start an easy to build, powerful website for free with a partner that always puts you first. start for free at godaddy.com welcome back to "squawk on the street." i'm sara eisen with carl quintanilla live from post 9 of the new york stock exchange. wall street's great rate debate. was the move in bond yields the start of a market comeback? spotify with first quarterly profit in more than a year. stock adding to its big yearly gain. up more than 100%. the cfo will join us in a first on cnbc interview. the tech earnings train kicking off with alphabet and

microsoft after the bell. first check on the markets. dow up 300. gains for the year pretty much flat, which is the outlier given the other indices. s&p holding 4250. we have some decent guidance from old line industrials. that plus rates stabilizing adding to a pretty good picture. after five straight down days on the s&p. >> yields are up a little bit. we're below the 5% on 10-year and guidance on kimberly clark and that es are companies that get hit by the strong dollar, which they're absorbing. let's start off with bonds. bank of america saying the peak in rates could be around the current levels, though uncertainties remain high. then barclays weighing in saying bonds don't look like compelling value despite the selloff. ubs seeing better value in bonds than equities. what should we expect for rates from here?

do bonds provide better value than stocks? joining us is td cowen president jeffrey solomon. jeff, do you think we've seen the top in yields? >> i think we're closer to the top than not. >> that's an easy dodge. >> no, it's not. i really do. it's hard to make the argument. is there a 1 in 10 chance that rates spike from here? sure, there is. but i think a lot of this has to do with the way the fed is playing things. i actually think they're doing a good job of continuing to talk down inflation. having said that, i think short-term rates will be higher than a lot longer than anybody has prepared. i'm amazed the market thinks there's going to be a hard pivot. i think it's going to be higher for longer. >> how do you take the question that bonds offer more value than stocks? >> if you look at it, it's hard to pick the stop. on a relative basis you see equity yields versus bond yields are pretty decent. and the real rate of return if you look at cpi versus ten-year is actually pretty balanced.

having said that, you know, when you look at what happened in the '70s, that's what i've been looking at as a proxy for where the fed is going to be, they're going to continue to lean on this to ensure that inflation just goes away because we had the huge spike at the end of the '70s. that's exactly what they don't want to happen. they've certainly done a good job at bringing inflation down. i would like to see that sustained before i call a pivot. >> it's the go to for doves that three-month annualized, you're at target. >> if you're sitting on cash, you're feeling good. there's no reason to hurry it. equities, you haven't missed much if you didn't invest in big tech. that's one of the things we've been looking at. the rally has been super narrow. it's like 12 stocks driving most of the performance here. if you look at the s&p on a not market cap weighted basis, it's down for the year. this has not been a tremendous risk-on, particularly for smaller companies.

again, that has to play out over time before i'd say it's safe to come outside. >> which is why some people say this is not a bull market, right? typical classic bull markets you make money in everything, to a shaded degree. >> this is not. this is part of the mean reversion we saw in '20 and '21. this expectation things are going to reverse so quickly may be a bit overdone. i would say i was probably in that camp, too. i thought things would reconcile much faster. it's been a while since we've seen inflation. a lot of us are coming to grips with how do we manage capital in this kind of an environment. >> so, what's it mean for the capital markets you are in, m&a, ipos? started to see some spurts of activity, but i don't know since we've seen this other leg up in rates what that's done. >> i'll start with equities. with the equity market, ipos are on hold for a little bit. i think that has to do more with geopolitics than anything else. we'll see how that plays out.

