massmutual. partnering with financial professionals, benefits brokers, and institutions. good friday morning. citigroup's global head of commodities ed morse will be here for what's ahead on the energy front. the ceo of columbia sportswear on earnings, consumer demand on outdoor and recreation with the stock down 20% this year. later the ceo of box aaron levie on new a.i. regulations, and takeaways from this week's

big tech earnings. first, stocks struggling to stay above the flat line the s&p 500 up 0.2%. weighed down by banks and other older economy areas. the nasdaq outperforming up 0.9% right now. relief rally in amazon after some relatively reassuring results from the company last night. >> tech also finally getting a bid after it's been down more than 2% for the nasdaq this week it's a painful week if you're in tech, even though fundamentally the big tech earnings haven't been bad. >> it was a little reveal of how crowded the stocks had gotten and, perhaps, how much faith had been placed in them that they were going to be able to blow away numbers meta getting a little bit of a bid today, too it's a little bit of a rethink of the immediate selloff in stocks like alphabet and meta that didn't necessarily seem to match up with the numbers. >> checking on rates the ten-year note yield a little higher but still below 4.9 and below the 5% level we reached on monday it's been a busy week for

economic data that gdp, pce, today personal spending numbers, durable goods among others what do we take away from this data and what does it mean for the fed's next move? let's bring in cnbc senior economics reporter steve liesman. most, if not all of it, steve, has been better than expected. >> a pretty good week, sara. i guess there's a lot to worry about, a lot to complain about it was a week of mostly stronger growth growth tended to exceed estimates and the prior readings with inflation remaining a bit sticky here. that's probably the rub. and all continuing to raise questions about the strength of the economy in the months ahead. take a look at this graphic we prepared here. arrow is helping you figure out gdp accelerated sharply. came in above estimates. that had already been revised higher core pce in line with estimates. personal income a little light relative to estimates and below the prior month. but the bigger story, consumer spending beating estimates with a persistent theme here of stronger consumer spending all this week and all last week.

stronger than most forecasts durable's higher than estimates. this is interesting because it shows some rebounding of business investment. it had been weak in the gdp report all this seemed to cement the market's expectation for no change in the fund rate next week and even reduce the probability of any future hikes this cycle with a federal reserve that seems to be ready to sort of watch it and let it play out, and also as you said, sara at the top of this, these high interest rates doing a bit of the work for the fed. >> i can make two arguments on this you know, core pce, i mean, you can do opposite ends of this you could say inflation is still elevated, it's sticky, not coming down to target, still 3.7% at core which is more than it should be or you could say if you look at the three-month core pce, it's about 2.5% it has come down sharply and i wonder inside the fed how

they're going to look at this data. >> i think what i would add to that conversation is, again, this continued expectation that the consumer will slow here with the student debt loan payments real disposable income when you adjust for inflation is negative so, that's something also the idea of savings running down i think they want to watch and see, now that you've had this really sharp increase in interest rates, there hasn't necessarily played out through the economy. i think the fed is going to take it month by month or meeting by meeting. look, if they need to do more, they will do more. they made that clear i just don't think they're in a hurry to do more because they think there is some slowness, that slowness we've been waiting for hasn't happened. they think it may happen now. >> steve, the market thinks it may happen, too. i'm not talking about the bond market because it's being driven by everything we've been talking about for weeks. this stock market is basically bracing for a pretty steep slowdown i was looking back to prior quarters when we had at least 4%

or so gdp annualized as we just got reported it doesn't tend to fall apart all at once, right it's rare it goes from 4% to blow 1%, as a lot of forecasts are saying, but again, this is a weird cycle. >> there is some momentum to the economy here a bunch of the analysts that i read this morning, michael, said that it's very hard for them to see a recession in the current numbers because of what you just said this idea that it would require the economy to stop on a dime. i think there was a pretty good expectation that things do calm down a little bit. you're not going to get these very strong consumer spending numbers we've had in the past. but one thing that is interesting here is that goods -- goods inflation was negative it was deflation and so what people did is they stepped up to buy stuff because prices had become more reasonable so, if that's the case, you could still have some continued good momentum. i just don't think you'll get these strong numbers we had.

