market and we are going to see a slowdown. our base case is for a soft landing. >> okay. going to try and do that with this show here, too, marta, because we got about 13 seconds. going to try to land this baby on an aircraft carrier. >> eight, seven, six. >> i'm losing time right now. make sure you join us tomorrow. "squawk on the street" is coming up next. ♪ good monday morning, welcome to "squawk on the street," i'm carl quintanilla with jim cramer, who's back, david faber at post nine of the new york stock exchange. futures trying to recover as the ten-year peaks just above 5%. plenty of m&a to get to today, including a mega deal in the energy patch and the biggest week of earnings season on deck. our road map begins with stocks sliding to start this new week of trading. s&p closing below its 200-day mo moving average for the first time since march.

plus a mega deal in the oil industry. chevron is buying hess. we're going to have the ceos of both companies joining us here at post nine momentarily. and one of apple's largest suppliers, foxconn, reportedly being investigated by authorities in china. they are said to be conducting tax audit inspections and revving land use of foxconn subsidiaries. that is pressuring sales of apple a bit as we get started with trading 29 minutes from now. carl? actually, i'm going to send it to myself. thank you, carl. we do start not with the markets itself but with that major deal in the energy sector. chevron agreeing to acquire hess. it's an all stock transaction, valued at $171 a share before before we see chevron trade this morning. the ratio, 1.025 shares of chevron and again we're going to be speaking to both the gentlemen behind that deal very shortly. jim, it follows, of course,

exxon and pioneer. i am told, however, these two were talking long before that. at least they have been having conversations. my understanding is they date back a long time, but even in terms of getting serious about a potential deal now, it didn't have anything to do with exxon pioneer. nonetheless, we are seeing significant consolidation monks some major players. >> i think that there's a sense that oil's worth less on wall street than it is in the ground. that's a great time to buy. one of the undercurrents i do -- carl, i got to do this. does mike wirth, the ceo of chevron, believe maybe, you know how we always talk about higher for longer? does he believe in that for fossil fuel? higher for longer? i do start thinking that maybe evs are in play here. the reason i say that is because wall street is not valuing these companies as if -- they're valuing them as, like, look, they're going to go away.

what we've seen in ev world in the last couple weeks is very telling, and i don't think oil's going away. i think oil has been underestimated in terms of how long it's going to be with us, and david's been to guyana. >> or guyana as those of us who have been there like to call it. i spent a lot of time getting that right. >> maybe you correct some people. >> there we are at one of the exxon -- >> that's an exxon deal. >> they are going to be a partner with exxon. >> oh, yeah, that's okay then. >> mike's watching right now. >> they like each other, because they don't -- name me two oil companies that don't like each other. >> they like each other when they can be producing a million barrels of oil a day. they like each other just fine. >> some of the adoption forecast getting pushed, the uk pushing back net zero targets as it's

politically increasingly untenable to have some of these firm deadlines. >> unless you get california saying, look, we're going to outlaw fossil, what happens to the -- here's a thought. that musk conference call, that echoed all the way to milan where i was, and that was a conference call, and david, you were the first to get existential with him. that was a conference call where he was worried. i mean, we're advertising, and it was like, everyone's got -- he said, basically everyone's got one. >> he was worried about macroeconomic headwinds, not the least of which is higher interest rates and we will certainly get to the 5% level of the ten-year. >> i'm sick of that, by the way. i'm now focused on 1998. >> evs are not in the sentence. when you speak to the executives in the oil industry, they will quickly remind you about chemicals, plastics, jet fuel and on and on from there. darren woods of exxon is saying,

yeah, under our stress scenarios, into the future, we see us going back to 2013 levels. that was -- that's where they see demand going. >> who's the largest company in the world in 2013? i mean, exxon was top five largest in 2013. >> that's why you see these kind of deals. >> we should ask mike and even john hess. >> i think we will given the opportunity. >> all i can tell you is that sheffield, i think, sheffield had problems finding an heir to the throne. john's been around for a long time, and this is a great opportunity to stay on the board. he's not selling stock and rejoining the board. >> that's true. >> he's all in. >> you see more coming? is there a possibility? any names you want to share? >> i saw some -- i promised to come back from europe with a kinder -- some idiot downgraded diamondback today, which is higher than clown. i just want to say. >> you talk about devin and diamondback. i don't know. is there going to be more

consolidation. >> rick moncrief has had a bad run at devin. i would hate to see him give up at the bottom. >> those two have almost identical market caps. >> i know. devin's pretty domestic. they don't have a guyana, to quote you. devon is about just conventional europe. it's not about permian, unlike pioneer, which has got incredible permian. by the way, guyana is incredibly cheap. the break even. >> yes. >> what do you think of that? >> what do i think of it? >> sorry to ask. how was the weather? >> the weather was okay. >> jim, it's not just energy today, though, there's deals involving roche and fortive. >> i'm saying that there is a belief that the peak in the ftc's prowess, not that they've ever had any, but i'm being kind, that ship has sailed.

that "titanic" has sailed. >> you are welcome back with an actual merger monday, i think it's fair to say, carl. with this deal being the largest, but to your point, vista deal is a $4 billion deal. we've got roche buying an asset. >> i'm glad. >> there's a bit of activity. it doesn't mean that we're going to see anything close to record levels, but -- >> no, but -- >> and jim, it may be, to the point you're making, that companies are a bit more -- a bit braver when it comes to deciding to venture forward in light of the recent losses at the ftc, although frankly, regulatory is still going to figure very prominently in any of the decisions that go towards saying, okay, we're going to go forward with a potential deal. but it's still there. >> i think the debacle of the week was unfortunately james gorman's swan song with morgan stanley. he's saying, look, issuance is coming back. m&a is coming back. lo and behold, who's doing this

deal? if morgan stanley had done this deal three weeks ago, its stock wouldn't be at $72 going to $68. it might be at $78 going to $81. >> they did kind of miss. >> let's get "kind of" out of it. >> the average stock reacting to earnings has not been kind. that's a big piece of mike wilson's treatise over the weekend, that price action on earnings, i think, even wells tallying some of the number of companies that are raising, eight versus the number that are lowering, seven. >> we had a price target raise in slb, schlumberger. they do set the tenor. remember, we're a podcast, so you're nodding in agreement with me, and no one knows. >> they do set the tenor, jim. >> thank you. >> you're welcome. >> a lot of this revolves around geopolitics as well. we'll move on to the middle

east. nbc's jay gray is in tel aviv with the latest. >> reporter: hey, good morning, carl. let's talk about the last 24 hours, intense air strikes from idf fighter jets. we know, according to the idf, that at least 320 military targets were hit. they say that includes tunnels and operational control centers. we also know that strike teams have moved across the border. they say they're going in looking for hostages to clear the area, again, they say, of hamas gunmen. at least one idf soldier was killed, three others wounded from those attacks. the hamas ministry of health saying over 400 people were killed overnight in those attacks and 182 of them are children. they say that 12 hospitals and 32 health centers have been forced to close due to a lack of fuel. that gets us to the aid coming in on the other end of the gaza strip. we know that 17 trucks moved through yesterday.