certainly they haven't performed well. when ipos as a class don't perform well, it makes it harder for others. other folks are queueing up. in the sponsor area, we've seen a lot of m&a activity. more m&a activity in the third quarter of this year than we've seen in a long time. more equity underneath lbos and sponsor deals. you're finally starting to see maybe 50% on average equity beds underneath these deals. and i would say the bank market for financing them is still a little bit, you know be, tight. certainly after the things we saw earlier in the year. the direct lending market is -- continues to be hot and folks are looking at those places to get their deals financed. >> jeff, i always like to ask you about biotech and health care. that's a big place cowen has played. a lot of moaning from biotech investors that the sector just

can't catch a break. we're seeing m&a. we're seeing innovation. yet, if you're not an obesity drugs, no one's interested. why? >> yeah, there was a lot that got done in 1920 and '21. i think there has to be a reconciliation of that. a lot of companies got financed and there hasn't been a lot of clinical success or it's taken a long time. even if you look at some really highly financed areas like gene therapy, the number of drugs that have come out over the last ten years has been surprisingly few. and so i think people are just taking a pause on it. and the sector has been beat up. the xbi continues to perform really poorly. companies will finance themselves because they have to. and offer select stories where there's real clinical -- hope for positive clinical outcomes. we just had one of the better octobers we've seen in terms of getting biotech deals done at td cowen for sure. >> on the financing side? >> on the financing side. we'll see how they perform long term, but in terms of getting

things done, certainly a lot of existing shareholders are doubling down in some of their core positions. when they have a high degree of conviction around names. backing management teams they think will be able to navigate through this challenging period for sure. >> jeff, always good to get color from you. thank you very much for coming in and sharing. >> good to be here. >> jeff solomon. in the last hour the uaw expanding its strike to gm's largest plant in arlington, texas. that comes after the automaker beat expectations for q3 but they pulled the full-year guide due to the ongoing impact of the strike. the strike is costing the automaker $200 million a week in lost vehicle production. we'll get more details on thursday when we get ford. joining us to break it down, cnbc contributor, former ford ceo mark fields is with us. this latest ramp up in arlington, i just wonder whether or not the hopes of a tentative at gm last week were foolish. >> well, carl, i think what we're seeing now is we're

probably closer to the end of negotiations than the end of the beginning. the reason for that, you saw the uaw has now struck the three most profitable plants, literally, in each of the detroit three automakers with ford, with kentucky truck, and obviously a few days ago what they struck in terms of stellantis, their pickup truck. as you just mentioned, arlington. i think that's going to be important because the uaw needs to be able to go back to the rank and file with whatever tentative agreement they end up with and say, listen, we gave the maximum pain with the exception of shutting down the entire automotive industry on these plants. here's what we're able to get. i think it's going to be interesting over the next week or two to see where we end up. carl, strikes are not like fine wine. they don't get better with age, right? they're not good for the automakers. not only do they get a financial hit but, you know, we're in the time period where production of

things like four-wheel drive vehicles for the winter, carry better margins are not producing. the worker on the line whigs been out for six weeks, they're getting 500 bucks a week. with this unprecedented level of transparency of the proposals on the table, you're going to start them getting antsy saying, hey, let's take this, it looks pretty good. >> so you're sort of getting to an ongoing thesis that's been out there, that is the uaw chief, fain, is going to try to do what he can to get the pound of mresh, so to speak, to demonstrate to his members that they got the most they could? >> yeah. i think he was waiting for the earnings to come out. as you saw from gm, the earnings was pretty good. it was down slightly from last year, but demand is still pretty healthy. and i think he's looking for that one last, if you will, cudgle to use against the

automakers to say, hey, they're profitable. it's time to cut a deal. a lot of this comes down to some of the nonwage demands. i think the key comes down to this demand from the uaw to want to organize the future ev plants or the joint ventures that are set up or either setting up for the automakers. that's a nonstart for the automakers. they're cognizant what it takes to compete not only against the nonunion imports like the nissan and toyotas but the teslas and other nonunion. >> the nonunions, like tesla, do you think this affects their ambitious plans to spend, i think, $35 billion, of which they previously committed to building evs? does it affect the timeline and pace of innovation at gm? >> well, sara, i don't think it impacts their longer term view that, listen, the industry is going to transition in these propulsion systems from i.c.e. to evs.