so, it's possible that things slow the fed wants to slow below potential. i'm not sure it's going to get that. >> what is q4 gdp practitracking >> if i told you, sara, all i'd say is they've been revised again. they're down in the 1% area. i didn't get my rapid update i could do a quick search to see if it's here from my friend justin from moody's. i don't think it's here yet. >> it's a lot lower. >> the last check i have is 0.5 for q4 steven stanley's at 2:00 and mike is at 1 or median is 1% with the cnbc rapid update for q4. we just have three economists weighing in. we'll do a little more work on this over time you have the magnitude exactly right, sara. >> that's pretty good on the fly, steve. >> not bad we have to wait for the atlanta

fed -- >> i've got it all here somewhere. i just need a minute - >> they nailed it and everyone criticized them and said they were too optimistic. >> steve, appreciate it. we'll continue this conversation with our next guest who believes it is unlikely the outlook for 2024 will be particularly positive on growth, adding it may more closely resemble a copy and paste of 2023. joining us is max kettner. you think that's what the consensus is going to be pencilling in for next year? >> absolutely. you were just talking about the consensus number for q4. let's be honest, if we just look at two months ago, that consensus number for q4 growth was very close to zero again, right? that's just been changed and revised a little bit higher. when we look at q1 and q2 next year, we again have consensus numbers very close to zero

you guys were talking about it as well. it is definitely very rare that you go from a reacceleration of growth, such as we've seen in the last couple of quarters, to suddenly, you know, suddenly 1% or below that even to numbers like that. so, to me, i think there's two things that really stand out number one, it's still pretty resilient growth number two, even if we slow down, and i do agree, right, we're not going to get those below ad consumer spending numbers. that's fine. but as long as consensus is still on track with these really, really subdued and close to zero growth expectations in the next couple of quarters, that's great, right? all we need is sort of like 1.5% growth and it's already going to be much, much better than expected -- than consensus expectations that ultimately should help risk assets. >> yeah. you're generally positive on equities, on other risky parts of the capital markets, i suppose. what does the yield picture mean for that outlook, though

i mean, i think the markets collectively have been in this kind of parallel panic of, oh, no, yields are flying at the same time. we don't think the economy can handle this rapid increase in rates. >> we've gone from goldie lockso reverse goldilocks nothing works. all you want is dollar and cash. that's not a particularly -- that's challenging from asset allocation perspective if everything sells off number one, it's for me not really the yield per se. i think right now there is an extreme focus, gr bond yields, but what we're seeing is we're seeing the bond yields moving higher, real yields moving higher, also as a reaction of growth growth actually staying resilient. growth numbers being much better

than expected. people are only really, if we think about, for example, things about the equity risk premium, they're only focusing at that equity risk premium on the second term, that bond yield they're not factoring in the possibility of earnings, right, of that earnings yield i actually think a little better because growth is remaining a little resilient that's number one. number two, i would want to add is, it's not necessarily the level of bond yields i'm so concerned about because if that is followed through by better earnings, fine, i'll take it what i am concerned about is, is the bond volatility. it's the movement, it's the speed of the move. in fact, if i tell you equity risk premium, if i tell you, i know for sure, i come from the future and i know for sure the bond yield is 5% over the next 12 months. fine, i'll take it if i tell you it's somewhere between zero and 10%, what are you going to do? you're going to say i need a higher earnings yield to compensate that's more what i'm worried about. i'm more worried about the

volatility in rates rather than the level. >> and i think the markets agree with you there they're wishing for more calm in those rates. thanks very much appreciate the time today. >> what did michael hartnett say, not until we see discipline from the united states can we get those in bond rates. it's not happening. >> we don't have the movement for that also the shortfall's been on the revenue side i would be interested in the conversation talk on what we'll do with the trump tax cuts when they expire in 2025. long-term. we turn to the latest in israel rockets breaching the iron dome this morning, hitting an apartment building in tel aviv now there are claims from the idf in israel there are terrorists headquarters under a major gaza hospital. nbc's jay gray in tel aviv with the latest on this developing story here, pinpointing some terrorist operations

