points up, and maybe show you quake quickly show you the ten-year. the two-year at 5.067. we're stuck in the middle. that's what this is like make sure you join us tomorrow "squawk on the street" begins now. ♪ good monday morning. welcome to "squawk on the street." we're at the new york stock exchange a green arrow monday big week setting yup with the feed meeting and lots of earnings and consumer tech and pharma we begin with a big week ahead for investors. the fed, jobs, apple on tap. the s&p is in correction territory, but pointing to a bounce at the open >> getting a boost from

mcdonald's shares. that fast food giant is reporting strong third quarter results. and google star witness is expected to take the stand this morning to counter to allegations in a landmark trial in a monopoly so to speak trial. a lot of discussion over the weekend and this morning about sectors in which every stock for example is oversold below the 50-day >> we're minus 5 from this which would be pretty accurate and minus five produces a bounce i do think that we all seem to look at the s&p futures as if they're just something really happening. i think they bounce back from friday, but david, in the end -- i mean, look interest rates are bad again are we happy these days are here again? they're doing what they typically do which is go the wrong way. >> they haven't always necessarily been right, but

there's a jpmorgan note, and you take a look at these. >> you're going to want to, like -- once you read this thing, you're not going to be in a good mood because they are so negative, but to your point, jim, a lot of -- it's page after page of the impact of higher rates on everything, right >> i know. >> u.s. households and their mortgage related debt and credit card aprs, on commercial real estate, on excess household cash fading away, on corporates, on high yields. >> isn't that why the most important person other than jay powell, t"the wall street journal" says, the fed might be done she's, like, the shadow board member, right? >> right >> he's basically saying that jpmorgan is right, and higher bond yields could end the historic rate rise you need to either see the treasury auction have real demand or you need to see the fed is done and maybe cut someday. that's not what he's saying, but

the box is very surreal and if you forecast badly the way sammy did today, you might as well say, listen. it might be your funeral. >> although, you know, we knew tech last week, the guidance was no good. today we have xpo. we have sofi >> sofi, i'm close to that he was the banker for the street when we became public in '98 what year is that? >> it's a quarter century ago. i remember it well. >> the ice age, but -- look. there's no doubt about it. the banks themselves are just the blast zone, and when i look at them, i say to myself, what happened what happened, david, that the banks could be worse in price than during the bank crisis? what does it mean? >> i don't have the answer, so i'm hoping that was a question

of which you will actually -- >> it was rhetorical >> i was hoping it was a rhetorical question. >> i think the answer is there is no way out of this box because unless rates come down, people decided this is the group where you're going to start to secret problems. this is the group that doesn't have any ability to be able to make any money, and you have a lot of banks that are trading. i mean, i remember when schwab was a line in the sand at 50 it is back at 50 morgan stanley, the pick of the litter there, right? >> it's mostly wealth management that drives that, you would think. >> the pick of the litter. pick oh, wow. nice >> i was going to, you know, i worked on that all weekend >> i just totally missed it. >> you know what my problem was, right? it's so hard to do this job and warm up for the giants, quarterback. you know i don't have a good arm, but better than that last guy. >> it's not easy coming in as a third-string quarterback give the guy a break

it really is. >> your second-string quarterback is worth more money. >> they're paying the guy the equivalent of what schwab is making this quarter. >> who is that >> the tall guy. daniel jones >> he's the starting quarterback for the giants >> he's coming back. >> they've offered him a very good contract versus what they've offered the best running back in the lead. >> he makes $40 million a year. >> what about jalen hurts? >> does he ever stop anyway, i look at this -- i think there are what we call these in the nfl guys that are -- companies that are just not delivering that should have. jpmorgan for instance, they feel like to me, they delivered a great quarter, and yet it doesn't get any traction the banks are key for where we're going to go. there are so darn many of them and they are the ones to watch, not tech watching the magnificent seven doesn't get me anywhere. >> if it takes rats es falling turn it around, won't we be sitting here a while