20 more today. they're carrying much-needed water, food, medicine. what they don't have is any fuel, and israeli teams are searching these trucks and making sure there's no fuel on board. they have said repeatedly, no fuel is getting into gaza until this war is finished. the white house has said they will continue to see a flow of aid moving through that gate, but the u.n. says at this pace, it's about 4% of what they normally see daily in supplies before the war began. so, it's really just a drop in an area that is desperate for any help. they also say that hospitals that are still operating have about two days of fuel left, and we now know, carl, that many of the doctors in those hospitals are carrying out procedures in the operating room, doing it by the right of their cell phones. that's all they have. >> jay, incredible. we'll talk maybe later this morning about the number of

military assets from the u.s. that are moving closer to the region. jay gray in tel aviv, thanks. when we come back, chevron's mike wirth and hess's john hess here at post nine. we'll talk about their $53 billion deal. we'll get to a bunch of calls today on walgreens, pins, salesforce, roku and set up for a very busy week. c'mon, we're right there. c'mon baby. it's the only we need. go, go, go, go! ah! touchdown baby! -touchdown! are your neighbors watching the same game? yeah, my 5g home internet delays the game a bit. but you get used to it. try these. they're noise cancelling earmuffs. i stole them from an airport. it's always something with you, man. great! solid! -greek salad? exactly! don't delay the game with verizon or t-mobile 5g

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>> announcer: the opening bell is brought to you by nuveen, a leader in income, alternatives, and responsible investing. welcome back to "squawk on the street." let's turn back to, it is certainly the deal of the day if not the week or even longer perhaps. chevron is buying hess. it's an all-stock transaction valued around $53 billion. joining us first on cnbc, chevron ceo mike wirth, and he is joined by hess ceo john hess. nice to have you here at post nine. thank you. i would typically start with the acquirer, asking a question, but john, i really am more curious in some ways as to why you've chosen to sell hess to chevron, why now, why at this price after obviously a company that's born your family name for quite some time and has done quite well in

the stock market certainly over the last year? >> well, thank you. it's an honor to be here, and you know, this year is the 90th anniversary of our company. our company started, has a proud history with my father driving a truck during the depression, a secondhand truck, delivering fuel oil in the region, and we've always been guided by making the right long-term decisions for our shareholders. this is the right long-term decision for our shareholders, and at the end of the day, a very compelling one. i think what's important to understand, david, is that hess brings growth to chevron, growth in resource, growth in production, growth in cash flow, and chevron brings us financial strength, financial strength in terms of a strong balance sheet, a diversified portfolio of assets, and industry-leading cash returns, so this strategic combination really builds and creates the premier oil and gas company position for the energy

transition. >> you talk about long-term, and i get that, and i'm sure your shareholders do too, and they will be able to participate, but my understanding is you guys have known each other for quite some time. you have had conversations years back about this possibility and i'm curious, john, why now? >> it's a strategic fit. mike and i have been talking about it for a couple years, but the pricing never works. now, the pricing works. and people talk about it. people have to realize that we have the best growth portfolio in the business, and if you look at our stock the last five years, we were the best tsr, total shareholder return, over a five-year period. whether it's major or whether it's independent. and last year, we were up 94%, number two in the s&p. so, the prices and the exchange ratio converged where it would be on a 20-day basis a 10% return, a price that worked for mike's shareholders but also would work for ours. remember, we're getting stock

back. >> understood, but it's pricing that you're -- it just -- the timing now is correct because, in part, as you just said -- >> it's a win-win. >> and the prices are properly fit. >> right. but since our shareholders are getting chevron stock, we get to participate in the upside. >> of course. >> but we also get a higher dividend. our dividend goes from $1.75 a share to $6 a share and next year it's going to be $6.50 and yet we still improve the sb intrinsic value in chevron. >> congratulations to both of you. i'm wondering if we can't go back in time a couple years ago. oil stocks were hated. there was a belief, whether it be esg or lack of growth, that it was finite. there's some terminal value by 2030, and yet the world has changed. we need oil much more than we realized. the oil companies are a little bit better citizens. maybe it even turns out that the electric vehicle adoption is slower. how many of these determined the

idea that, really, just put a lot more of your company shares toward fossil? >> first of all, we believe the future of energy is lower carbon, and we are committed to helping to build a lower carbon energy system. we've been investing in hydrogen, carbon capture and storage, renewable fuels and decarbonizing the oil and gas that we use today, reducing the carbon footprint of the energy the world uses today. the reality is the energy system is massive. and it needs to continue running to keep the light on, to keep the trains running and keep the toy trucks delivered for christmas. and so, look, we need to operate in the world that we live in, and that is one that still needs oil and gas delivered by responsible producers. this is a fantastic, exciting deal for us. it's about long-term growth. it's about long-term value, and a continuing commitment to a lower carbon energy system. >> is oil still cheaper in the ground than on wall street because of these concerns? when i listen to you, i think to myself, wait a second, maybe all these are buys. maybe -- congratulations, tsr,

but the fact is people gave up on these. that was a great business. >> i think there's a lot of upside in these stocks. the multiples are still low. the cash flows are long. the duration on our cash flows, i talked about long-term growth and long-term value, this extends our visible growth profile into the 2030s. we've got leading shareholder distributions. our dividend growth has been 6%. we announced the intent to raise our dividend 8% in the first quarter of next year, increase our share buyback. we're returning cash to shareholders and still see relatively low multiples compared to the rest of the market. so, we think there's a lot of upside. >> doesn't sound like regulatory worries are top of mind. can you talk about how close a look that got during negotiations? >> you always talk about that did yo during negotiations. this is an upstream transaction. there's no refining, no marketing. the oil markets are big. we produce 2%. we have 2% market share in the global oil markets.

our portfolios have really very little overlap at all, and so we don't believe there are any real competition issues here. we'll certainly work with the authorities to go through the process, but we so this as good for america. these are two great american companies that are coming together. it's good for energy security, good for the american economy, and we see it as a transaction. >> something else on people's minds is trying to reduce the carbon footprint across the board in this world. how do you respond to people who say, it's stock but you're buying back a lot of stock to offset what your -- to a certain extent what you're issuing? you could use your capital more effectively here by continuing to focus on carbon reduction efforts, and you're not doing so. instead of, you're buying a lot of assets. >> i would disagree with that, david. we are focused on lower carbon energy. we've got the largest production and storage of green hydrogen project in the u.s. we're the second largest

renewable fuels producer and we're expanding our renewable fuels production. we're absolutely committed, and remain committed to building these hour carbon energy systems, but the world's using the energy that it is today, and we can combine and reduce the emissions intensity of the oil and gas that's being used in the world as well so we have to do both. it's not about one or the other. we need to do both of them. >> and you think by this deal, you will be able to reduce the overall carbon footprint, for example, from production? >> sure. we're doing things today to reduce methane emissions, to reduce the -- improve the efficiency of all the operations. if you look at the carbon intensity of our business today, it's down 25% from what it was just a few years ago. we've got a commitment to get it down to 40% by 2028. hess has been doing a great job of reducing the carbon intensity of the scope one and two emissions of their operation as well. we're absolutely working on that

at the same time as we're working on these new energy systems. >> john, you kind of broke ranks with your company, but hess was the gold standard at the gas station. it was the gold standard in refining. how did you know to leave those businesses and just go for pure? >> well, you know, we have been on a journey. it is about change. you never stay with the same hand, and it's always try to invest in the highest returns and the business where you have competitive advantages. so, while we started with a truck, then became a refining and marketing company based in new jersey, we talked about it. then, the gas stations, and then ultimately, in '69, merged with amrata to balance e&p and refining in marketing. i became ceo in '95, and in 2010, we started our journey just become an emp company because we thought the returns would be higher, but jim, you made a point before about oil and gas. oil and gas are going to be needed for decades to come.

they're key to an affordable, just, and secure energy transition, and in the united states, it's a strategic industry for our country. 12 million jobs, more than automotive. lower energy and electric costs by a factor of two to three versus europe. and we're energy independent. both europe and china buy 70% of their energy, so this issue of energy security is key, but people have to think clear-eyed thinking. oil and gas are needed for decades to have an affordable transition. the key going forward is investment. the world needs to invest more in oil and gas, like $500 billion a year, where the last five years it was 3 to $400 billion, and on new energies, the world needs to invest $4 trillion a year. last year, that number was $1.7 trillion. we have to be realistic about the investment challenge ahead. >> if that's the case, mike, the oil companies in this country have been spending far less.

they've been returning money. it's not the drilling the way they used to do. i hear john, but i don't know what to do with the companies that have two and three rigs going when i would have expected 10, 15, 20 by now. >> well, i think over the last decade, we saw companies outspend cash flow, not create value for shareholders, chasing growth. and the industry's gotten the message that shareholders expect a return of capital as well as a return on capital, and so companies across the industry have become more disciplined. i think they're returning cash to shareholders. the u.s. is still growing. the u.s. is over 13 million barrels a day of production, the highest it's ever been. it's the biggest producer in the world and it's growing. we're doing both. and i think that's the key. whether you're talking about energy transition and traditional energy, whether you're talking about growth and return to catch, you need to have a balanced approach here. >> those production numbers have been getting a lot of notice lately. does that mean that conversations with policymakers are getting easier? earlier in the year, there was a lot of discussion about lack of

conversation or tense conversations. >> i would say there continue to be mixed messages on the policy front. we don't get a consistent set of messages on investment, and for long-term investment, that's important. so, i think there's still room for us to have more dialogue and try to find a path to steadier and more durable energy costs in this country. >> and to build on what mike said, russia-ukraine has changed the conversation. energy security has changed the conversation. the importance of oil and gas to our country has changed the conversation. so, i would say the administration is a little bit more pragmatic about the need for oil and gas, and it's actually a strength of our country. >> guyana, something we talked about over ten years ago when you were fighting off elliott. i've actually now been there and spent some time. your partner's going to be exxonmobil. is that an issue at all for chevron when it comes to guyana? >> i think hess and exxon have done a fantastic job in

developing this resource and refining it and continuing to find more and more. we work as partners to share risk in this industry all around the world. there are places in australia and and kazakhstan where we operate and exxon is a partner. we've got a good relationship. they're an outstanding company with great technical capability, great project capability. >> what are your expectations in terms of production from that region? from guyana in particular? >> we're seeing the growth that you have seen out of that project. three of the -- two floating production and offloading units, a third not far up, ultimately up to ten and in excess of a million barrels a day over just the next few years. projects have been on time, on bh budget, and they're delivering more than expected. it's a world class asset, it's unique, and we're honored to be joining.

