already. we're seeing that in credit growth. we're seeing that in mortgage sector. we think that's going to have a surprising effect on the economy. and the strong data we've seen repeatedly, of course in the labor market but also in growth, the gdp numbers that will come out soon, i think the best days are behind us. although the fed doesn't think now that rates are too restrictive, i think as data starts to soften in the coming months, the fed will start to change its tune a bit and take a more balanced approach. we don't think the fed will raise rates again. we think we'll be on hold for quite some time, though. and it's going to be quite a long time before the fed actually thinks about cutting rates. >> so, as far as equities go, do you think there will be a moment where the market takes bad news as bad news? it's less about disinflation hopes and more about growth or earnings growth worries? >> yeah, it's a challenging point right now in the cycle. i think we're on the cusp of

data starting to soften but the fed being somewhat behind that thinking. until the data softens enough that inflation is clearly coming down to make the fed more comfortable and change its messaging a bit, i think we're at a point where both good news -- good news can be not favorably viewed because it might indicate that the fed is going to be more restrictive and bad news, of course, is bad news. we could be in a point in time for a little while where both -- where everything is bad news because we need to see the fed soften its messaging. we need to see economic stability here. >> well, a lot of it rests on what happens with inflation and how close they can get to target, how soon. what do you expect? >> i think it's a long road. if we look at last month's cpi numbers, yes, in broad terms the trajectory looks decent but there are some sticky components. i think if the fed really wants to point to the 2% inflation as being the firm target and really

wringing inflation out of the system, it still has a way to go. we see areas such as auto insurance, they're still very high to the upside and very sticky inflation. it's going to be quite a long road to get to that stable 2%. that's why we think the fed isn't likely to have lower rates any time soon. >> what accounts for this move up in bond yields, especially at a time where there are geopolitical tensions, you would have thought turis would get a more safe haven bid, mike laid out what real yields are doing and the risk/reward. what do you think is causing it? >> that's a great question. i do think it's plain and simple supply and demand. the treasury right now is issuing messes ive amounts of debt to fund -- to be able to have the money needs for government funding. and in q4 you have about $850 billion in treasury and

securities the treasury has to issue. the deficit next year is supposed to be about 6% of gdp. you're talking about another $1.4 trillion. the question when buyers feel comfortable stepping in and where the marginal buyer is going to price those treasuries, i think that's what the market is feeling out right now. and if the fed is going to stay higher for longer, as the market thinks, i think right now the ten-year treasury will make sense right where it is right here. >> watching small caps, and seeing negative action for the year. is there any value in that? are we at a point where you need to think big in terms of corporates just because of the financing pressures? >> it's a great question because those financing pressures are real and they hit the small caps more aquutly than large caps. large caps provide an element of stability in the portfolio. if we look over the past 10 to 15 years, small cap values

underperformed quite significantly. valuations are pretty attractive. we do think there's some near term and long-term attractiveness there, but if we're talking about a patch where we can have softness in the economy, where maybe the best days of the data are behind us and we need to wait for that stabilization to kick in, it could be a while before small caps reverse here. we're not calling for a quick reversal, but we do think on a medium term outlook, small cap value still has attractiveness, it's just based on valuations here. >> virtually no movement since the days right before covid took off. thank you. have a good weekend. talk soon. let's turn to the vote for house speaker. third vote has begun as congressman jim jordan tries once again to gather support. emily wilkins in d.c. with the latest. what are the indications, emily? >> reporter: sara, so at this point we are anticipating that jim jordan will get lesssupport on this third vote than he did on the second vote.

second vote he had 22 republicans decide to vote for someone else. the magic number is four. can't lose any more than that and still become speaker of the house unless you get democrats to help. i go speak to one lawmaker going in today, a republican, who's voted for jordan in the past but said on this vote he will be voting for someone else. he said, look, i want to get this done. i want us to be united. they think they need to go back into a conference room and keep hashing things out. lawmakers were in a conference room for four hours yesterday trying to figure out a path forward, if they could empower mchenry, or what it could be. members of the house are feeling lost, confused. you have a number of folks who are sticking behind jordan, though. one is former speaker kevin mccarthy. he actually moments ago gave the nomination speech for jordan. this is part of what he said.