waiting? >> that's my point my point is i'm not positive. >> by a while, we're talking, what six months that's when the market's counting on the first cut. >> i think you'll see the treasury issuance, and you need a guy, like, a guy that won a big game this week you need him to step up and say, the bonds are an attractive level, maybe 5.75%, and not guys who chatter on twitter, but guys -- >> this is not enough. >> that was one of the great, you know -- i'm doing what i'm doing, but don't take my cue stories. david, when the billionaires play, go away. don't do what they tell you. >> i agree with you on that. >> you do? >> yeah. i find that just because they're billionaires doesn't mean they actually know anything about anything. >> thank you billionaires -- they're dying. >> no one knows anything that's what i have come up with

after all these years. >> they're dominos >> no one knows anything. >> there are some who do. >> no, there aren't. there are, like, three people who know something literally three people. >> you don't think temper knows something? >> that doesn't mean he won't be wrong. >> this is not the great level to get involved. you need to see something. you need to see the fed give -- we're going to have treasury issues. >> we're going to be sitting here until the fed gives and what are we going to do every morning? we got to talk about something >> look. last week, there was a company called amazon, and it delivered an amazing quarter, and we could help people. >> it was an amazing quarter, yes. >> okay. >> why won't we follow it? >> it's so depressing this morning. >> why am i depressed? >> snap out of it. >> i'm realistic i'm saying don't trade it. i'm not saying buy it ahead of the quarter although you can go into this new video chat and buy in app sle and buy it a head of

time >> are you of the view that morgan stanley and denny over the weekend that the chances of a year-end rally have gotten slimmer? >> i saw that in the first half that we were definitely goners and i said, this is great, but that's the man to watch and he's talking about this percentage of where we could go in recession that's okay, but, you know, to david's chagrin, i don't have enough stocks to like. i just don't >> well, we came into the quarter worrying about government shutdowns goldman today removes that as a base case. >> right there you go >> two strikes down out of the way. >> we have treasury issuance this is back to the '90s they're doing seven-year. >> it's gdp from 77% pre-covid level. grocery supplies sharply higher. the treasury, 94%.

fiscal deficit, 50% of gdp, the highest since the 1950s. want me to keep going? >> you're killing me >> highest in 40 years >> what do you want me to -- >> by the way, government receipts are lower than we anticipated for whatever reason. revenue is not coming in as much >> one of the reasons why the multiples are shrinking is they're going to have to raise corporate taxes. they have to find some way to raise money because just an untenable deficit and it's just killing stocks now, you know, it's not like the president cares a lot about stocks i mean, he was on the picket line against the auto companies. that was a disaster for the auto companies. have you noticed that? gm is still out there fighting. >> you mean with the auction >> with ford and potentially stellantis have reached a deal >> and gm loses since this holdout of theirs. they're just part of the blast zone. >> you saw the warning out of panasonic today out of demand for tesla cars.

>> we saw tony >> what was that actually? >> they warned on battery sales because of weak demand for tesla at the high end. >> i think the most important quarter last week was one no one wants to talk about, was hertz where people don't want a tesla. >> they don't want a tesla >> they don't want to rent a tesla. >> and they're expensive to fix. >> and they're expensive to fix. >> apparently they're expensive to fix, but also they suffered as a result of the drop of price taken place, and they have a large group of what are used tesla. >> i'm making a thesis here. the thesis is, on the semiconductor which is an auto-related semi, that the autos are simply a blast zone. this is a big group altogether, and the banks are horrendous the magnificent seven, and we have a magnificent one last week >> microsoft >> i don't think apple will be that good, or nvidia will be what people want because nvidia is, you know, so heavily loved and we had bill mcdermott and we

got amazon 2 out of 500 there are 500 in the s&p it doesn't react as well. >> it's the only mag 7 above the 50 >> meta's quarter was quite good as well. it was the commentary broadly speaking around terms of ads that scared investors. >> i don't like to agree with michael wilson, but he's basically saying the reaction to the quarters was bad i'm not -- i thought meta's quarter was terrific. >> right >> when i say terrific, i can't believe how good it was, and i do know that everyone knows there's every campaign from the consumer product companies and they cease if there's something horrible that's what they do. it's just -- and yet meta talked about them ceasing and the world went nuts. >> it can't be that positive we're getting headlines that gm is getting set to end the tentative strike. >> good. >> we have mcdonald's.