>> do you need all the assets? you've got southeast asia, guyana, gulf of mexico. how about a disposal? >> well, we'll do some disposals as a result of this because our portfolio is stronger, and you always look at investing in the strongest, most advantaged assets that you have. there's other assets that we have that are good but they may not compete for capital as we remain disciplined on capital investment. they may fit better for others. we'll do some divestments as a result of this. >> i know that you're no stranger because you're kind of ambassador for the industry, but noble energy, which was, i thought, a great acquisition, at the same time caught up right now in the mideast, one down. stay, work with the different governments, work with israel? or is it a distraction and maybe time to say, that was good, but it didn't work? >> it's a long-term business, jim. we had geopolitical risk. we see security risk in our business all around the world or in my 40 years, this is not the first time we've seen a hot war

in an area where we've got operations. first priority is the security of our people and reliable energy supply into the country. we're focused on that today. but it's a long-term business and we got to take a long-term view. the position in the middle east, offshore israel is a very attractive one and it's a strong resource, and we intend to be there for the long haul. >> mike, when it comes to acquisitions, does this, in a sense, complete what you believe you need in terms of the growth profile for chevron for years to come? >> well, this is certainly -- this is our second deal this year, and so it's important. >> it's far larger than the other one. >> it's important to integrate these things well and to maintain stable and safe operations as you go forward. that's a lot of work. that's certainly what we're focused on the here for the foreseeable future. that said, in our industry, over our 143 years, we've grown through organic and inorganic activity over time, and i suspect down the road in the future, we'll see both. >> yeah, and john, was there ever a consideration -- obviously, you're acting on

behalf of shareholders, of which you're a large one, as much as 10%, of selling to another company? did you entertain other offers or was it always just chevron? >> we get inbounds from time to time, but with the strategy we had, we thought we'd create the most value by executing that strategy. chevron was the one company that offered us financial strength while we offered them growth and the pricing worked out where i think we're really creating the premier oil and gas company, uniquely positioned for the energy transition, and by the way, it's also got a great ceo. so, we're very comfortable havinghas go into chevron's shares and being a long-term shareholder with the country. >> the hess name goes away. does that bring you any -- >> the hess toy truck will continue. >> that's enough to keep you happy? >> there are going to be some other things. i'm going to stay engaged in the business. i'm going to join the chevron board, and i intend on having my

voice heard on the energy transition. >> gentlemen, thank you both for being with us. we appreciate it. let's get the opening bell here. carnegie hall today celebrating its 133rd concert season. at the nasdaq, kolibri global energy. jim, reflections on this? >> i have to believe -- as mike said, stronger, longer. as john pointed out, energy security could play a matter. 2% is all they have. i mean, it's hard to believe that's a monopoly. i think that this is a sign that these oil stocks are cheap, particularly after sheffield selling to exxon. market -- look, the market is so grim right now. maybe you have to look at where raising numbers are. you could raise number of them. you heard what hess's return was. but i come back and i look at prices, and i think, only bright spot for the moment, this group. >> we have taken now the

200-day, took out at $42.16, the october intraday low. >> we're seeing the magnificent seven retreat. we're seeing so many different companies, frankly, wilson wright in terms of the forecast being not that great. i know that if you're what some of the things that were said on that morgan stanley call that, look, if you're going to get 5%, we're not going to tell you not to get 5%. so, right now, we have to try to get settled to where i think the 30-year goes to 6%, david, and people have to just realize this is what happens while you're galloping to that and you're going to go down every day toward that gallop until we stop. >> every day? really? >> every day that it moves. >> yeah. >> there will be days where it looks like it's going to be over, but it's not. especially with the issuance, especially with the fact that retail sales were strong. we had a strong employment number. i mean, geez, the economy's not really quick >> we're coming off a strong

employment number. you still think soft landing, though? >> absolutely. this economy is too powerful to land hard, and i think those who are saying it's going to land hard don't realize that we have had rate increases like this. we just haven't had the speed, and the speed is daunting. look, i keep going over the words of jamie dimon about the world being dangerous. he did a piece this week for club members, and i come back and i say, okay, listen to what they said. you actually could argue that the only part of the world being dangerous that's factored in yet is that oil's higher, and there could be more to it. do you not check the headlines every couple hours? >> we do, and i do hear a lot of remarks from market participants saying it seems as -- the market doesn't seem to react as much as to geopolitical events as you might anticipate. perhaps it doesn't know how. it's often hard to judge exactly what the reverberations are going to be from war between israel and hamas, for example, but if it goes to the northern

border, if it starts to spread, that would certainly not be a good thing. >> no, but the -- >> i don't know how much of that is market reaction right now or not at all. >> again, i think it's just trying to figure it out. you heard jay gray speak. every day you're going to get an nbc report from there, and you have to figure out, what does that have to do with the earnings? you don't know. in the meantime, the deals are happening, and people are yawning. this is a huge deal. pioneer was a huge deal. >> yes. >> they were saying, there's no more deals. well, i mean, wrong. >> these are two of the biggest deals, without a doubt. but i mean, you can take a look. what are they doing for those who like to see deals? hess is not doing anything. it's down. i mean, the reason i was asking john, in part, is there are people who are disappointed with the price, as you might imagine. >> and pioneer, look, my travel trust owns it. with the add distributions, we did really well. but carl, at the same time, boy,

that ten-year is -- >> it's too delicious to resist? >> was that on john oliver we did the ten-year play? there's a moment where you're sitting and saying, you know what? new jersey general obligation bonds, three and change versus this nuttiness? >> even over google, amazon, meta? >> not me. i like the -- i'm not calling them companies. they're nation states, because they don't have to borrow. they're like the medici states, having just returned from italy, i wanted to get one reference in. oh, david, what time is it? >> oh. that's very nice. >> that's the official eagles -- >> do you want to share it with the class? >> i'd like to. my problem is this is the only good news. otherwise, i come in, and i say, look, i was watching the markets last week, obviously, and wow, the earnings, not bad, but the reaction's so horrendous. some of these, when you look at

the reaction, you would think that they had first class misses. it wasn't true. the pe multiples are shrinking so radically. we haven't seen even what happens if this auto strike doesn't end soon. >> you sound like mike wilson now. >> no, no, i want to be -- >> you do sound a little -- >> i'm going costume for thanksgiving. i'm not going -- i mean, for halloween. i'm going with kostin. >> are you going as kostin? >> i'm going to serve wilson for thanksgiving, because i'm going to be right. it's just going to take some time. we have to get the bonds where they got to go. and not jay powell. it's not jay. >> it puts into context some of the sell-side calls this morning. i wonder what you think of the piper downgrade of salesforce. >> can we just talk about the hatred of enterprise software coming from them? huge upside surprise. benioff was the most bullish i've ever seen him. i follow up with a trip to dreamforce, he's starting to break into new verticals. they're doing so much with generative a.i., and it's hated?