>> now, i've listened to the speeches this week and i can already tell you what my friends on the other side will say using their poll-tested phrases. but let me correct the record. jim jordan is an effective legislature. >> reporter: guys, it's not really clear what is going to happen after this vote. we know jordan is probably not going to have enough to become speaker. then it's a question, do they move on to another vote? do they go to conference and try to huddle this out? do they send everyone home for the weekend? certainly there have been a number of members who mentioned they want to stay. they think they should stay all weekend long and continue voting, but at this point it's just not clear what path republicans have to actually get a speaker of the house. >> have we ruled out patrick mchenry just temporarily being able to get the power to do it, to pass legislation? >> reporter: for now the willingness is not there.

to do it, republicans would have to team up with democrats and they don't want to do that. they want to have a majority of republicans behind that idea. a lot of republicans said, look, we just need to elect a speaker. we can't nominate someone to have that power for 30 days, 60 days and kick the can down the road. a lot of them said we were elected to lead. we need to choose a leader. of course, as president biden with that request for aid to israel and ukraine to congress, that will increase the pressure here for them to move. if jim jordan is not able to get to 217 and unwilling to step down, then it's potential that more republicans could begin to see empowering mchenry as a viable path forward to pass those key pieces of legislation. >> which will be a whole other debate about constitutionality and mchenry himself. talk soon, thank you. emily wilkins. the house is looking to end the selection of a new speaker as the president last night said he's seeking $105 billion in new

funding for ukraine, israel, the border and some other security priorities. jay gray is live in tel aviv with the latest. good morning, jay. >> reporter: hey there, carl. good morning to you. look, protesters spilling into the streets across the region right now and amping up some protests. an israeli air strike near a church in gaza, a greek orthodox church. one of the walls crumbled there. at least 18 are dead, according to hamas on the ground there. it was a shelter for 500 people who had moved into the area. hopefully -- they had hoped eventually to leave gaza. let's talk a little bit about the stepped up violence across the region and some american involvement there. the uss kearney, a navy destroyer intercepted three cruise missiles launched from yemen and they believe could have been headed towards israel. american military bases in iraq and syria targeted in drone attacks over the last three

days. there was a a rocket attack at a u.s. and coalitions forces in baghdad. the violence is ratcheting up as those ground troops for the israeli defense forces get ready, they say, to move in. we've been saying that for days but it will appear with the number of bombing runs by israeli fighter jets overnight into the day today, hundreds of strikes, at a pace even they say is outside anything they've seen in decades. it would appear, carl, they're clearing the way for that ground strike. >> just a quick one from me. president biden when he was speaking in israel mentioned a new demand that the american red cross be allowed to monitor the hostages. what do we know about the hostages at this point beside the fact that the numbers keep getting revised up? >> reporter: yeah. what we know, and this is from the idf, that there are at least

203 hostages. 30 of them under 16 years old. 20 of them under 18. and 10 to 20 over 60 years old. they also believe that a majority of those hostages are still alive. what they apparently don't have a real good handle on right now is where exactly they are. >> jay, our thanks to you this week. obviously, long days ahead. you've been a value to on you our viewers, helping us understand what's going on. nbc's jay gray. coming up after the break, the ceo of hbe following the company's investor day. stock down 6.5%. big focus on margins and capital returns over the next three years. plus, rbc says we're overthinking the impact of ozempic on food stocks. the analyst behind that call joins us as new reports surface that notvo nordisk is examining shots for kids.