premarket gains here with a quarterly beat comp, up 9 in the united states. it was able to get customers in despite higher menu prices and benefitting from digital and delivery gen >> terrific. >> the consensus for q4, and ever corp better have a better november and december. >> will people eat a full cheeseburger with gop? we have numbers coming out from adobe. these stocks have been hit by the obese ugly stick, and it doesn't seem to matter once they come out, they could say good things, but people say, isn't it true people order fewer hamburgers they don't know. >> we don't. >> good acting >> almost none of the companies other than that weird commentary from walmart -- >> which was then taken back. >> have ever said that they're

seeing an effect that they can actually say as a result of people eating less food. >> i totally agree. >> or fewer calories. >> i'm given to think the whole thing is a kennard they talked about how basically no one will be hurt. the numbers are such that not a sizable cohort is taking them, and it's probably mcdonald's anyway i think it's time to -- i think mcdonald's is stock, and they're a good company, and these were terrific comps and there may be a gop, but we have to start getting past that and decide that that is not the reason to sell a stock as much as i think that there will be people who like these, i do believe that the idea that the future of food is dependent upon them, is just dead wrong. >> we're going to get lilly earnings this week too >> they don't have approval yet for obesity. >> a busy week setting up. when we come back, the u.s. versus google. set to testify today in the landmark antitrust trial

a lot more this morning on autos as david said. there's some ai news talk more about the banks and data dog, cisco, and chevron in a moment 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.

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downtown washington, d.c just a short time ago, walking into the courthouse ahead of what we expect to be a 9:30 start time for this ongoing proceeding today we also saw a department of justice attorney arriving here just a short time ago. it looks like everything is set to get under way this is an opportunity now to defend his company in this antitrust trial. remember, the core issue here is those payments, multiple billions of dollars of payments that google makes to all sorts of device manufacturers and carriers to be the default search engine on all of their services we've learned the big number in this just on friday, $26.3 billion in 2021, that's what google paid for those search engine defaults, but the government is arguing that is buying its way out of competition, that those huge payments are forcing other competitors out of this industry, the search engine business almost altogether google says, no, no, no. wait we are offering a better product, and that's why people

are choosing us, and there's nothing wrong with these revenue-sharing agreements that they make with a lot of these other companies around the industry so that's the central argument that we're going to see here today, and we're going to see the ceo defend his company in person in just a couple of minutes. back to you. >> in tech in washington at least is this news about this executive order from the white house about ai as they try to get in front of what we widely expect to be very convoluted discussions about the impact of that tech. >> yeah. fascinating first effort here from the biden administration. the executive order a little bit more sweeping i think than a lot of analysts had expected in terms of the strength of it. they're using the defense production act in one aspect of this executive order they're going to force some of these ai companies to reveal their safety test results to the federal government that's something that we haven't seen before, and there's a whole host of other elements here. the biden administration really

marshaling the federal government you can think of it as a first swipe at ai regulation here in washington, d.c., and i think this is the first of much ai regulation to come, but with congress sort of on the sidelines now for maybe the next year, this is the big piece of regulation that we're going to get out of washington, maybe in all of 2023 and 2024, carl >> thanks. thoughts about either of those >> i think in the latter, when we had bill mcdermott, one of the things he talked about on service now was a huge number of federal contacts big deals. three $10 million deals that were reached at the end of the quarter, and that was because they had just issued this vancouver project which is a way to be able to identify cybersecurity for your internal agency or a company. i wonder whether this wasn't david getting ahead of that because i think palo alto does