i mean, to me, that's just pe multiple. we're going to hear from service now soon. >> this week. >> they only miss in the event of thermonuclear war. i think this is completely overdone, but i recognize a bad chart. it's a head and shoulders. procter did well, by the way, only good quarter last week. head and shoulders. what are you looking at? >> i'm looking at some texts. >> you're looking at jalen hurts. >> i'm making sure i've got some information to discuss the next thing i wanted to talk about which is another deal this morning, engage smart, vista buy it. $23 a share. it is all cash. so, unlike hess's stock, at least, if you own engage smart this morning, enterprise software, you know, relatively small. you're happy. the stock is up. at least you're somewhat happy. there you go. got a nice 12% bump. you can see you haven't seen that price this year. haven't gone back and taken a look, but i'm just looking through -- i mean, obviously,

vista has been active. i did notice, speaking of the financing markets, they're not financing this right away. they're going to wait. they'll probably -- so, it's all equity. they're bringing in most likely, you know, some best. they're taking general atlantic down, which owns 52% of this to about 35%. and as i said, fully committed equity financing, not subject to a financing condition, because you may want to wait if you can in this market and see. maybe things will get a little bit better for you. >> how about the fact that a -- >> this is not a leveraged buyout at all. >> how about a pe firm being able to cash out a little? how nice is that? i was going to ask you about -- i was going to ask you about blackstone. >> what about them? >> and cash out. that quarter wasn't that good. >> there was a disappointment, perhaps, that there weren't more. >> that's what i thought. >> cashouts. even though they did pass the trillion dollar level in assets under management. >> this is another one where it could -- it was hated. >> was not a good performer. it was down as much as almost 5%

the day after earnings. >> the reaction, carl, to those that just did okay is so punitive. again, i don't want to miss the fact that i got -- look, has wilson been right during the last week? yeah, dead right. but i also think that we're going -- the level of gloom is very high, and a lot of it is in the context of jamie dimon saying maybe you should be more scared. rates going higher, the world going crazy, and then there's the usual conundrum of the consumer, and i wanted to talk just for a second about steve squeri and american express. if the student loan problem is so bad, why is that the biggest spending cohort? and i can't figure that out. it's a confusion, but we end up just saying, well, listen, maybe that's an aberration. they're still going out to dinner like mad. that stock has acted so poorly, and yet, i just don't think it deserves it. >> we talked a lot about it on friday. profit up year on year. travel entertainment up 13%. u.s. consumer up 9%.

no real credit worries, at least telegraphed at the moment. >> no. i mean, yes, okay, not on express, but we do have auto loans, and we talked a lot to companies in the auto business this week. auto loans, there are some problems with delinquencies and auto loans. that's the first. but 30-year is the worst delinquencies. that's not good. >> really? i didn't realize. >> that's bad. >> even though as you just said, amex was talking about great strength among their base. >> profligate young people. >> apparently people who have enough money to continue to spend it have what fifth third said last week was some degradation in overall credit but a real bifurcation between the high end and the low end and some b to b caution recording budgets going into next year, capex, that kind of thing. >> we're stuck with walmart and costco and tjx doing well. and everybody else, doing poorly

in the retail world. and that's a shocking development, because do we really only have -- well, amazon's doing well. do we really only have a couple companies doing well in all of retail? all of retail. >> right. >> worrisome. >> and to carl's point, you hear that from a number of different companies in terms of the difference of willingness to spend amongst the middle to higher versus the lower where there is a lot more pressure now. let's call it, you know, 40 or $50,000 a year and below in terms of annual income. >> i think even musk talked about that on the call. people who make $200,000 a year have no idea what it's like right now trying to get by on $50,000. >> wasn't that a great comment? not that he's the common man. i'm not making fun of him, but of all the calls i've heard, he seemed the most sensitive to the idea of the tale of two cities. >> yeah, the world's richest man. >> empathetic.

>> that's not one of the characteristics i would associate with him, no. and in fact, i think you've read the isaacson book. i think it's time for you to go. good-bye. i know we worked together for 20 years. good-bye. >> you know, i just left out about how steve jobs wasn't the nicest guy. >> no. by the way, not being a nice guy and those kinds of things can be a very effective way to -- >> ben frank lin was a nice guy. >> tesla shares, as we just saw, continue to see significant -- >> not really. >> not really? that thing is down a lot. >> you always resist, though, getting caught in the gloom and losing sight of opportunities. >> can't. i can't. >> today, upgrades of walgreens. upgrades of pins. upgrades of waste management. >> i'll so glad you mentioned walgreens. that's lisa gill. she's saying that walgreens is going to get away from this shop-lifted, close the decks

tour, the greatest flagship store they had, that i went and did a piece from, closed. she's talking about wentworth being a smart health care guy. they've got to get out of the shoplifting business and get in the money business. that shoplifting per share has got to go away. >> they call it a clearable bar as this new management rolls in. >> when they give away the chocolate at the front of the store because they know that therefore they can say, look, here, an offering, that's got to go away too. you should charge. i find charging to be an incredibly positive experience. >> it's a very helpful way to make money. >> there was a great piece in "the atlantic" about self-checkout being a failure. i said, maybe they don't use the self-checkout because it's such a pain, they just walk out. >> you can pretend to use the self-checkout. you can sort of do, you know -- >> have you ever done that? >> no. >> bay mistake? costco says there's a lot of

people who do it by mistake. they thought they paid. that's why they have to have people. >> they didn't have the receipt. >> right, but this is the problem with shelf-checkout. cvs and walgreens continue to do it. who's got the worst pilferage? well, maybe target. but target is -- >> the whole foods around the corner here does self-checkout, but i always go bay by the book. >> i paid for a bag and they didn't have it, and i went and complained, and they said, are you kidding me? i walked out with a chicken, walking around the street with a chicken. >> you can't get a bag. >> hey, how you doing? a guy said, are you cramer? i said, chicken. why are you carrying a chicken? >> like at disney world carrying around a turkey leg. >> how about the india and the espn valuation? mr. naysayer disney? >> yes, and the $8,000 from last week. >> you might have talked about that. >> we did talk about a number of

those things. life goes on without you. >> you still have a show, i know. >> we did talk about some of these. >> there's long stretches of awkward silence. >> absolutely. that's what it's like without me, but i did think that iger is lifting his head, starting to put together something. >> it's still coming. the whole plan. >> work in progress? >> i think so. i think particularly on espn. again, i sort of have said many times, the abc idea that's noncore sure but will that really result in any kind of transaction? very difficult to say. >> look at that. oh, no, don't look at that. i told you he's going to boeing me with the disney. >> there's a -- >> why did you buy it, jim? >> there's a line about reliance in india. we got -- at least we got the actors talking again, starting again tomorrow after two weeks of nothing. >> yeah. they're back to the table. we'll see if they can finally get to the finish line like the writers did. >> i was going to mention netflix, but once again, i would hear, jim, where were you? i'm going to skip netflix.

>> i like the idea that i'm always in your head. >> you are always in my head. >> guys, you know, we should take a look at shares of apple, and speaking of newspaper stories, this is "the global times." >> paper of record. >> it's out of china. and so, mainland tax natural resource authorities inspect foxconn companies in several provinces. seems to be in part because the company's founder said in august that he would be running as a candidate in the 2024 elections of taiwan's regional leader. >> independent candidate. >> and foxconn may be investigated because he is running for those elections. chinese mainland experts again tell "the global times" the investigation is normal and legitimate as any company goes through tax inspections. but again, given everything we know in terms of chinese regulatory authorities, what they do or don't do, response to u.s. or not, related to taiwan and so forth, you might imagine

apple would get at least some concern and that's happening with the stock down over 1%. >> i want you to go back five wo weeks ago when we heard that the government basically was saying, hey, don't buy apple. >> telling government employees, don't bring an apple phone to work. >> what american was the best received in china this year? >> tim cook. >> and how are sales? jam packed. >> jim, i don't know how sales are. >> reuters has a piece today that china's offering deep discounts. >> we don't know what's right. >> we left out the fact that they have been terrible at a.i. how about that? that's known sources within the company. you know, if you talk to someone within the company and you talk to the -- and you're in the media, you're done. so, whenever i read these known sources, and, by the way, they don't like to do something until they're the best. >> yeah. jim is referring to a piece on the tape today that a.i. within app apple is seen internally as a disappointment, that they were thrown by the wave of a.i.