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year-to-date but raymond james says it's time for crocs to put their best foot forward, being oversold, and talk about overseas opportunities, good margins, all part of that bull call. shares of hp in the red having their worst day since may after the company issued disappointing earnings guidance for 2024 at its analyst meeting. the stock negative on the year. joining us first on cnbc is hpe ceo antonio neri. your guidance was put in the release and was very disappointing. >> actually, i think the market's still trying to understand our guidance in the context of the fact that we excluded the dividends that we get from our put option in china. so we decided to exercise the put option several quarters ago. the consensus out in the market, including that dividend.

when you exclude that, actually our guidance for nongap diluted per share is actually up 4% year over year. >> do you think it was just an error in the analyst models? >> i think it's a time for dige digestion. i think 12 of 14 analysts still had that number included. remember, we're going to get $3 billion after tax. that we're going to use to apply capital returns to shareholders when the time comes to collection. >> because i don't have to tell you, some of the reaction lower than expected earnings and free cash flow guidance, according to barclays or -- one of the analysts are saying, suggests that 2024 growth initiatives are taking longer to materialize. yes, that was barclays. >> we got it at 224 growth, 3 to 5% growth over the next five years. we will continue to expand gross margins. we'll see double digit growth in a.i., double digit growth in the intelligent edge. at the same time, actually our free cash flow conversion is

improving because next year we're improving by 10% when you exclude the $200 million from the execution. so, it takes a little bit of time to get adjusted to the new narrative. but operationally, we are doing what needs to be done, continue to improve the shareholder return, which has been awesome. in the last three years we improved that shareholder return 121%. >> is there any degradation in the macro dback drop? if there is, why not say that? >> we didn't say that. we said we're adding $100 million to the total addressable market over the next three years. our intelligent edge business now represents 20% of the company's revenue. almost 50% of the company profit. we expect that market to continue to grow as we expand into new areas. the hybrid cloud market will continue to grow high single digits. our annualized revenue run rate is growing over 40%. a.i. is a huge opportunity. that market alone is going to be $150 billion over the next three

years. customers are taking a little longer to make decisions but path to revenue takes a little longer for a.i. because -- >> you don't see it as a repeat of what we went through earlier in the year. elongated sales cycles, more corporate uncertainty, anything like that? >> no. the sale cycle is long but i.t. is a core spend for any enterprise in in market. they continue to drive the digital transformation. we -- actually a very positive trend for what we have seen. >> you've been trying to shift the narrative to an a.i. provider around enterprise spending. are you having trouble convincing investors that you're an a.i. play? >> no. remember, we have three growth engines in the company. one is intelligent edge, which is growing 50% year over year. that we expect to grow double digits. and that, to us, is core because it's generating the largest profit in the company. hybrid cloud for us is hpe, i

want to call it a fourth cloud. that business is now growing 40% plus. and then we have a.i. a.i. this year is going to grow nicely double digits. we reaffirmed double digits going forward and it's a big opportunity for us. we have a unique platform inclusive of infrastructure software and services to around these large a.i. scale models. in fact, this year alone in the last two quarters, we actually book almost $3 billion in a.i. orders that we will see over the next few quarters materialize in revenue. >> what do they do? what kind of orders? what are you doing for your customers there? >> basically, building large a.i. native architectures that includes many times of -- including gpus so they can train and retrain and tune this model with the data. >> we usually say the markets give corporates a pass on currency, but does this headwind feel like it's out of the box to prior cycles? >> well, it was definitely worse than we planned because the

currency effect to us was a negative 300 basis points. despite that, this year we'll grow between 4% and 6% adjusted for currency. next year we think it's 50 to 100 basis points headwind. we have done a good job managing that headwind against the hedging at the company. >> on the macro front you mentioned the delay in terms of customer making decisions, but still prioritizing? >> absolutely. >> this is going to be a different i.t. spend cycle than other recessionary or slowdown periods? >> the supply chain challenges, people put -- customers put orders ahead. now they are digesting that. the public cloud, they make capital investment and come back. we expect the second half of '24 computer business to come back. also costs will go up again. and then connectivity is essential to everything. we see that -- we're expanding into security and are growing