it absolutely agusts their timeline. you are seeing that. you saw ford push back timeline not only their objectives for how many vehicles they want to produce by x date, but also the plants being built. you saw today from gm, you know, they're pushing out their goal in terms of the number of units they wanted to produce by mid next year. interestingly, they're all posing that in terms of capacity. not in terms of sales. you're basically seeing ev adoption slow down because now you're really getting to the hard part of ev adoption, which is convincing the mass market to be able to buy these vehicles versus the earlier adopters, who were -- i won't say it was easy, but it was easier than where they're at now. >> right. we've talked about the sticker shock element as a headwind to adoption. i'm not clear, though, if you're cutting capacity, does that mean prices hold in?

where are we going to make progress to getting that magic $25,000 ev? >> well, up be, you're seeing tesla take the lead on this. the average price of a tesla across their whole model lineup is down 20% from the first of the year. and that -- musk isn't very clear. he's like, listen, i'm going for volume over margin. i think his calculus is a little land grab right now. i'm going to cement the position of tesla in the marketplace before the established oems ramp up for their vehicles. but i think partof pushing out the automakers is pushing out their capacity and plans is along the lines of what you just said, carl. listen, if we have less capacity, that will put less pressure on price. make no mistake about it, versus a year ago, getting the profitability in evs for the entire industry is harder now given what's happened with pricing led by tesla. >> for sure. the white rabbit, as morgan

stanley calls it, that everyone is chasing. we'll see where things go from here. talk soon, i hope. mark fields. meantime, the ceo of fiserv coming up after the break. the stock is getting a nice boost after raising guidance for the second quarter in a row. watching spotify, reporting a surprising profit, beating expectations for subscribers and total listeners. ceo paul vogel joins us first on cnbc with a big turn-around in the stock. sharply higher after that conference call. new projects means new project managers. you need to hire. i need indeed. indeed you do. when you sponsor a job, you immediately get your shortlist of quality candidates, whose resumes on indeed match your job criteria. visit indeed.com/hire and get started today. i'm going to sell my life

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watching ge higher after posting better than expected q3 results. also raising guidance. year over year it turns a profit from a loss. ceo larry culp saying the company is seeing rapid growth in aerospace in particular. management says it remains highly confident in the spinoff of its grid and now onshore wind business. if the stock can maintain these levels, it would be the best

year for ge shares. going back all the way to 1982 when the stock rose 73%. >> different era back then, for sure. let's turn to another earnings mover. fiserv higher after delivering a beat on top and bottom line, raising guidance going into year end, a day after announcing a new partnership to expand its reach into payments processing for small businesses. joining us at post 9 today is cnbc exclusive fiserv ceo frank. good to have you back. >> good to be back. >> we were talking about the mood off camera and what the tone is like from your visits. how much is reflected in the guidance in the quarter? >> well, our guidance reflects everything. and i think the tone was what's going on around the globe. we've never had two wars before. the change in the speaker. but i think the consumer is still spending. and, you know, bank spending is

still there. but obviously it's all of the world's issues are reflected in our guide as best as we could see. >> we mentioned small business. is it filtering down to the small and medium size business or is their concern still about how things cost year-on-year looking back 12 months? >> well, you know, inflation definitely had a affect on small businesses. you know, they're still seeing growth. they're serving the consumer. the consumer's spending. they're looking to grow, you know, you mentioned meilio, that's about helping them manage their business better and banks partner with them better. i think small business is saying, hey, we're here, open for business and the consumers are using them. >> the clover business, which competes with square, had really strong growth. double digits, 26% revenue growth, payment volume up 15%. is it a strong consumer or are you taking shares from competitors like square? >> well, there is square, there's us, and we're really the

two largest sas platforms out there. the market is very, very large. we have been a share gainer and we also are bringing more value-added services. so, our ability to expand the tam, total addressable market, while clients continue to grow. >> what about the consumer overall? there was some concern we would see an impact from the student loan payment resumptions. are you seeing that at all? >> what we see right now is kind of flat to what we saw last quarter. so, you can consider it on a year-over-year basis as a slowing. the fourth quarter is a very tricky quarter because of the holiday season. so i think the second half of this quarter will be very telling to how strong the consumer is going to come out. but they're out in spending right now. you see that in our revenue growth numbers. >> so, in a good way, right? the idea the holidays remain robust? >> yes.