interest earlier in the year. >> i think that their history is, when it's figured out and does more than just term papers, we'll be in there. i've been using it a lot. it's fun. i'm going to use it to do wordle. >> chatgpt? >> yeah, i think i might do it for wordle. it's good for games. >> it's good for a lot more than that, jim. >> i'm just saying that when apple, when it's worth it for apple, apple will do it. now, people are going to say that when, in december 4th, when lisa su unveils her chips, people are going to say that the microsoft-hewlett packard access is going to make it so there's a.i. that fits in your daily life. >> with copilot? >> yes. nice piece. microsoft is holding up better than most enterprise software companies. god this, market's ugly. >> i was going to say, the kbw bank index is really flirting with taking out its may low. >> i can't believe those companies -- the stocks are doing worse than during the

crisis. i don't think it's right, but then if you go back to the bank of america, obviously, not a small bank, people were worried about their bond portfolio, which i think is pretty ridiculous. i mean, it was just too high. >> hold to maturity, but they had embedded losses that are enormous numbers but to your point -- wait, worse than the global financial crisis? what are you talking about? >> the bank crisis. not the global. >> oh, the bank crisis in march. >> yes. >> okay. it's like -- >> lot of those companies, people were worried about. they were worried about the stocks. the businesses themselves aren't that bad, but the stocks are horrendous. we need mergers so badly. it's awful, awful. >> jim's right. we lost 4,200 here. all sectors red except for industrials. slight gain there. 1% declines on names or in industries, at least, like financials, energy, utilities and so forth. quick reminder, you can get in on the cnbc investing club with jim. sign up and find out more at cnbc.com/jointheclub or use the qr code on your screen. it takes you right there.

fed is in a blackout window, mercy mercifully, so no fed speak, but of course the news of the day is the ten-year visiting 5%, currently just a shade below.

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here we have all the time in the world, but no time to waste. watching the long end this morning. bill ackman got a lot of attention when he announced his bond shorts. a couple tweets we covered our bond short. there is too much risk in the world. we'll see if that marks a turn in sentiment. dow coun about 140. we'll get stop trading with jim in a moment.

let's get to jim and stop trading. >> my tag line for "mad money" there's always a bull market somewhere. i don't like this bull market. i don't want to be like cal. l 3 harris recommended by wells, it's good, they bought the aerojet general. the stock is well off its highs.

very well run. they are the -- i would say the big winner right now in what's going on. if you did want to capitalize off of armaments, which i wish we didn't have to, lhx is the one to buy. >> generally the consensus when people talk about that. >> the stock is so -- we're talking about a stock 177, it was at 255. there's a lot of room to run here. >> how will you frame up the week tonight? >> well, i'm going to have snap on today. i'm focused on this strike. they got to reach an agreement this week. >> the uaw. >> yeah. i think that shawn fain is running the uaw, is moving the goal posts. it's become political. i'm wondering whether the rank and file are with them. $500 a week is not that much and it is getting cold. the strike must be solved soon and prices that are not prohibitive, and it can't include batteries. if it includes batteries musk has such an edge that's never going to take off for ford and gm.

$4,000 it would add to the battery. make that up with the pennies. >> gets to the key question in terms of their ability to generate any kind of a margin if they're given what their costs are going to be. >> musk sounds like a guy who makes cars. >> he does make cars. wants people to go to the office and drive there. >> want him to -- >> drive to the office. he's no joke. robo, full self-driving is coming. >> still have to have some money -- i know. the cyber truck, by the way, not yet. not yet. it's very hard to make. >> we'll see you tonight, jim. "mad money." 6:00 p.m. eastern time. after we have recovered 4200. wharton's jeremy siegel on how higher yields fit in his market perspective. don't go away.

[ clock ticking ] we're going to have so much fun. good monday morning. welcome to another hour of "squawk on the street." i'm sara eisen with carl quintanilla and david faber, live for you as always from post nine of the new york stock exchange. take a look at stocks here early monday morning after a down week on wall street last week. we're lower, but again off the lows of the morning be and there are pockets of strength there.

on the right,industrials, health care communication services all green. everybody else is red. energy at the bottom of the list after the big deal we'll talk about. consumer discretionary under performing ahead of some big tech earnings this week. number of sectors on the move as you can see and treasuries got to include it at the top of the list. the 10-year yield above 5% earlier in the session below 5% but as you can see elevated across the curve. we're 30 minutes in the trading session. three movers we're watching. chevron one of the worst performing stocks after announcing the $53 billion stock deal to buy hess. both ceos speaking with us last hour. more on what deal means for m&a and the energy space from here coming up. another day in the red for tesla after a new filing revealed the company's capital expenditures for the year would exceed its original 7 to $9 billion target. shares are down 20% in the last three months.

they got hammered last week on the back of that earnings report and conference call. then walgreens one of the top gai gainers jpmorgan upgrades it to buy. under the company at new management, price target $30 a share there. stock is up 2.25%. this is going to be an important stock. tech earnings and a calendar to show you how much is at stake this week even though it's a quiet period for the federal reserve. there's the earnings pitting. it's going to be dominated by consumer names like coca-cola. we'll get economic bellwethers like 3m and the big tech setting the tone, alphabet and microsoft tomorrow. as far as economic data two key reports i would highlight toward the end of the week, the first look at the quarter gdp which should be very strong and wall street estimates are between 4 and 5% growth that we could see for the third quarter and then on friday, we get the pce

deflator the fed's preferred metric on inflation. few other releasing in there. new home sales interesting with mortgage rates above 8% and that fed speak they're not going to talk about policy, powell and barr, because they're in a quiet period ahead of the meeting next. >> good. >> but it almost doesn't matter because any of this stuff right now because it's all about treasury yields and the 5% yield on the 10-year we're wondering is that going to cause people to come in and buy. bill ackman covered his short. >> yes. carl mentioned that ackman said the economy is slowing faster than recent data suggs. bill likes to introduce himself into the conversation. there was focus on that position which has been a good one for him being short and now they are covering, obviously. they believe perhaps there's going to be more money or demand for those bonds. >> it does feel like a dangerous world, no matter what happens here, and the fact that

treasuries haven't been acting as safe havens is interesting especially the march up in gold. maybe things will get a little too tense where you just have to buy treasuries. there are two factors i wanted to hit as to why these yields continue to move up that we don't talk about as much as, you know, the solid growth and higher inflation and higher for longer. what happened in japan kicked off the rate move overnight which is there was a report out of the nikkei business news that japan at its bank of japan meeting next week is looking at scrapping the yield curve control further because they are facing upward pressure on rates as well as the 10-year nearing 1%. remember it's a global move. the dollar/yen around 150. there's talk of potential intervention. they intervened last time because the yen is getting so weak, so there are -- my point is there are other factors at work here and it's a global move and sometimes that's what trigger is for a move that we've seen in our bond market.

>> macro thoughts we're going to get from the big companies? sara, you mentioned earnings and it's nice that earnings is going to take the forefront perhaps over endless chatter from fed officials, i don't know, are there any particular that stand out to you. >> the earnings are good but the guidance is less good and the commentary from ceos is more cautious than the economic data we're getting on strong jobs and strong retail sales. brine moynihan said retail sales are noise. the fed is doing its job and it's working. ceos have a pretty good real-time indication of what's happening with the economy. if we get this cautious chatter and guidance, that could give us clues into where we're going. that's been the big surprise, is how resilient the consumer demand picture has been. the new york fed does a recession odds sort of model, just another regional fed model, and base it on the difference of the three-month and 10-year

yield and it's come down a little bit. we're in the 50s or so percent chance of recession. it did get as high as 70% chance of recession. that's thanks to the stronger growth and, obviously, the back up in yields. people have been positioning away from this at a time where ceos are growing more cautious. that's going to be a setup for how to think about this week for a little bit. >> rihymes with the journal survey. raised recession odds second time in a month to 35%. largely on the back of geopolitics. >> the problem is we've been waiting for a recession since march of '22 when they started raising rates and it hasn't happened. one other factor out there that i don't think is getting enough attention but could be a reason yields move up from here, the treasury likes to bury this report that comes out on friday of the deficit. we got the final deficit number. >> i saw it. wow. >> for this fiscal year. 1.7%. technically 24% higher than the

year before. >> $1.7 trillion. >> that's an important "t." >> we wish it were 1.7%. >> it's double if you sort of take out the quirks around the biden student loan forgiveness number. the problem is this is happening at a time of high growth, full-on employment. those are times you should be dealing with the deficit not adding to the deficit and debt, and yes, government has to pay higher levels of interest and that's a big part of the story here, but it's a problem. it's going to factor into this story whether there's enough demand for the all the supply. interestingly i learned a [ inaudible ] note -- >> the note today. >> the s&p topped out july 31st when the announcement of issuance came out for treasury on this quarter was significantly higher than last quarter's issuance. that tells you that's a factor here at play of who is going to fund all this debt. >> our next guest says higher

yields reveal stronger growth bad for bonds, not as bad and perhaps good for equities. wharton school professor of finance is with us. great to have you. does that mean you think earnings for the quarter are going to impress? [ no audio ] >> professor, apologies. we'll get your audio working in a second here and come back to you. that is, obviously, one of the key hopes for the bulls, that the macro backdrop is going to reflect some strength in least consensus earnings, maybe '24. i think we got your audio back. >> let's talk about -- very good reasons why yields have repubrisen. if it's stronger growth would you rather be in stocks or bonds? stocks are the place to be if we get stronger growth. i don't mean just for last quarter.