markets for us. and a.i. has become top of mind for everyone because it's transformative to their business. that's incremental and accelerator to everything we do. >> antonio, thank you for coming by and talking us through, especially with the reaction we got in the stock today. it's off the lows. antonio neri. >> two days in a row in the building. we want to bring you an update on the house vote for speaker in washington. it does appear jim jordan has lost his third vote for speaker with nine republicans voting so far against him. he can afford to lose four. i think we have a few more, sara, absences, which made the sledding a little tougher for jordan today. >> you heard the update from emily wilkins, doesn't expect it to happen. then there's kind of a question mark as to where this goes, right? meantime, watching solar edge this morning following some five downgrades after this revenue miss today. we'll get to that. on the flip side, union pacific gets an upgrade outside of deutsche bank. now have a buy on unp, norfolk

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to healthcare.

ford, gm, stellantis on high alert as we enter week six of the uaw strike. each of the five previous fridays have seen uaw president shawn fain announce new strikes at mrabts for all three automakers. he is expected to speak today,

4:00 p.m., on facebook. since the strikes began, ford shares down 7%. gm down 11%. and stellantis flat, though in anticipation of the strike, pressure on all of them. >> meantime, solar edge on pace for the worst day ever hitting the lowest level since 2020 after warning about this revenue miss. our pippa stevens has more on that move and what it might be telling us about the industry, pippa. >> that's right, carl. shares are tanking 31% after the company said q3 revenue at the midpoint will be 20% lower than prior forecasts with q4 also impacted thanks to what the company said was, quote, substantial unexpected cancellations from distributors in europe. essentially companies ramped up output to meet what had been very strong demand, but that demand has slowed, meaning there is a big excess of product. perhaps even more importantly, solar edge said gross margins for q3 will be between 20% to 25%, down from the initial 31%.

the company didn't elaborate, but reading between the lines it seems they've had to cut prices. and wall street is unimpressed. goldman, b of a, deutsche, oppenheimer all downgrading the stock. some pretty dramatic price target cuts as well. goldman taking it down to $131 from $254. backe of america going from $146 to $65. we've heard the solar industry isn't looking so hot. the issue is the bottom keeps getting moved out. meaning, carl, there is just not a lot to like in the space right now. >> it has been challenged for a while. pippa, thanks. pippa stevens. let's get a news update with bertha coombs. hi, bertha. the white house just requested more than $105 billion in aid from congress to support security needs in ukraine, israel, taiwan and the u.s. southern border. $61 billion of that request is

slated for ukraine. president biden made the case for aid in his thursday night address to the nation, saying the money will help keep american troops out of harm's way and build a safer world. the judge presiding over former president trump's civil fraud trial threatened to put him in jail this morning for not removing a disparaging post on the trump campaign website about his alert. he called it a blatant violation and serious sanctions for jail time could follow. lawyer said it was inadvertent and apologized for the error. jury selection is under way in fulton county, georgia, this morning for the first defendant to face trial in the election interference case there. lawyer chesebro was to be tried alongside sidney powell but she agreed to a deal with prosecutors yesterday, pleading guilty to six misdemeanor counts and will now be testifying

against other defendants. sara? >> bertha, thank you. up next, rbc on why the bear thesis for sectors impacted by weight loss drugs has again overboard. names like lilly and novo nordisk outperforming. does that represent an pouny? wel scuss. together, we built something truly beautiful. it takes years of dedication to get to this milestone. the new york stock exchange is a symbol of what america

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upside move of the morning is knight swift transportation, a big surge for the trucking company. jpm takes sell rating off the stock today. they upgrade to hold, boost the car get to 57. stock gaining back a lot of what it lost in just the last three months. shares were down nearly 20% over that period as the transports have been all over the map. >> yeah. mostly weaker for the week. ending on a high note. note from rbc's desk grabbing our attention this morning. the bank says the hype over glp1 drugs like companies from notice voe another disk and eli lilly