it do. they have artificial intelligence to determine whether you're inpenetrable or not, and maybe the service was a strength of the court. >> i don't know. >> it was pretty impressive they won all these federal contracts right at the end. >> right. >> they revealed the vancouver project. i think there's a way to be able to assess this, but in terms of the amount of money that was paid for the contract, what were they supposed to do? they were saying, give it to us because we're better bard, no it's like bacon. >> bard isn't doing it for you >> bacon might have wrote some shakespeare. that's it. bacon. bacon's burning. >> because the bard is shakespeare. >> right >> there's bacon. >> i'm doing a litta little -- >> thank you, carl. >> it's so hard. i woke up and i'm a little slow this morning >> i need carl to translate kr cramer for me. >> did you ever read milton as a subject? we'll take a look and take a

look at futures here holding in there as we get set for a busy week and wrap up these last couple of sessions of october. don't go anywhere. as an independent financial advisor, my promise to you is simple. as a fiduciary, i promise to put your interests first, always. i promise that our relationship will go well beyond just investment decisions. it's the intersection of your money and your life where we can make the biggest difference. [announcer] charles schwab is proud to support the independent financial advisors who are passionately dedicated to helping people achieve their financial goals. visit findyourindependentadvisor.com

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step into your comfort zone with olukai. we mentioned gm. let's get to phil lebeau with breaking news. >> all three of the big three are now locked up into tentative agreements with the united autoworkers. we have confirmed from sources that gm and the united autoworkers have agreed to a tentative agreement. it's a 4 1/2-year contract we've reached out to gm and the uaw. both have declined to comment. we're awaiting details about this contract that has been reached between the two sides.

we expect it to generally come in line with what we saw from ford and stellantis. 25% raise over the next 4 1/2 years, over 30% when you add in cost of living adjustments a number of other things in here that really, you have to look at this from the uaw perspective. this has turned out much better than i think people expected when all of this began back on september 15th they didn't get every single thing they were looking for, guys, but they got a lot this is a very rich contract that the uaw has now locked in with ford stellantis and just a little while ago. >> you covered the scene incredibly well, and it's almost as if after watching the coverage, it's very clear they had no idea what a strategist they were dealing with they had no plan, and they gave away many things that they had -- worked hard for phil, why were they so unaware they had a real opponent

>> jim, that's a great question. i'm not sure i think at the end of the day, people will look act on this and yes, you can say, well, the environment with the way inflation has been going, and the fact that they were coming off of record profits in north america over the last three years. of course, they were going to make rich contracts, but all along, the uaw, shawn thane and his leadership and the strike strategy, this one, you know, one plant at a time, we'll keep you guessing and you're not sure if we're going to strike here, or going to strike there, and very, very effective use of social media by the uaw. you put that all together, and this has worked out far better than they expected and i'm sure far better than a number of executives expected in detroit when all of this began >> investors will be trying to figure out what it all looks like in terms of cost, what it's going to meet for margin >> yeah. >> fill us in there, yeah.

>> the early estimate is that the all-in cost and that's the one everybody focuses on, prior to this -- or the previous contract, it was $64 to $66 per hour, all in for the big three, $55 per hour all in for the foreign automakers here in the u.s. and $45 per hour for tesla. the early estimate on the ford contract that we've seen is that it comes in somewhere about $88, $89 per hour we haven't seen a final calculation, but if that's correct, let's say it's $87 an hour, that's a jump of $22 an hour all in per employee, look at that gap between them, the big three, and the foreign automakers they're at $88, $89, and foreign automakers, $55. those others will go up as well. that will be the big focus now over the next several years. the gap between what detroit is

paying and what the foreign automakers are paying here in the u.s. >> right phil this, comes at an interesting time as well because, you know, over the last weeks and i want your obviously input here we continue to hear that evs are starting to really slow, that demand is really slowing we talked so often about what this is going to mean for gm and ford and their plans in terms of being profitable in ev meanwhile, they seem to be pushing things out kind of just give us a sense as to the landscape as we sit here right now with this tentative deal >> the overall demand is l slowing. that is an actual thing that is happening within the auto industry it doesn't mean we're seeing a reversal and people aren't buying evs at all. it's not growing as quickly as it was in the past it's about 7% of overall sales and for the big three, they have to say, do we commit as much as we expected through '25, '26 or are we a little more judicious