you know, i think the promise of ai is real. this year, our growth has been driven by productivity. we actually have payrolls that are only half as big increase as we had last year and we had also than 1% gdp growth and this year we're going to have well over 2% gdp growth. so productivity driven growth, i mean, first of all, brings inflation down. it's good for earnings. but it does drive yields up. higher real growth, more borrowing, more capital investment. i want to be in stocks and not bonds. let's talk about the deficit. suppose a higher yields are driven by the deficit and that may mean higher inflation in the future with big deficits. where would you want to be? stocks or bonds. you want to be in stocks. now sara mentioned japan. i'm not as convinced, you know,

japan 30 years ago, when its stock market peaked off was as big as the united states. now it's a tiny fraction. its economy in an aging population is declining. yes, it holds a lot of treasuries, but i don't think japan is the force that it once was. i'm not as concerned about japan as being a source of the reason. but when i take a look at these higher yields driven by productivity, growth and even if you worry about deficits, listen, i would rather be in stocks. >> isn't the geopolitical picture now, professor, more short term and more acute and apt to given investors caution? >> right. it does. these geopolitical problems are usually opportunities to buy if we look back at history. clearly things could get worse in the middle east before they get better, you know. you are invited to try to time

that in the market, not many people can, you know, what is the most famous saying in stocks, that stocks climb the wall of worry and when the -- then there's no clouds in the sky, you're buy too high. i think geopolitical risk is in the long run an opportunity to buy stocks not to sell stocks. >> i think the point i was trying to make, professor, on japan, not necessarily that it's an economic headwind, however, it is a trigger for higher rates in the u.s. because we do see that when there's talk of their yield curve control adjustment our treasury yields rise which is all an economic hieadwind. i get you like stocks better than bonds and we have had growth, but now we're facing the fastest tightening cycle we've seen, the backup in yields and what that does for financial conditions and for consumer spending, and quantitative easing at the same time, that's

the test for growth and for earnings ultimately, isn't it? >> and you meant quantitative tightening. >> tightening. >> yeah. at the same time, right. certainly i think these higher yields have been the source of the 5, 6% drop that we've seen in the s&p, but then when i think about well, is that because of stronger growth, then that means next quarter that means next year, earnings are going to be better than they would be otherwise? don't forget -- we talk about stronger real yields and certainly they have gone up, the 10-year tips to 2.5. we have to remember when tips came out in 199, they were 3.5 and within three years, they were 4.5. so in the long picture, these real yields, although certainly higher than they've been in the last 10, 12 years, are not high in terms of history. if we have real growth that's the source of the higher yields i don't think that's a negative

for stocks. >> finally, s&p, year to date, total return is a nice 11% with dividends, but you strip out the magnificent 7 and you're almost half a percent. do you think that we need to continue to rely on mega cap tech or can the rest of the economy join in? >> wow. it's been so unusual that the new bull market, if you call this a new bull market, but usually when you have a bear market, the new market is different leaders and this is the same leaders as before, they have been magnificent to say the least, but the difference between the big tech price earnings ratios and small and mid-cap price earnings ratios, which are 11 and 12, is one of the biggest that i've seen. so i'm not saying that big cap are way over priced or anything like that, but i say, i've rarely seen mid and small as cheap as they are today. >> yeah. russell with a new 52-week low this morning.

professor, we'll stay in touch. good to see you. >> thank you. >> jeremy seeingle. >> as we head to break, our road map for the rest of the hour. mega merger monday with another deal in the oil patch. chevron buying hess more than $50 billion. what it means for the sector and who could be next. >> plus, just speaking of the magnificent seven a crucial week for the likes of alphabet, microsoft, amazon, meta, all gearing up to report earnings and we're going to get you ready. >> while the health care spotlight has been focused on these weight loss drugs, big tech has been hitting new lows. we'll discuss that when "squawk on the street" continues in a moment.

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and creates the premier oil and gas company positioned for the energy transfer. >> there it is, that energy transition. ceos of chevron and hess speaking with us in the last hour about the $53 billion all stock mega deal. chevron's acquisition comes after exxon's deal to buy pioneer. let's discuss what all this latest m&a action in the oil industry means for the sector. joining us at post nine is paul sankey. nice to have you here. i guess both sides give it to me. i was asking hess why and why now to chevron, especially given the price. give me your take from chevron's side and hess side? >> we know it's the best asset in global oil. hess was trading as takts jofr play and the question was, can you get a high enough premium to be a consummated deal. the question for hess why now and at this price? hess stock last week was at an

all-time high. 5% premium to that price which is kind of bad. this is by far the best remaining independent oil company out there on the u.s. exchange. it is a light price and does raise questions for the sector. we don't have the asset base of hess. >> for chevron, just -- >> just a great deal. chevron is heavily exposed to kaz zik stack whstan which has travel through russia. if they buy in the permian they will dilute themselves. can chevron get hess. frankly, i didn't think they could. i'm delighted for chevron. for john hess it's a tremendous end to his career as a ceo. >> why didn't you think chevron could get them? >> i didn't think they would get them for 5% premium. we were talking 200 a share in range with the highest price targets on the street. $20 below that and that was the stretch target, let's say. the average street price was 170, but that doesn't include a

takeover premium. >> does it mean there's more console dmags shale? >> the knee jerk it's bad for oxy. maybe mr. buffet included. mr. buffet owns chevron and oxy stock. and then a second rank if you want of companies where what we're seeing here is the medium ranked companies are getting a poor multiple and as you get bigger, you get a better multiple. the bigger the better in oil. the highest multiples are exxon and chevron, the next hess, how do these guys in a synergistic way and a good for all shareholders way combine let's say someone like devin and vincent and someone else. these guys need to get bigger. we had other rumors around chesapeake and other news you would do deals to scale up. >> the big guys are done for a while. they're going to be digesting large deals. >> absolutely. they have to be done. i say it's a little bit of a negative for oxy here.

>> the regulators going to let all this happen? >> gthere isn't really a major issue with intradeals. if you flip out hess for chevron, it doesn't really change the competitive landscape. i do think exxon for hess would have been much more of a challenge because that would have worried the guiana. the concentration to one big oil. i think they liked having john hess around to keep everyone honest. mike wirth is no less honest. it all adds up. it's sofrtrt of win-win. >> how about for the climate, in terms of spending on carbon reduction efforts, they're not changing their targets at chevron. is this recent wave of consolidation saying anything in terms of the energy transition? >> on friday the great people of the midwest basically had the

pipeline canceled, a co2 pipeline that would have let ethanol become sustainable fuel. nimby had the pipeline canceled. it's going badly. the other theme in energy is the solar stocks. they've been a disaster. if you list the reasons why, it's pretty brutal. the guidance of solar was horrific that combines with the interest rate environment, the long return, long duration renewable stocks are getting crushed and until we get some kind of better interest rate environment with better returns because the solar stocks are making poor returns essentially, it's tough for everything on the environmental side of the market basically right now. >> we were the mentioning the uk and the prime minister's move on net zero. does it make sense for policymakers absent nimby? >> the rubber is hitting the road. is tesla more environmentally

friendly when you look at the scale of things, and it goes through everything, right. then you've got all the automaker problems to add to that. a major backing off of the environmental investment. let's just throw money at the problem and it will sort things out because the returns are poor and the environmental benefits are questionable. it's a problem for the sector when you combine it with the fed. >> environmental benefits being you're running tesla off the grid and if it's -- >> 75% of teslas in europe are built in china. that's 75% oil manufacturing in the case of the batteries using forced labor, you know, do you feel that's environmentally friendly? this was always the issue and a trump issue, you've essentially offshored your manufacturing to a high coal, 75% coal. china's coal consumption is 50 million barrels oil a day. anything out of china is not

environmentally friendly. >> they have the renewables as well. >> leading on renewables actually. >> yeah. all right. we're going to have you back to talk about these things as well. paul, thank you. >> pleasure. as paul mentioned occidental getting hit. the only energy name doing worse than chevron. pippa stevens with the sector and names moving on the back of this. >> there is so much buzz around that chevron and hess deal. energy stocks are in the red today alongside the broader market. looking at the technicals, it's now one of just three sectors trading above the 200 day moving average. the other two being tech and communication services. according to btig. that's on a market cap weighted basis, but if we look at an equal weight basis, energy is actually the only group above its 200-day. jonathan crinski from btig noting energy's relative breakout means the sector is attractive, despite its out performance over the last three months. those gains have been led by upstream players, a pick-up in deal activity with the xop up