is overblown and having an effect on package foods. take a look at past fads that fell by the wayside from amazon's feared grocery take over of whole foods to beyond meats, remember that bloated valuation. joining us to break down his call, rbc capital markets nick modi. why do you put this in those categories, nick? >> well, you know, the point we were trying to make is this happens quite a bit. i could have probably given a lot more examples, but the reality is when you look at the valuations of these stock, the staple sector typically trades at a 10% to 12% premium to the overall market. today they're trading at a 3% discount. granted, we've been cautious on the space mainly because of macros, putting pressure on volume recovery, putting pressure on pricing and promotional activity. but at some point as stock analysts we have to say, enough is enough. we think we've kind of reached the bottom. and when you really think about some of the real world

application of what's going on with consumers and these drugs, i think the market is pricing in something that's a lot more onerous. our tech analyst did a great piece yesterday talking about how the real world interaction with these drugs is less than what we saw in the clinical studies. i think where a lot of investors are using the clinical tdata in output as a benchmark in the overall impact would be, but we're seeing something very different in the real world. >> does that mean, nik, your favorites are now are kered within food, within beverage or maybe just relying back on some of the things that have happened in beauty? >> yeah. carl, we've been very cautious on packaged food space for most of the year. we remain so outside of hershey, that's the only outperform rated name we have, in addition to utz, a snacking company which we recently initiated on. those are the two names we have outperforms that i think would

benefit from an abating headwind on this topic. we've always been very, very bullish on the beverage space within our coverage since the beginning of the year. constellation brands has been impacted, coca-cola, keurig/doctor pepper and a wine company because some of the alcohol names have been affected. >> because anyone you talk to on these drugs, nik, say they drink less, they don't crave sugar, they don't eat as much. that doesn't bode well for these companies. >> yeah. and it's a great point, sara. the point we've tried to make is, first of all, it's a very small percentage of the population right now. for those that believe there's an impact today coming from these drugs, i really don't know how you can make that math work. i understand that people that are on the drug are eating less and maybe eating better. it's still a very small proportion. if you go to the kind of real world applicability, the weight

loss is half as much as what you saw in the clinical studies and only a third of consumers are on the drug after one year because of the side effects. and the cost. so, we just have -- what i'm trying to do is just inject a little bit of balance and realism into the debate because i have over my 20 years of being on the sell side, i have seen this happen many, many times. it's created such dislocation that it would be kind of a shame and missed opportunity to not take advantage of it when you think out the next 6 to 12 months. >> i wonder if you can make sense of what walmart was trying to say about the impact on basket a couple of days ago. and then what you think when you see some of your sell side colleagues at other firms try to quantify the impact on gaming or apparel or the size clothes we're all going to buy? >> hey, the beauty of this job is we can be creative and talk about a lot of interesting angles and he walmart thing, an

spoke to my analyst who covers walmart, what they basically said is, look, they're seeing some calorie reduction but they're also seeing the basket increase as consumers are looking for better -- better for you products. so even the quote that's been used to say, oh, my god, walmart is saying people are eating less is not totally consistent with what i think the message was, which is people are just shifting around what they're buying. so that's on the walmart comment. like i said, of course people on these drugs are losing weight and eating less. that's the point, right? it's such a small percentage of the population that i just don't understand how we can come up with a thesis that the current trend is impacted by this. >> because the bigger picture is there's an obesity crisis. those numbers are very big in this country and globally. this represents a potentially

game-changing solution to that health problem that could affect all sorts of things like kidney function and heart disease. how much of that population, i think, is the bottom line, drives sales and growth for companies like a hershey or mondelez? >> that's another great point. again, let me be very clear. i'm not saying that these drugs don't. present some risk long term or it's not important for society. i get it. all i'm saying is that these stocks have reacted so much that i think a very bearish price is priced in today which is not the case. the important thing about incomes and demographics, when you look at the buyers of a lot of the categories and brands my companies sell in consumer staples, they tend to be more middle and lower income, whereas i would suggest that you have much more higher income

consumers buying these because they can afford the out-of-pocket expenses. >> nik modi, interesting, as someone going against the wave on consumer staples. thanks for joining us with the note. >> you bet. >> nik modi from rbc. still to come, b of a raising its third quarter gdp estimates after what they called a sizzling september. the firm's senior u.s. economist going to join us ahead. watch the regional banks today. pretty dismal action at the open as some of these get slammed. the kre is having very rough day. some of these percentage decreases, especially in regions are something to watch. wee ckn mite'rba ia nu. this is spring semester at over 13,000 us school districts, which have become top targets for ransomware attacks. but there's never been a reported ransomware attack on a chromebook. which is why thousands of schools like the fairfield-suisun unified school district