jay? >> reporter: yeah, sara, it's just come out in the last few minutes, an idf spokesperson saying they have intelligence that tells them that there are ten hospitals inside gaza with command and control centers underneath, including the hospital where they say there is a command center for terror, is how they put it, underneath that hospital hamas has come out and categorically denied that any of those hospitals are being used in any anything that's going on with the war saying that it's just an kus again, these are their words for the idf to focus attacks on hospital that's something that we'll continue to watch. just beginning to play out right now. and it comes after what was a second night of targeted raids that included troops and tanks moving into gaza, clearing out the area along the border between israel and gaza, taking out some more of those command centers as well as some of the

anti-tank installations, the troops on the groundworking as well and the navy involved this time just off the coast with significant strikes to structures during their move during that raid so, clearly, the idf continues to say this, they are preparing for the next phase of this war, which would appear to be some type of ground advance but no timing specified at all you mentioned this coming in after numerous attempts today all blocked by the iron dome, a lot of air raid sirens here in tel aviv today, one of the rockets did get through. it struck an apartment complex here in tel aviv just to the south side of the city we know that four people were injured. their injuries described as light to moderate. so, no fatalities as a result of this strike, but one of the rockets did make it through. the idf says there have been

8,000 rockets fired at tel aviv since the start of the war >> yeah, benjamin netanyahu just tweeted out the intelligence that they say they have, showing the hospital and all the underground tunnels and terror offices. thank you very much. jay gray from tel aviv. still to come on the show, columbia sportswear cuts guidance on what that company is calling a challenging u.s. market ceo joins us next with the stock down 20% this year plus, watching the automakers, ford lower after results and saying it is postponing about $12 billion in planned spending on new ev manufacturing capacity idceueo e w ngso pulli guan d tthuastrike stay with us

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the firm finds it difficult to get behind that idea, citing detear rating foot traffic, questions on market. stock is down more than 25% for the year >> it's become a battleground this month. >> to a degree, yes. there's some long-term believers in the omni channel advantages and things like that that have built up during the pandemic stock has really lost any valuation premium. trades very cheap to walmart and others. >> they still have cost efficiency program going on for a few billion dollars. and the small format stores. certainly in new york. maybe that's not a good gauge. sticking with the consumer, columbia falling this morning after missing third quarter revenue. this did cite strength in china and growth in direct-to-consumer business but lowered guidance for the full year, saying macro headwind could mean bigger slowdown in some areas joining us first on cnbc is columbia ceo tim boyle good to see you, tim what are you seeing from the

consumer right now >> it depends on where in the world you're talking about the chinese consumer, frankly, is quite robust. our business there has been good you have to remember we underperformed in that market for several years. we believe we have the right team in place there, so that business is going well our european business is going well frankly, i think the u.s. business is as much responding to warm weather than almost anything else. we have a big portion of our products are weather-related it's important the weather be appropriate for selling winter goods in october >> is it the weakness coming in orders from wholesale specifically in the u.s. is that what you see in direct-to-consumer has been good, hasn't it? >> yeah. when we talk about the most current quarter, it's really about loading the shelves for retailers. and then when we talk about the future, it's about how we

perceive the weather -- likely weather. we hope for normal, average weather, but retailers are becoming quite cautious. so, we have our own stores, but we also have a big business in selling to other retailers those retailers generally are becoming much more cautious about '24. >> what about inventory management during this period, how are you dealing with that? >> as you know, and we've been quite open with our investors that we had a lot of inventory at the beginning of this year. most of it was a function of residual impacts from the pandemic and logistics issues around the pandemic. but we spent the year, and we're quite proud of reducing our inventories and still maintaining our gross margins. that's a big part of our story we have a very strong balance sheet so we can approach inventories in a way we can liquidate over time. we don't have to go crazy and

mark stuff down impacting our gross margin now it's just managing for the residual portion of the inventories. we told investors we plan to reduce our inventories as against last end of year by another $200 million good stuff happening >> you mentioned the retailers are pretty cautious at this point. do you think they're wrong about reading what the consumer is ultimately going to be able to do into next year? >> we have such a broad swath of retailers that it's hard to know if they're wrong or right. i just think the general focus has been, let's just take a little smaller, more conservative approach to next year and we'll try to chase goods. if people have them, they'll be fine >> what about across channels, are your outlet stores outperforming the e-commerce and other stores because of the value nature of the consumer