10% in the last three months. on the flipside he refining stocks have taken a breather after making a series of new highs and the crack etf which tracks the space up just 3% in the last three months. david, back to you. >> thank you. as we head to break, check out the move in fmc, agricultural science company. the company reduced third quarter revenue and earnings guidance on what it's calling destocking trends that were, tiote, more severe than ancipated. 15% down. don't go anywhere. icy hot. ice works fast. ♪♪ heat makes it last. feel the power of contrast therapy. ♪♪ so you can rise from pain. icy hot.

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we continue to monitor the headlines out of israel. this war against hamas. nbc's jay gray live from tel aviv with the latest. jay? >> yeah. one important note coming out of actually washington just within the last few minutes that says sources tell nbc news the biden administration is advising israel to delay a ground assault for hostage talks, saying they should delay that ground assault to try and rescue some of these hostages. that's been something we've been wondering about, sources telling

nbc news that is the case. look, it hasn't slowed the air attacks over gaza, 320 military targets according to the israeli defense forces hit in the last 24-hour period, including tunnels, operational command centers and they have been clearing out that area along the border with gaza. we know that select teams are moving in for raids in that area, looking for information on those hostages, clearing out the area of hamas gunmen, they say, and so it's really stepped up along that border. we also know they've been repositioning some of the troops and some of the equipment there, leading many to believe that a ground assault is very imminent. we know that on the other end of the gaza strip, aid continues to move in, 17 trucks yesterday, 20 trucks moving in today. food, water, medicine, medical supplies, no fuel. right now, the u.n. says fuel is desperately needed as much as any food or water.

we have been told by the health ministry of hamas 12 hospitals have closed, 23 health centers have closed for lack of fuel or damage from the air strikes of the hospitals that are remaining right now. they have about two days of fuel left according to the u.n. and then they will be forced to shut down as well. we know that in some of those hospitals, the doctors are actually performing surgery just using the lights on their cell phones in those operating rooms to see what they're doing. that gives you an idea of how desperate the situation is. as for the other aid, the u.n. says what's coming in right now is about 4% of what before the war was an average daily delivery for gaza. >> that's an incredible number. appreciate the update. let's get to phil lebeau with a news alert on the awesome and stellantis. >> carl, the uaw is now striking

a second stellantis assembly plant, the sterling heights final assembly plant outside of detroit. essentially taking down the most -- one of the most profitable plants that stellantis has in north america. you're looking at 26% of u.s. production, where they make the ram 1500, quad cab, very, very profitable vehicles, for stellantis and you have the uaw taking down production for 47%, 48% i should say, of stellantis' u.s. production. 48% is now knocked out because of uaw strikes. this was announced within the last half hour, the uaw saying it made the decision because stellantis still needs to go further to catch up with gm and ford in terms of the negotiations. to make a point of saying they

are lagging relative to their competitors in terms of the negotiations, in terms of what they're putting forward, so again, the uaw calling a second final assembly plant for stellantis for those workers to go on strike. 6800 workers. there are more than 40,000 uaw workers for the big three in the u.s. who are on strike. guys, back to you. >> yep. from bad to worse. phil, gm and ford are going to report earnings this week and i feel like they have a little bit of a communication challenge when it comes to how they characterize the impact, if it -- if they're bullish the union can use that against them. bearish, they face problems on wall street from investors. how do you thread that? >> i don't think it's a communication issue in terms of being bearish. i think wall street you have to play it that way. if you were gm and ford you cannot portray this or try to play down the bearishness aspect of this. these stocks can they go lower yes, they could go lore.

is it likely they go lower? probably not. i expect you will hear from the gms, how much money they're losing every day, and it the need to get it resolved. i don't think it's a communications challenge. they will go at this and they will be bearish. they will not portray things as hey, business is good, and we think we can get this resolved. you will hear pessimistic comments from gm and ford executives. >> and then questions about losing competitiveness to awesome like tesla -- >> absolutely. those questions -- sara, those questions are there already. you can't communicate your way out of this. and i think we will hear from them in terms of when they report their financial results for the third quarter. >> phil, thanks. phil lebeau this morning. meantime fairly ugly open. we did lose 4200. mike santoli watching that, although i think he's also

watching the banks and small caps too. >> yes. they actually did bounce off those lows as yields came in a little bit. you had that -- you were talking about the bill ackman tweet, coinciding with when the market got a little bit of a bounce. i think you would have to say, i would say, that it shows you that almost everybody was poised and fixated on okay, we're kind of near some kind of support level, been up 15 mondays in a row, biggest, most profitable companies in the world about to report. that's the one-hour tactical play. you might have seen unfold. if you want to talk about what the market has been most concerned with it's not just a pure the world can't live with 5% 10-year neelz, the economy can't handle it. the economy has been stronger than expected. if i look at target and capital one and whirlpool trading back towards spring 2020 prices it shows there's no faking the

cyclical or financial trade. so whether, in fact, you get another burst of maybe it will be okay, as earnings go up and got get rewarded for it, that's the question. >> vix 22 is interesting. >> it has been interesting. look, you got above 20. it had been a ceiling since may or so, but it shows you there's been building concern and, of course, no shortage of excuses for people to be more anxious or on guard with whatever is going on in the world, so there is this build up of anticipation of potential things that aren't, you know, going to go our way. gold and oil are calm today. maybe we had a sense where friday you get the build up of anxiety, a little bit of tension release on monday has been a pattern for two weeks. >> 15 mondays in a row. >> except for labor day monday. >> yeah. going back to june since you had a down monday. can't explain it. don't know if i have to. we'll see -- we can see where we close. >> talk soon. mike santoli. as mike mentioned big week for

big tech earnings from alphabet, meta, amazon. our next guest says the tusep looks tough for the group. when we come right back.

can't explain it. when we come right back.

welcome back to "squawk on the street." i'm dominic chu with your cnbc news update. a group of house democrats wants a briefing from u.s. intelligence officials on how the chaos over the house speaker election is affecting the country's relationship with china. the 11-person minority party members on the select committee on the chinese communist party claim beijing is using the failed elections and a nearly 20-day speaker vacancy as a propaganda tooled. and they report to chinese media as evidence. the u.s. renewing a warning to beijing following a collision in the south china sea and the u.s. would defend the philippines in case of an armed attack after chinese ships

blocked and hit two filipino vessels in con tested area of that sea. no injuries reported. democratic senator bob menendez is expected to immediate not guilty to new charges claiming he accepted bribes from the egyptian government and acted as a foreign agent. the senator entered a not guilty plea for earlier corruption charges alleging he accepted hundreds of thousands of dollars worth in bribes. sara, i'll send things back over to you. >> thank you. let's get to what is at stake for big tech. amazon, meta, alphabet, our next guest cautious, quote, overzealous ai expectation and fear of a spending slowdown. let's unpack and bring in jeffries research analyst and brent has a buy rating on alphabet, meta and amazon, feeling cautious about the group or particular names? >> i think the group overall has

had a great run and we're seeing a cautious investor. you've seen numerous hedge funds basically bring down their exposure given this concern as well as the long onlies don't have town of conviction given the backdrop of some of the concern on the demand side as well as stocks. going into earnings print. the good news many stocks have been derisked going in, the bad news, no one has a ton of conviction and we've had a great year to date return. >> who has the best setup in your view? >> we still think microsoft and meta, microsoft given the ai platform hits are going to start to take hold in the next six months, so as we've said, there's an ai wave coming. there's a price uplift. this will help reaccelerate demand in the azure business. the stock has sold off from 366 down into the low 300s, so we think the setup is looking better there.