>> given labor conditions or whatever in this country. >> i think so, yeah. >> how about intesrnationally? we talk about the concerns here, latin america, europe, is there still a sense that north america is the best house? >> i think so. but we're a global business. we have a fabulous business in america, brazil, argentina where we do have what i would call excess inflation. >> and some political movement. >> yeah. and i think that was a surprise coming to that election. we'll see how that runoff occurs. but i still think the u.s. is the greatest market, has the best capital markets, has the best economics. even though we've had higher interest rates, inflation, when you compare it around the world, it's a fabulous lace. >> latin america in particular is super strong. is that sustainable for you? >> we've had built that

business. we built the business in argentina, our business in brazil. we have a couple points of inflation in that growth. but we're market share leaders in both those markets. we continue to grow. >> finally we were having a conversation earlier about m&a. where does it fit in your view in terms it of adding to growth? >> well, you know, we have done a bunch of tuck-ins. our point of view, a product like bento box that serves restaurants, we believe with our scale and distribution, we can buy startups and have them grow at very large scale. clover was bought for $56 million. and a lot of engineers deployed by us and a lot of capital to now have an industry-leading platform. >> looks like a bargain in retrospect for sure. thanks for being here. >> appreciate it, guys. still to come, a look ahead to the big tech names reporting tonight. a big week for the sector kicks off with alphabet, microsoft and

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welcome back. we want to turn to the latest in the middle east as israel tries to locate these hostages in gaza. jay gray is in tel aviv once again.

>> and it's been interesting to see some of the outreach to try to locate those hostages. we know today that the idf forces have dropped leaflets, trying to communicate, what they say, on multiple channels of communication, telling gaza residents that they are willing to provide both protection and compensation if they give some of the information to idf soldiers as to where these hostages may be, how they are being held and where hamas gunmen may be set up along the border. that's something we hadn't seen to this point. we know that the air strikes have been continuing at a very fast pace. the aid is coming in as well. 20 more trucks crossing the rafa border, crossing with egypt today and no fuel. that's become a critical issue. the u.n. saying fuel at this point may be more important than the water and food that is making it across. they say that of the hospitals

that remain open, they are well over capacity. some at 150% and have less than a day's worth of fuel left. the lack of fuel also means that bakeries providing the bread that is the only food many of those in gaza are getting right now, will not be able to do that if they can't get the fuel either. >> jay, we know the country -- the whole country has joined the fight, including the tech sector. a lot of people do look at tel aviv and israel as a whole as a tech hub globally. how are civilians and industries using skills to join the fight? >> yeah, no question that the tech industry here is burgeoning, and no question they have joined this fight, as you talk about. we had a great opportunity to talk with some of those in the sector who are working behind the scenes as civilians. others who have been called up as reserves. >> reporter: in the echo of

blast across gaza 40 miles from the border where tanks and troops prepare to move in. there's a group of civilian fighters. their weapons, a mouse, keyboard and computer screen. their system, information and identification. >> we have teams that are working on technology, cutting edge technology like a.i., like facial recognition, voice recognition, trying to match patterns of movements and all the stuff. >> reporter: tel avivs burgeoning sec sector using their special skills at a time their country needs them the most. >> we work day and night. >> reporter: recognizing the agony of families unable to find loved ones after the october 7th attack, ruben, a software developer for palo alto systems says in 24 hours he created the framework for an app, now used by hospitals, police and the israeli armies, pulling together pictures and data helping to identify those killed or wounded. >> they put it on the data, like

what is the gender, the eye color, the hair color, the body type, does he have tattoos, what is his height. >> reporter: victims unknown for days now identified in just minutes. tech teaks are also analyzing video, social media posts. searching for hostages and those responsible for the attacks. the industry has a presence on the front lines as well. at least 10% of tech workers army reservists have been called from their office towers to active duty. >> it's like two completely different things, right? here i'm a combat soldier, to walk with my gun. >> reporter: stationed along the border with lebanon where fire fights with hezbollah fighters are intensifying, a few weeks ago he was working at a software engineer at a tel aviv startup. using a weapon or the web, there is a sense of urgency right now. >> there's so much work to be done. it's not a time to take a breth