>> in general our brick and mortar stores, which are mostly to outlet stores, are outperforming the other components, which are, for us, e-commerce although we have great business in pure play retailers across the world really, so, you know, it's a mixed bag >> all right, tim. thank you for the update appreciate it. >> thank you. >> stock a little higher right now. tim boyle, columbia sports ceo up next, a check on the energy market. chevron and exxon both lower following their earnings wti on the flip side moving higher as overseas tensions escalate plus, cnbc investigation looking at a pandemic relief program and an interest rate that popped up alongside it to cash in on billions of dollars of taxpayer money. that's next.

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bullishness on the street hyped draftkings saying the firm would be buyers heading into the company's investor day on november 13th, 17 days away increased market share, improved margins and a call for draftkings to up the company's adjusted ebitda target all an upside for citi the stock is already up 140% so far this year. the peak was above 70 bucks in early 2021. >> so zoom out

still got -- european markets set to close in just a few moments. lower to end the week as markets digest economic data and earnings the stoxx 600 lower this week, now on pace for its worst monthly performance since back in september 2022. if you look where the underperformance is, it's in france today driven by a selloff in sanofi. issuing a profit warning for 2024 nat west getting hit hard after reporting interest decline last quarter and the uk financial conduct authority saying it found, quote, potential regulatory breaches at that company. next week we'll get an interest rate decision from the bank of england, bank of japan and the federal reserve. this week it was the ecb and there were no real surprises. they kept rates on hold. they signal they're fine holding but watching inflation higher than target. and didn't really make any

changes to the bond buying program, which i think people -- so, gave investors some comfort. >> central banks seem to wish to be pretty much done, if they can get clearance from the numbers to be that way they're going to hold and not look to cut, but they sort of hope they don't have to -- >> that's what we'll get from the fed probably next week. >> almost certainly. turning now to the energy sector, chevron and exxon both missing earnings estimates for the latest quarter as profit drops from record levels a year ago. but oil prices are ticking higher this morning as concerns rise over conflict spreading in the middle east. joining us to discuss citi global head of commodities, ed morse. it's good to have you with us. we are ticking higher on wti and brent this morning, still within this range a little bit off the highs of a couple of weeks ago. what's your read right now on the interplay of what you consider relatively week product demand and then that geopolitical premium >> so, the political premium is certainly there if you look at

30-day volatility, the volatility increases when you come to the weekend because nobody wants to be positioned whatever happens on the weekend might affect them. the physical oil market is a lot weaker than where the prices predict at the moment. people have been exaggerating the oil market implications of whatever might happen. it looks like nothing might happen in the immediate future that's going to affect prices. fundamentals are there and we're seeing them in spreads to second month -- they haven't collapsed but come in by a good 50%, which is a sign the physical market is pointing in a different direction from the volatility. but we're still a good $10 lower than the peaks last month. >> the physical market, you know, showing a bit of softness on the demand side is that inconsistent with the overall economic numbers that we're getting, whether it's on consumer spending or other metrics? >> it is and isn't inconsistent.

certainly inconsistent in the sense that you'd expect with higher gdp, there would be higher demand for commodities. there are structural changes at work as well we have a lot of noise that happened because of the pandemic we have a recovery from the very lows of the pandemic that make whatever you think is steady stay in terms of gdp and its relationship to oil demand a little more obscure. i think the fact of the matter is that the structural changes are overwhelming we are down industrial and transportation activity. demand is really on a weaker path in terms of its relationship to gdp.

and we expect that to continue transport fuel demand, in particular, doesn't look as robust as you think it would be in a growing economy we think china has peaked in diesel demand, is about to peak if it hasn't already, in gasoline demand. europe has done the same kind of peaking. that's two out of the three largest economies in the world and you look at year-on-year, u.s. gasoline demand year-to-date is down year-on-year so, it's -- it's a pretty remarkable structural change that's at work as well. >> if you just look at the headlines from today, u.s. strikes syria sites used by iran after proxies on american troops iranian army holds large military drill for ground forces iran increasingly is entering the fray here, whether it will or not hard to tell can you just tell us what's at stake from an oil perspective if we see greater military activity out of iran? >> sure.