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what he calls a sizzling september for eco data. joining us at post 9, economist baba. i'm curious to know what your nb is for q3 and how that number has evolved over the last couple of months. >> we're looking for 4.5% growth in the third quarter. that's a lot stronger than what we were looking for at the start of the quarter. what's impressive is you can't explain this away with special factors. it's been broad based, all the key sectors have followed the boxes. momentum for the consumer through the quarter, starting with the last strong data with july and ending with robust retail sales in september. residential investment tracking its first increase on a quarterly basis since the first quarter of 2021 and then business investment also very strong at the peak of the fed hiking cycle, which is pretty impressive. >> does that bleed into q4 and ameliorate the concerns we've had about strikes or student loans shutdowns?

>> i think it could to a certain extent. we still expect q4 to be meaningfully softer than the third quarter. the consumer will probably be affected a little bit by student loans, as you said, and the handoff for business investment is probably pretty unfavorable. we do have this fiscal impulse, but can we continue to grow in investment or will we remain at these elevated levels of investment? >> i was trying to dissect earlier on the show why economists were so wrong, including the fed, about q3 and this acceleration in growth from the u.s. consumer. and pointed to excess savings. everyone thought it would run out. i mean, by one estimate, pantheon said there is $1.4 trillion left and underestimated what was happening with real incomes. how do you explain what's going right that you got wrong? >> our view on excess savings is it's an arbitrary measure. it's based on some pre-pandemic savings rate and consumers will decide how much they want to save going forward. given the strength in balance sheets, and it's broad strength

across the various categories of household assets, consumers can probably save less on a flow basis going forward, which means they can keep spending, so whatever number of excess savings we come up with doesn't really matter. the point is that the outlook for spending still looks pretty good ex concerns around student loan -- >> because of wage growth? >> because of wage growth, financials have performed well, there's a lot of liquid assets and home prices are up. overall, balance smeets look solid to deal with whatever headwinds come our way. >> we mentioned earlier odds of a december hike have dropped to a new low, 25. do you think he left the door open enough? >> right. >> what was it that he said? >> basically what he argued is if the data remains strong, if we continue to get above trend growth, if the labor market doesn't tighten -- doesn't lose enough, then there is still room for one more hike. that's similar to what waller

said. basically, something has to give. either the economy slows down or inflation picks up. and i think the momentum in the economy is enough that they'll be concerned enough about continued strength in growth, which will lead to inflation and they'll do that fivenl hike -- >> you don't think a 5% ten-year yield will do the trick? >> that's what they're hoping for and it's certainly a possibility. we do see significant risks, to be fair, they don't do the last hike and they are concerned about financial tightening. they noted it's happening in real rates, in term premium and so they might have just done enough. >> when we talk to bank executives and they tell us the credit cycle is manageable, provisions are in line with prior expectations, are they whistling past graveyards? do you see us on the cusp of some cliff? >> we don't think we're at the cusp of a cliff. we are worried about tightening particularly higher rates. consumer balance sheets and business balance sheets are pretty well set up.

the government balance sheet but that's more of a long-term problem. >> what's the significance of him pointing to term premium, powell, as a reason for rising rates? >> he explained it's not a function of fed expectations. instead what powell is saying is that this is a function of other concerns maybe around supply and so on so the term premium rises and so even if the fed doesn't hike more, longer term rates are likely to stay elevated and tighten financial conditions. >> a lot going on. we'll see what we get next week. thank you, good to see you. and up next, a look ahead to big tech earnings. microsoft, alphabet, meta, snap and amazon are all reporting next week. >> and speaking of tech, watching apple here on pace for a sixth straight day of losses that is the longest decline since eight days in january of last year. we're back in a moment.