and think about the past. it's time to act. >> reporter: action they hope to help end the war so they can get back to their day jobs. >> and for these civilian groups, they tell us they are moving around constantly out of security concerns. all of them tell us they hope their work isn't necessary very soon. they'd like to be done with this. >> it's amazing just how the entire country is galvanized and mobilized to support this effort. >> is it not life as usual? are they not going to work? are kids going to school? what is the daily routine there? >> yeah, it's interesting because in the last two weeks we've seen it kind of change a little bit, shift a bit. when we first got in, a lot of the shops were closed, a lot of the markets were closed because people were gone or too afraid to get out. we've seen a little bit of more activity over the last couple of days.

but it's still noticeable. there's still a lot of places in the tech industry, a lot of offices have shut their doors. too many people are gone. even in the local shops and restaurants, you see a lot of people that say, we can't open, my son is gone, my husband is gone, my wife has gone to serve. so, that's something that has become a new normal in this area of tel aviv. >> it's such a small country. everybody is affected. jay, thank you very much for bringing us that story. jay gray in tel aviv. the cfo of spotify joins us after the break, reporting a surprise profit, its first in a year. . the stock more than doubling in 2023 so far. watching verizon as well, leading the dow and s&p on pace for now the best day since 2008. the company beats on earnings, raises free cash flow forecast as the sub ads did top estimates as well. insurance cuz i don't need it anymore. my kids are grown, my wife is great, let's settle up the score.

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some of breaking news to tell you about. 33 attorneys general from across the united states are now suing meta for allegedly endangering young users and profiting off the data harvested from them. the suit also alleging meta knows its plat forls are addictive to its users but it does not disclose that fact. remember, this follows a 2021 probe into meta from several state ags, alleging the company promoted instagram to children despite knowing the potential harms it could have on their mental and physical health. meta saying in part, we share the attorneys general's commitment to providing teens with safe, positive experiences online and have already 30 tools to support them. we are disappointed that instead of working productivitily with companies across the industry to create clear, age-appropriate standards for the many apps teens use, the attorneys general have chosen this path.

they are demanding several remedies. meta stock not reacting too much. it's still off the high of the day. keep in mind, it's more than 200% since last october and will report earnings this week. a news update with pippa stevens. >> hey, carl. here's your cnbc news update. there are four candidates remaining in the house speaker race. house republicans are voting behind closed doors this morning to put forward a replacement for kevin mccarthy, who was ousted three weeks ago. representatives byron donald, tom emmer, mike johnson and kevin hearn are still in contention after three rounds of voting. the chinese military official who disappeared from the public eye two months ago has beenofficially removed as defense minister. that's according to state media reports. no explanation was given for his dismissal and china has not announced a replacement. beijing also abruptly removed its foreign minister in july. and the eighth installment of the mission impossible

franchise won't hit theaters as planned next summer. paramount pictures shifted the release date to 2025 amid the ongoing actors strike in hollywood. production on the follow-up to "mission: impossible" paused in july. >> thank you. let's get to the european close. markets mostly higher after moving off the low. utilities, real estate and consumer goods leading the charge. hermes is the big winner after reporting better than expected sales. on the flip side, financials, the underperformer in europe following weaker economic data. and barclays warningof fourth quarter cost-cutting charges. both manufacturing and services index and eurozone falling. s&p global saying, in the eurozone, things are moving from bad to worse. that's quite a quote. we wouldn't be caught offguard to see a mild recession in the eurozone in the second half of this year. this has the head of the ecb, christine lagarde tells eu officials that the fight against inflation is going well but the

eurozone economy faces stagflation for the next few quarters. they don't have it built into their forecast if europe goes into recession. clearly with germany in recessions, the risks are piling up. speaking of european companies, spotify is a big mover this morning. it's higher after the audio giant turned a surprising profit in the third quarter. citing higher gross margins driven by lower marketing expenses, personnel cost decreases and subscription price increases. spotify did raise the price of single premium account to $10.99 per month in july. joining us first on cnbc is spotify chief financial officer paul vogel. welcome back. nice to see you. >> great. thanks for having me. >> i think what the market likes here is the fact that you were able to do the cost discipline without sacrificing growth, but we really did see a big change in the share price after the conference call. what happened? >> yeah, so i'd say a couple things. if you take a step back for us,