so, i'm not going to talk about the motivations and, et cetera, for the iranian strikes but i will look at people who predicted in the case of iran gets involved in a dramatic way, 150, $160 prices i think this is highly unlikely. who really has an interest in the strait of hormuz that's the only way iran can get oil into markets, the only source of hard currency earnings they have no interest in it. china gets more than half of its oil through the strait of hormuz iraq, saudi arabia are big users. you'd have to have something either accidental or, and i think more accidental than intentional, to have anything come in the near term that's going to give you a disruption

in supply. it's been a very exaggerated geopolitical risk as far as we're concerned. >> ed, appreciate the perspective this morning thank you. >> thanks for having me. time now for a news update courtney reagan with that for us the u.s. is imposing new sanctions today to target hamas and further cut off funding. the secretary of state says the latest round of sanctions targets eight people that contribute to the group's investment fund and iranians who support the group. the u.s. estimates hamas controls $500 million of assets to fund its operations. the cdc shared new numbers showing a slow uptick of the new version of the covid-19 vaccines so far data shows only 7% of adults have received the vaccine. with children, just 2% the cdc says only about 40% of adults surveyed say they will definitely will or probably will not get the shot the biden administration wants to help solve america's housing affordability promises by housing empty commercial building they announced new federal

financing to convert downtown buildings around the country to residential use. office space vacancies have hit 30-year high as america deals with affordable housing units. up next, the tale of two tech markets amazon and intel jumping after tough weeks for meta and alphabet we'll discuss all of it. then poor q4 guidance has shares of solar company enphase plummeting the ceo telling pippa stevens, europe is very weak while in the u.s. interest rates are the culprit. stock down0%hiye 7 ts ar

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whose resumes on indeed match your job criteria. visit indeed.com/hire and get started today. breaking news on gm and the autoworkers strike phil lebeau has more for us. >> it appears uaw and gm is moving closer to an agreement. make whalen from cnbc.com matching what we have heard from

others at general motors and with the united autoworkers, that these intense negotiations really ramped up yesterday mary barra was involved in some of these as was shawn fain, president of the uaw those negotiations, which went late into the evening and even early morning, are ramping back up today don't be surprised if we get some type of an announcement of an agreement similar to what ford has with the uaw. if we get that either later today, tonight, maybe over the weekend. by the way, uaw also moving closer to an agreement with stellantis this is the pattern we usually see. much more accelerated than what we see in past uaw negotiations. >> things seem to be moving. we'll talk to you about them. the irs and doj are investigating a government program intended to help small businesses navigate the pandemic the concern, a cascade of claims, some of which the irs says may be fraudulent the focus is not only on

applicants but on a cottage industry that exploded onto the scene promoting the program to small business owners. kate rogers is here with more on this story hi, kate. >> good morning, mike. it's called the employee retention credit or the erc. the irs says approximately 230 billion in taxpayer dollars has already been paid out in september. it's per employee credit for businesses who qualify with proof of declining revenues or a government shutdown order that did not allow for operations eligibility rules and clarifications have continued to be updated by the agency through september. some have said those guidelines certain of them open to interpretation, paved the way for promoters of the credit. the government said it's looking hard at whether aggressive sales tactics by firms lured small businesses into taking money which they were not qualified to receive. the irs has not named specific companies it's looking into but said the potential fraud in advertising around it is so extreme, it is flat out stopped

approving the credits until the end of -- at least the end of the year in our investigation we take a look at the practices of innovation refunds, which is one of the industry's biggest advertisers and one of many players in the erc promotion business the commercials were popping up everywhere >> let innovation refunds help with your erc tax refunds. >> innovation refund says it's processed $4 billion worth of pandemic era tax credit known as the erc as of may. >> it only takes eight minutes to qualify. >> in september the irs announced a moratorium due to questionable claims and fraud concerns across the entire erc promotion industry >> stop waiting. go to innovationrefunds.com. >> that moratorium paused business for innovation refunds and other erc companies helping owners apply for the credit. cnbc spoke to 20 former employees and contractors at innovation refunds at various rankings throughout the company. from many conversations a picture emerged of a company