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big tech headlining a busy week of earnings next week. microsoft, alphabet, meta, amazon are all on deck. our deirdre bosa has what to watch in today's "tech check." hi, dee. good morning. for the mega caps, it's all about the promise versus the economics of artificial intelligence. throughout the first half of the year, the hype was a benefit, carrying the magnificent seven to new highs. there has been a marked shift where the costs and unclear monetization feels like more of a risk.

next week we will get microsoft, google, amazon and meta that stand to benefit the most from ai but they stand to lose the most if they can't prove to investors their strategies are working. on top of that contending with the climb in treasury reels, equities as a whole even if the mega caps are seen as defensive plays these days. microsoft, let me go through them, has open ai, azure ai integration and 365 co-pilot but last quarter cfo amy hood threw cold water on any near-term impact saying services will be gradual and monetization in the 20204, the first half of calendar year 2025, ie, more than a year away. it will spend more now so investors will want more details, more azure growth in the meantime. speaking of cloud, that could be the single biggest factor for

amazon this quarter where they've been putting all of their ai efforts, and the street is looking for conviction that aws growth has finally bottomed. also to note amazon has not raised capex outlook like others have so they could do that this quarter. amazon is seeing this behind google and microsoft in the race. it has to catch up. google may be the most straight forward, the warm hug of internet stocks. ai is important but search and youtube some of the best businesses around, double digit growth from both units look pretty good against the macro backdrop. and finally you have meta for them, all about spending since zuckerberg kicked off the year of efficiency. can they keep capex under $100 billion? those are huge numbers, guys. investors and analysts, are they prepared for it?

on what should be strong double digit growth. four of the biggest names next week. >> one of the risks with these, even the warm hug of google, is the macros. and it feels like it catches investors by surprise when there's macro weakness. they're global companies. they have currency exposure and some of them like google are tied to what the economy is doing and how they're spending. where are they right now as far as monitoring slowdowns and what's the risk? >> good question, google, its biggest business that make up the majority of revenues has been so much more resistant than anyone else including facebook and snap. it's held up well. growth at a reasonable cost, garc names. interest rates and treasury yields make them let attractive. these are safe, davis plays.

they have huge cash piles that when interest rates were closer to zero they looked like liabilities. they're strong and are collecting and earning money risk free for these companies. though they are tied to the macro, they have many different businesses and are subject to u.s. dollar strength. they are havens of safety in a way also because of the cash piles, because of their pristine balance sheets. >> yeah, advertising will be interesting, too, they're down in a tough tape. the agency business is much different than digital. dee, thanks. a busy week next week. that's our deirdre bosa. meantime, trying to climb out of session lows, the dow is down 111, 4246. art cashin said 4200 might be the land in the sand the bulls need to defend. >> bonds are catching a bid after the move to 10% on the ten-year yield. maybe that can give some relief to stocks heading into the week where cashin said is a risky

weekend, not feeling good about the state of the world. we don't have a house speaker, the number of risks piling up. besides gdp on thursday we'll get the pce next week. important numbers for the fed. it's a blackout period, so no more fed speak. we'll have to interpret the numbers ourselves. >> some people are thrilled. let's get to the judge. carl, thank you very much. welcome to "the halftime report." i'm scott wapner. front and center this hour, the run in rates, the fallout for stocks, the ten-year hovering near 5%. and just as mega cap earnings loom large, the investment committee debating what to do from here. ing me for the hour shannon saccocia, josh brown, steve weiss and capital wealth planning cio kevin simpson. good to have you with us here. let's check the markets. you see we're off the lows of the day. we're still red across the board. we are going for the fourth straight for the s&p 500. the ten year is at 490. we're dropping a little bi