it's been a phenomenal quarter and a phenomenal year. and so coming into the year, we've exceeded all of our expectations. we exceeded on the quarter of monthly active user growth, es seeded expectations on describer growth, our gross margin was better, we had an operating profit that was amazing. if you look at it in the totality of the year, you look at guidance for q4 and where we expect to end the year, we'll add over 100 million monthly active users, which is the largest year we've ever had. 30 million subscribers, the second largest year we've had. we started the year, which is really important, we talked about the ability to sequentially improve gross margins throughout the year. we saw that in q1, q2, q3 and forecasting that for q4. with that has come more efficiency for us. we're seeing that resulting in strong bottom line numbers. we had an operating profit this quarter. importantly we had strong free cash flow. we generate over $200 million in free cash flow over the quarter.

i think it's a combination of being more efficient as a company, see the benefits of the business. that has not come with anything other than continued strong user growth and subscriber growth. we're getting the top line growth, we're continuing to invest in the business and also seeing improvements on the margin side. both gross margin and operating margin. >> that's what got investors excited on the call, the margin improvements and the fact you're guiding for it again in q4. are you at the point now, paul, where it's sustainable, where you can see sustained operating income profitability? >> yeah, we believe we are. we believe this is an inflection point for us. in every quarter you never know what will happen but we expect we're in a position to have quarterly profits, itten to be in the black. for us what's really important is we talked about as a company, we believe we have a great product. we think consumers think we have a great product. we wanted to prove out we can also become a great business. we focused as a business on how do we continue to innovate and continue to invest and be more

efficient. i think what's been exciting for us is you're starting to see that. you've continued to see the strong user growth, subscriber growth, and you're seeing that margin improvement. i think most investors weren't looking for us to turn a profit in q3 or q4. it's exciting we'll do it in both q3 and q4 and we expect that to continue in 2024. >> i think the other came on monthly active user and subscriber numbers even into a price hike. give us color about what you're seeing as far as the higher prices and what. behavior looks like coming out of them. >> yeah. we've been pleased with how the price increase has gone. when you think about a price increase, we're looking at two main factors. one is what is going to happen to churn and will subscribers leave? the second is gross addition. are more users going to come in or not after the price increase. we have raised prices in the past. typically when we've raised prices we've seen very little impact at all on churn. it's been minimal.

we had a sick forecast this quarter. the churn came right in line with expectations. what was exciting is our gross additions outperformed. we saw no real change on the churn side and we saw acceleration in the gross additions, strong gross additions and that led to the outperformance on the subscriber side. >> paul, you know, i remember a while back where the street was wrestling with your investments in podcasts. i wonder if you consider podcasts and whether or not they win through a bubble, as some allege? if so, i wonder when the next craze comes along you'll be more dis discerning in investments? >> when we got in the podcast business we had zero market share and now we're probably the leader. we feel great about our podcasting business. it was definitely an investment. we spent a lot of money in the space. a lot of it was productive. we clearly made a few mistakes.

what's great about podcasting, a, we are starting to get through the back end of it. we talk about how it's a drag on our gross margins. it's a minimal drag and we expect it to be added to gross profit in 2024. in addition to having podcasts, we've seen when our users engage with music and podcasting, their engagement goes up, churn goes down, retention goes up. it's been great to have both of that as part of the app. now that we have audio books, we think we're adding more value and content into the mix, which will be really valuable. for us, podcasting has had ups and downs but it's been addicaddict additive to users and engagement and profitability as well. >> premium up 16. i wonder if there's long-standing pressure on the consumer going into a downturn on, say, employment, how durable that is. can we keep posting numbers like that on premium? >> yeah, we hope so. for us we haven't seen any impact at all over the last