focused on aggressive growth and relentless sales of the product. >> the way the organization was run does not make me feel comfortable that i was part of a good business. >> reporter: we spoke to a former employee by phone, who asked not to be identified due to fears over retaliation. >> we were never told to tell a client that they qualified we're not a tax professional we would simply say, it looks like you would be prequalified. >> reporter: on its website they make it clear it's not a tax firm it partners with independent tax attorneys, who determine if a business is eligible for the erc. and those attorneys sign the paperwork that gets submitted to the irs. several former workers told cnbc this model could protect it from potential liability if ineligible businesses claimed the credit do you feel innovation refunds has insulated itself from blame by partnering with outside cpas and tax attorneys? >> absolutely. they have clearly insulated themselves extremely well and

say they don't provide tax advice. >> reporter: innovation refunds charges business owners 25% contingency fee on the refund they receive a former man in leadership said in their opinion, because of this business model, management was encouraged to take aggressive tax positions on qualifications in order to maximize their contingency fee. >> we create a vet easy path for business owners to tap into a significant amount of money. >> reporter: solicitation cnbc reviewed show that innovation refunds sent potential customers preapproval amounts for the credit one potential customer was preapproved for more than $300,000 and was sent emails with titles like, apply or say good-bye. former employees and contractors told cnbc the company incentivized workers with perks to stay and sell an internal company email cnbc obtained said there was a $100,000 bonus payment tied to sales targets. when we reached out about this

story, innovation refunds declined to comment, writing it won't be participating but five of the 20 former employees and contractors cnbc spoke with spoke positively about their time at the company. innovation refunds pride themselves on being ultraconservative and compliant, wrote the company's former executive vice president of financial partnerships on linkedin he told cnbc, most of the company's leads were already enticed by the marketing the irs said it's now intensifying audit work to look into dubious claims industry wide if audited, small businesses that filed inaccurate claims could owe some of the money they received back, plus penalties. the government says it's working with businesses pressured by promoters. the irs announced an option for businesses with pending claims to withdraw or reduce them if they believe they were ineligible or exaggerated. >> i don't know if i'll ever know if it was done correctly on a case by case basis, but it

makes me very queasy that people could be owing a lot of money back. >> reporter: jen mccabe has been consulting businesses on the erc and says she's seen issues across the industry. >> the rules were completely getting tossed out the window. >> reporter: her concern is for small business owners who may have been targeted by promoters of the credit. >> they're scared. helping so many people determine if they were eligible a year after they've already banked the money. and that -- that's sad. >> reporter: erc scams top the irs's dirty dozen list for 2023. the agency doesn't name specific companies but lists unsolicited ads claiming you can qualify within minutes and fees based on a percentage of the refund amount of the erc as red flags these tactics were used by many erc promoters. >> the promoters should be held accountable. they've trained huge sales organizations, they've set themselves up to be distanced

from these mistakes. they've planned for this they're sophisticated. >> in its september press conference, the irs said the department of justice is the now involved and the irs criminal division has initiated 252 investigations involving more than $2.8 billion in potentially fraudulent erc claims without naming specific companies involved mike >> kate, fascinating thanks so much >> thank you let's turn back to earnings now. amazon, a bright spot in tech today. shares surging after reporting a top and bottom line beat and momentum within aws. deirdre bosa breaks down those numbers. hi, dee. >> good morning, mike. amazon gave somewhat mixed signals on aws but seems to be good enough for the market today. those shares are surging so, i want to zero in on the core e-commerce business and something that might being overlooked that is its revenue outlook. at its midpoint it was $3 billion short of street expectations