the certainty of the products coming out, again, the microsoft 365 co-pilot coming in november which everyone is excited about. you have that as a backdrop in demand and that pricing power will help microsoft in the next several quarters. on the meta side the comps are easy and they're continuing to accelerate. market share gains, the points solutions of pins and snap and other have been losing share to google and meta, so we think their consolidation play as well as easy comps and continuation sucks with advertisers right now is in a good spot. >> brent, any unifying theme around the conference calls from these companies you will be listening to or we should be listening to get a sense of what's going to be most important? >> i think the most important is really all the ai excitement. a lot of this is efluff to be honest. it's not revenue until 2024. the single biggest question everyone is getting when does this turn to revenue. a lot of excitement, the semi

names of amd and nvidia have done well this year because you have to build the services on top, but they aren't all live. they will become live. the number one question, when do they come live and what's the pricing impact to the economic model for the software companies in '24. >> does that mean the street will be sensitive to guidance on operating expense or hungry for more cuts or layoffs? >> yeah. i think right now it's been the capex war. every technology company is bringing their capex up, many have compared it to telco days of investing out. everyone is concerned about investments. microsoft had to raise their capex between 8 and $10 billion. these are huge numbers. oracle, we were there last week, they can't get the super clusters up fast enough and there's concern that the services aren't coming online and there's a lot of expense. they're getting delayed because this is complicated and we're in

a new world of ai. it's going to take time. i think that's the concern in short-term are we going to have a margin overhang and no revenue in the short term, more of a 6 to 9 month view. as we go into '24 and '25 that will change and the revenue will come snoonl we'll leave it there. thank you. i'm sure we'll be talking throughout the next few weeks. >> thank you. still ahead this morning, s&p health care under performing the broader index by the widest margin in 20 years and big tech hitting new lows. are there stocks cheap enough to buy here? our next guest says yes, and we'll get to his top knicks a moment.

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you. welcome back to "squawk on the street." big tech hitting multiyear lows. the xbi on pace for three straight years of decline as s&p health care under performance the broader index by the widest margin in a couple decades. our next guest, quote, cannot remember pain to this extent in health care. his top stock picks include merck and biogen. let's bring the analyst here at post nine. always good to see you. >> you too. >> thanks for driving in. >> no problem. >> we talk about the impact on med, tech and dialysis by the day, but talk about how you see it broadly lately. >> it's been painful. you've basically had a couple of winners. the glp-1 obesity thesis has been monumental for a couple players, lily and novo leading the pack. for the rest of health care it's been difficult. you've got pressure in pharma, you have pressure across the med tech as you alluded to, life sciences with the comps because covid was a boom for them, and

now we're kind of left with, you know, a pretty destructive year broadly. yeah. >> what does your screen look like and what distills the winners from losers? >> there have been so few winners. you have a couple in pharma that have led, you know, med tech mixed, very, very tricky lately with the obesity names having a huge impact. distributors and managed care are like two other areas that have been decent i would say, but all-in, it's been a tough year. this is going to be one of the worst years for health care if we continue on this pace versus the market and certainly we're hoping for better. doesn't seem like there's momentum here. >> it's not like the innovation is there, right? beyond the obesity space, cancer, we're seeing a lot of break through. alzheimer's. >> it's been incredible. the innovation is a double-edged sword. a ton of breakthroughs but almost unlimited company creation. if you own one stock on one particular day it could be

obsolete the next look. that's what investors are having trouble with. too many companies in big tech. they're all vying for a niche market. that's one reason why the obesity trade has had legs like this. it's a huge market that everyone can kind of come to terms with and it's easy and it's simple and the rest of big tech is very esoteric. >> during the rest of the year there's oftentimes when i'm reporting on pfizer or name your big mega cap pharma paying a premium for some big tech company none of us have heard of, that doesn't help? >> it has not really happened. it's been probably the most common bull thesis for biotech investors the m&a wave was going to cause a flurry of interest into the broader sector. we haven't seen it. you have to be in the right stocks. you clearly cannot draft off of what's happening in m&a and buy the broader sector and come out with positive returns because the xbi is like the -- i guess the best, although not a great

indicator of big tech biotech. >> you can tell people not to sell or short stocks. >> sure. >> you could do it quietly, i know. >> i hear you. >> do you? maybe that's the way to go. >> it's -- i feel like most of what i have, you know, written over the past over the past few has not been overly bullish. it's tough to get up every day and write with that sort of tone. yes, it's been very tough. i think the interest rate environment is creating another headwind for this group. i'm not sure the correlation over decades has been there but over the past couple you can make a decent comparison that one is hurting the other. hopefully we get going but it's not been he's. >> i get going, what's the catalyst to get going? >> well, i feel like at some point we kind of get into a mode where you're going to see more consolidation. some of the losers in the xbi are going to kind of evaporate. either they get too small, reverse mergers happening, asset

sales and distributions. i think we basically just have to truncate this entire industry and get to a point where the companies that are remaining are a little more palatable for the street. >> wow. attrition. >> attrition. >> i would argue mizuho notes not like for candor. appreciate reading your stuff. >> good titles, too. when a look at where queeldz go from here with the deputy of c cio. by the way, it has reversed, after going above 5% earlier, the ten-year yield back down to 4.9.

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welcome back to "squawk on the street." thinking of buying real estate in new york? officials are making an historic change when it comes to commissions and there's some pretty big money at stake. robert frank has details. >> the real estate board of new york changing the way new york brokers are paid. president board will now prohibit the seller's broker from paying the buyer's agent fee. currently the seller's broke split that 6% commission wither the buyer broker. some say it's anticompetitive

and inflates home prices. under the new rule, the sellers will pay the buyer's broker directly. the entire commission structure is now under fire. a class-action lawsuit by thousands of home sellers against the national association of realtors and two real estate agencies is now under way in kansas city. the plaintiffs say the fee structure is anticompetitive. two brokerage firms have settled for a combined $139 million. the justice department also reportedly looking into the nar's fees and policies, whether they violate antitrust. in other developed countries brokerage fees typically about 2% or less. the nar saying, quote, the market itself decides how real estate agent services are given. where prices where they are and technology sort of taking over this business, no surprise these fee structures are now under fire. >> under fire, robert, but does

it mean they're going to come down? >> well, part of it might come down if this lawsuit that started in kansas city is successful. that really just sets up a 6% structure where the buyer agent is paid 3% no matter what. if that is chipped away and negotiable, maybe it comes down in some cases to 4% and 5%. it's not 2%, but it's a start. >> it's a start. okay. 2% the rest of the world, or many other places,dy hear you say that? >> that's right. >> wow. robert, thank you. robert frank. as we take a look at the markets, sara mentioned the s&p had briefly treaded into positive territory. it's backed off a bit. the nasdaq is positive. again, i mean, it's the ten-year. >> rate relief. >> potential relief as we exexceed seeded that 5% yield briefly and it backed off from there. no fed speak for the remainder of the week but a lot of important earnings, as we have

said. >> and some economic data coming later this week. i think it's notable that the buying is starting in communication services and alphabet, for instance, has gone green. tomorrow really kicks off with microsoft and alphabet after the bell. but they have been outperforming by a wide margin some of the less profitable tech stocks, for instance. >> no doubt. got a huge deal today in oil but ss's not doing anything for he. shares are down 20 cents. more "squawk on the street." 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 switched to google tools for education. so they can focus on teaching and 22,000 students can focus on learning, knowing that their data is secure. ( ♪♪ )

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jeffrey sherman's going to break down what's next. from baby bottles and toothbrushes and lighting, the ceo of phillips is with us. and the impact of rising rates on tech from cash flow valuations to startup funding. we'll talk about that as well. first up, though, a look at the markets. stocks coming off the lows of the session as yields retreat after the ten-year, carl mentioned, briefly css