couple of years with economic uncertainty, through covid. we have grown through all of it. for us it's about innovation. we continue to believe that we are -- our investments in product, what we do that differentiates us is why we have faster growth, why we have more users, why our users churn less, retention is higher. we believe as long as we continue to price that value, we believe we'll continue to grow strongly. obviously, there's a lot of uncertainty out there but we feel good about how we grew this year and over the last couple of years given all the uncertainty. >> yeah, market -- investors feel good about it, too, paul. thank you for joining us today and talking us through it. >> thank you for having me. >> paul vogel, cfo of spotify. when we return, what james quincey told sara did pricing and demand. shares well underperforming the market this year but giving a boost to the dow today after they raised guidance at dow. ilup00h.ff a session hig stl 2. d by ameritrade,

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we're robust trends around the world. outside the u.s. also the u.s. business in internal revenue growth. we spent the last few years leaning into the opportunity to grow, reinvesting ahead of the curve on marketing on innovation, on revenue growth management packaging and on execution. so, i believe we have the momentum behind in our business that gives us a good confidence for the rest of the year, as you say, that's in our increased top line and bottom line guidance. we feel good about the momentum of our business going into 2024, notwithstanding some of the consumer clouds on the horizon. we think the momentum is there in the business. >> that was coca-cola ceo james quincey speaking last hour, touting the beverage company's bullish guidance after beating the street's expectation for the third quarter. the stock is moving up 3% on the pack of those results. one of the higher gainers of the

dow this morning. quency also addressed some concerns in the market about the obesity drugs like ozempic. he says they don't pose a real fundamental change to the beverage industry, carl. he said a lot of hypothesizing, very little data, even some of the worst estimates as far as how many people could be on this drug, he just doesn't see necessarily cutting into beverage sales. he says you can cut calories with food. you need the hydration with liquid and coke has been positioning themselves to a more wellness portfolio, zero calorie coke and sprite. >> can we get other cbg companies getting volume inflecting positive? >> that was the thing that really surprised people. 2% volume growth, 9% pricing growth. that's why it's a standout compared to household products makers where it's been zero or negative, food companies zero or negative. i asked him about that. he said they were very conscious of the pricing moves they were able to maintain and offer value for consumers.

>> maybe we'll see if this is a turn for this space or not. >> coke says it's sustainable for them at least. dow up 220. let's get post to post with bob pisani. >> good morning, carl. i'm encouraged by the fact the s&p is up 27 points because yields are a little higher. that's good news. but we're now getting earnings, and i'm and i am a little concerned with what i'm seeing here. remember in between the banks and the tech company are the big industrial names. they have been reporting recently not great commentary about the fourth quarter. here is 3m. they might say look at this, 3m is up 5% today. fabulous. they did report a beat but the fourth quarter guidance was well below expectations. why are we moving up here? remember something. this has been a terrible performer all year. this is an 11-year low. $90 in 2012 and trading a the a 10 times forward multiple. those are terrible numbers even for industrials. this stock is extremely washed out at this point.

slightly lower estimates for the fourth quarter aren't necessarily going to drop it more because it has already been dropping dramatically. don't kid yourself. the guidance isn't very good. same thing with illinois tool works which is right over here. take a look. this is very good in the automotive space. the important thing is they report a beat but they talk about the impact from the strike for example on their businesses. they are talking about a 12 cent reduction for the fourth quarter. and 219 here is flat for the year. it hasn't gone anywhere, one of the big industrials has essentially gone nowhere the entire year. we take a look at dow and the material space. their guidance for revenues were below expectations. 10 billion to 10.5 billion. that is a little bit below the expectations overall. then we have corning here. that is another good example.

sort of in the consumer space and slightly the industrial space i guess you could say. they missed on the top and bottom line and the guidance was well below estimates. they mentioned weak demand right across the board. industrials are now reporting. we'll see what the tech companies say. it looks obvious to me the industrial sector will see a reduction in earnings estimates for the fourth quarter. we have to see what the big tech companies say. back to you. >> great point, bob. speaking of which alphabet and microsoft report tonight. how to play those names ahead of earnings is next back in two. doors lead us to places we've never been. your dedicated fidelity advisor can help you open those doors. they can help you create a retirement-income plan designed to balance growth and guaranteed income. and provide access to specialists who help with estate planning