that is heading into what is supposed to be the blockbuster holiday quarter for amazon on the call, management talked about a cautious consumer. trading down where they can. that could -- but it could also be a sign of sustained top line pressure and a change in competitive landscape. bernstein this morning writes, aws and temu, you need the answer to all three for the stock to work. we got one answer, one on the way and one is still a question. amazon answered on operating income aws margins up, growth in advertising and third-party seller services. this is about as profitable an amazon as we have ever seen. cloud, mixed signals there, but more optimism. that is on the way it has to back that up temu refers to a broader competitive threat to amazon's core that's still an open question. if as management says consumers are trading down, chinese e-commerce platform temu offers basement bargain prices. that's why it's been seen as

more of a threat to the dollar stores less than amazon or even walmart. if it is encroaching on amazon's share, that could hit amazon's holy grail that is the prime flywheel it could take sales away from that core and that could hit amazon's advertising propositions, the newly low guesstics network, and could also give merchants a potentially cheaper option in terms of seller services on the flip side, temu and another rising chinese platform, shein, low cost, low quality, you essentially pay for what you get, their popularity may not last, but it is something to watch, particularly this shopping quarter now, we did do a deep dive on the temu threat in a "techcheck" weekly you can find all of those at cnbc.com/tcweekly. we go into this, how it could potentially eat away at amazon's market share again, it's that core e-commerce business that's going to be in

focus for the rest of the year as we approach black friday, cyber monday, the christmas and hanukkah shopping seasons. >> what is the -- do we know the market share numbers for some of those chinese sites, temu and shein? >> still very small compared to amazon, but the growth of them on, say, the app stores of ios and google os, has just exploded, which leads analysts to believe it's growing faster than amazon. amazon kind of serves an almost saturated market it has so many prime memberships. the threat is there. we have to see how it evolves. that's why i think the upcoming few months is important. >> it's so telling that when you look through the bull case on amazon in general, it's all the focus. of course, on aws but also emerging advertising opportunity. the run rate is a third of meta's and not as much about real growth in the core consumer business it's all about margins and trimming back. so, amazon being amazon, and

it's all business. >> i agree you bring up an important point. that is that amazon's core is a low margin e-commerce business when you look at its biggest competitors in the race for generative a.i., microsoft and google, their core, advertising, enterprise services. that is a much higher margin business i would say on the plus side, and this is getting a lot of attention today, that operating income was just huge this is a very profitable amazon we're looking at it could be it's filling its coffers, getting to that better measure of profitability in order to challenge them on that front. you put that together with aws recovering, more money to spend on generative a.i., that could turn out well for the company. >> amazon, best performer in the qqqs, up 8. box ceo aaron levie, on a.i. regulation and what's happening with cloud spending.

watch whirlpool. this is the second straight week you can read more on the quarter and analyst reaction on cnbc.com stay with us when you're looking for answers, it's good to have help. because the right information, at the right time, may make all the difference. at humana, we know that's especially true when you're looking for a medicare supplement insurance plan. that's why we're offering "seven things every medicare supplement should have". it's yours free, just for calling the number on your screen. and when you call, a knowledgeable, licensed agent-producer can answer any questions you have and help you choose the plan that's right for you. the call is free, and there's no obligation. you see, medicare covers only about 80% of your part b medical expenses. the rest is up to you. that's why so many people purchase medicare supplement insurance plans like those offered by humana. they're designed

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duckduckgo comes with a built-n engine like google, but it's pi and doesn't spy on your searchs and duckduckgo lets you browse like chrome, but it blocks cooi and creepy ads that follow youa from google and other companie. and there's no catch. it's fre. we make money from ads, but they don't follow you aroud join the millions of people taking back their privacy by downloading duckduckgo on all your devices today. it has been a busy week for tech as meta, alphabet, amazon reported earnings. cloud and ai two of the key focal points for investors right now. our next guest is looking to expand his own company's business, touting developments in file sharing, security services, while remaining optimistic on the future of ai. box ceo aaron levie, welcome

back back to see you. >> good to see you thanks for having me >> great to have you i don't think we've heard from you since you had that big conference earlier this month where you announced all these new initiatives primarily around ai and box ai. is it frustrating the market is not really giving you credit for being an ai player, the stock down more than 20% this year >> we obviously take a very long-term view of how we're priced and the market dynamics there. i remember when we were $9 a share, and we believed in the long run and obviously that's paid off that continues to be the case in how we're building the business. >> so how are you thinking about ai as a potential revenue driver on top of what you already do? >> what we announced at box works, our annual customer conference, we'll be rolling out box ai to all of our enterprise plus customers, so that's our highest tier plan that we have that enterprise can elect to buy into and that has some of our

advanced functionality like box shield for data security, our e-signature, data governance and much more. we'll be including it in the plan giving end users the ability to ask their documents questions, be able to ask many documents questions, generate new content and that will be included in that package as users go over a certain level and high volume aif i use cases they can purchase ai credits we think it's disruptive and easy to roll out across the enterprise and have gotten a lot of great customer reaction in terms of how we priced ai in our offering but what our offering can do for helping them understand all of their unstructured data that is, frankly, one most powerful use cases with ai. >> it will be included in your highest tier plan on the pricing side are you going to be at a point soon where you can break out how much revenue is generated from generative ai? i thought it was notable ibm,

for instance, did that this quarter. they said a few hundred million across software and consulting >> i think we'll be able to call out qualitatively where we're seeing the most demand because it's in one of our highest tier bundles, some of the allocation can be tricky with that. but i think it will be pretty clear where we're seeing tail winds from ai and what customers are doing with it. we'll be sure to obviously talk to investors in the market about that broadly >> aaron, investors in aggregate captivated by ai is an opportunity. they want to look at companies that could be direct beneficiaries and at the same time want a lot of their companies to be attentive to margins and earn right now, as opposed to invest heavily for the future what meta would be spending in capex. how does that balance work for your company, and what are you seeing in terms of people being very detailed into what they think the payback for this investment will be >> it's a great question

we've been handed this incredible gift which is maybe the most amazing technology we've seen in at least many decades. at the same time that technology has real expense associated with it unlike software you write it once and write it anywhere, it's running on fairly expensive gpus you have to tune that to make your products more efficient and be able to reflect that in your pricing model. that's what we've done including box ai in our plan, the highest average contract values, the highest lifetime values from customers, the highest gross margins, an ability to not have any impact to our gross margin with the introduction of ai in our offering it is real for customers to figure out how do we use ai responsibly in our organization from a cost standpoint to be able to have the greatest impact across our business. what gives us extreme confidence in the market is ultimately when you look at the productivity

gains ai can deliver, instantly relative to the cost of the gpu usage. when companies do have the right kind of use cases, there's no question on the affordability of this technology right now. >> aaron, big picture, you tend to have views on where the industry is going. what are you thinking about regulation at this point whether it's coming on ai, how that might affect all of this innovation, and what they should be doing >> i'm probably in the 99 percentile optimist camp i think it represents a massive boon to productivity and human knowledge and whether it's students getting a tutor or asking medical advice, i think ai is just a positive in terms of how we work in our personal lives. i think we have to take a lighter touch approach many regulations are already in

existence within the existing regulatory framework, health care and life sciences regulation, manufacturing, transportation we have a lot of the laws in place and ai is another technical capability that works within the existing framework. i think we need a lot of studying of the ai models but i would not regulate at this stage of the game. >> we don't even hear that from the biggest ai players, aaron. it's a debate with you for another day. aaron levie, thank you very much for joining us >> thank you >> 99% optimistic on ai. >> it's good to hear from somebody in the mix and in the trenches with it >> as far as the overall market, mike, the nasdaq remains positive stocks like meta, the dow is weaker and the market is still

sharply weaker on the week >> i would say a faint buy the dip. yesterday we got relief on small caps, on banks they were all up big giving part of that back today the market feels like it can't quite relax until bond yields come in a little more than they have >> more than 160 earnings next week along with the fed meeting, bank of japan, it's going to be a big one here have a good weekend. now to "the halftime report" with scott all right, welcome to "the halftime report. i'm scott wapner front and center this hour, the rough week for stocks, maybe the most important question yet, did amazon just save us from a more meaningful mega cap shutdown we'll discuss and debate for your money and the markets joining me today bryn talkington, steve weiss, jenny harrington and capital wealth planning ceo kevin simpson there you go, by about 130 points, th