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megacap tech earnings on tonight. what to look for on today's tech check. >> good morning. so let me start with this chart. microsoft vs. google this year. i think it says a lot about where the two companies are at as we head into earnings. microsoft was the early generative ai winner in large part thanks to the deal with open ai in january and february the first part of the chart out performed, said things like he wanted to make google dance. google answered the call and came up with its own suite of generative ai products. for a while their stocks were neck and neck performance wise. then second half of the year hit and the air came out a little from the ai bubble. treasury yields rose and core currently cash flow generating businesses have taken the focus. for microsoft that is pcs, cloud. for google it is still

advertising and that is where we are heading into their latest reports. at microsoft ai has the potential to bring in billions of dollars from enterprises but a cfo said on the last earnings call that isn't really going to happen until early 2025. cloud meanwhile has seen growth decelerate. some concerns are building around i.t. budgets in the year ahead. that is going to impact the stock now while ai is further off in the future. alphabet on the other hand is what bernstein called earlier this week the warm hug of megacap earnings, its advertising business still making up nearly 80% of overall revenue. it's been more resilient than those at meta and snap. sure, search could be disrupted by generative ai sometime in the future but google has convinced the street it is on it. in that sense you could call google the personification of growth at reasonable price. 10% top line growth expected, supported by advertising, with options in artificial intelligence, autonomous driving through waymo and other moon

shots. as always, though, guys, these are called megacaps for a reason. the impact on the broader markets is potentially huge and comes at a time when the appeal of holding treasuries is only rising. that raises the bar a little bit. for equities as a whole. of course these names making up the biggest portion of that. >> sometimes the wild cards out of at least the alphabet print involve expenses. >> yes >> i wonder how closely you'll be looking for clues about that along with any kind of antitrust or doj concerns. >> yes, so on the cost portion i would say it is a wild card for both of them. they've been spending because to pay for generative ai the compute power is very, very expensive. that was outlined last quarter so if there is a surprise it would be anything on top of that. we know that capx is rising. they have to build out their cloud infrastructure, servers, buy more of the expensive nvidia chips to support the generative ai push. meanwhile the monday tiesation of that isn't seen for sometime. that is certainly a factor here. if that is above and beyond what the street is expecting that

could hurt the -- both of those stocks. in terms of antitrust, i don't know what to say. it never moves the stock even if the threat of it is getting closer and things are actually happening at the doj and of course there's that big outstanding tax bill from microsoft. it is possible that the street has been complacent and will finally start to look at it, but hasn't so far and i don't know that earnings is going to be the catalyst. >> we'll see. >> they often don't say things about it. >> options implying a 5% move by the way on alphabet. we'll see what happens after the bell. thanks. what do you think? >> we're watching stocks here. they are moving in a narrow range. i would note higher off the fifth day of declines for equities. s&ps up 0.6. overall what we've gotten from earnings has not been too worrisome and a few guidance raises. you mentioned industrials. i'm watching some of the consumer staples rating their guidance as well, raising their guidance as well even in the face of challenging outlooks for

the consumer and currencies and that sort of thing. we'll get economic data. i point to yields. the march up spooked everybody and it is continuing to hover a little higher today the treasury yield but we are below 5% level on the ten-year which is clearly something investors want to see. >> we'll get to evc as well. >> bank of canada tomorrow. >> back to post 9 and the judge. thanks so much. welcome to the halftime report. i'm scott wapner. the rally and stocks the most earnings reports of the season beginning in just hours now. the investment committee setting up what is likely to happen. how you should play all that. joining me for the hour josh brown, stephanie link, jim lebronen thal, check the markets, green across the board. ten-year note yield at 4.84 holding steady after the decline yesterday. jim, that is what the story continues to be about. yes we have the mega-kaps and earnings that begin with alphabet and microsoft but probably would have a different market