and realize the market will be slower to develop and push these plans we were planning to bring online in '25 and '26 out to '27 and '28? most would argue that's a smart move at the end of the day, david, what has to happen, they have to get their act together because they certainly haven't been right off the ball you know, yes, they're doing better and they're increasing their sales, but this is still tesla's game and they are still -- they're nowhere close and that has to change over the next several years, and they know that. you listen to the ford call the other day. jim, i know you listened to it. >> yeah. >> it's pretty clear they know what they have to when it comes to evs. with regard to electric vehicles, it's show time. >> you bet pitch. >> you've got to come to the plate over the next couple of years. otherwise, you can pretty much say, okay. 4 1/2 years from now, we'll be talking about this again in the uaw contract. >> as for labor pressure in the industry, phil, going forward from here, let's listen quickly

to what shawn fain said about the cycle. >> one of our biggest goals coming out of this historic contract victory is to organize like we've never organized before when we return to the bargaining table in 2028, it won't just be with the big three, but with a big five or big six. >> gymnastics what a lot of the street commentary's focusing on today, phil. >> look. they have momentum, and i'm not trying to play down the success that shawn fain and his team have had over the last month and a half there's no doubt they have momentum and lthere's no doubt that if you are working at a toyota plant in kentucky that you're not looking around going -- >> that's pretty good. >> having said that, they have a long track record of being unable to unionize at toyota, at honda, at nissan they just haven't done it, and

they have been talking about it for 30, 40 years so at what point does that change is this the contract that changes that maybe, but that's -- that's what you have to keep in mind >> phil, thanks. phil lebeau. wrapping up gm this morning. let's get the opening bell here and the cnbc world celebrating a recent ipo at the nasdaq choice one financial services celebrating 125 years of the bank >> look. i think that what phil said is very important in the sense that fain outsmarted them and the fact that -- we're in a different moment i think that both unions are getting their way and treasury is getting in the way with just gigantic issuance, and i think that's why individual companies really struggle hard, carl, to be able to make a break out here, because you have to distinguish yourself above that

fray union fray, yield curve fray these are major head winds that we haven't seen since the '90s. >> going jay's way >> yeah, but we have to see the deficit. i don't want to sound like a deficit hawk here, but boy, anybody who likes stocks, look david, anybody who likes stocks knows that frankly, there are no treasuries to be bought by foreign countries and that was always something you can -- i remember one time apeople are worried that china owns too much come back, china. they have $800 billion >> it's obviously the other side it's the demand and what doesn't seem to be very much demand any longer from buyers such as china or even japan. to your point -- >> so liquidity. ouch >> yeah, and that's why we're also going to be watching very close -- i think it's wednesday when we get the actual plan from treasury and how much supply will be issued over the next few

months it's not something that has typically been a focus for the market, but it is now because last time it was a very large number i think it was the end of july when we last heard and the market has sort of trended down ever since obviously bond prices have fallen dramatically. >> treasury was very arrogant. there were people who suggested, why don't you just do a gigantic financing? it was the same thing which is the shorter is a better place to borrow they need to be criticized for this the lack of understanding over the yield curve is shocking. >> yellen is doubling down her comments late last week about how these long rates are ar ec about economic growth, and not funding concerns. >> that's a nice thought. >> we wrapped up a gdp print. >> i just know that -- well, look the gdp is correct, and anybody who favors that, as long as we get that without inflation, that's fine, but there was a way to finance without making it so that the stock market was hurt, but then again, remember

biden is a president who does not focus on stocks. otherwise he would have tried to figure out a way to make a deal between gm and the uaw, not show up on the picket line which was the last thing david, no one in the industry on the management side thought that a sitting president would show up on the picket line. i mean, he is a union president. >> he is a union president always been a youunion guy. >> it was union versus capital nothing's changed in america except for the unions didn't roll over this time. >> it's going to be -- the workers are going to be making all in as much as $88 an hour. that's including all benefits. >> remember how long the unions were losinging on this issue ofw much to pay the beginners and they've completely caved on that, and what maertters of course, is we're not in a union country, but if you are in the restaurant business, you're shaking. if you are in any business that needs a big labor force, i think

we could be in a wave of union unionization. >> over the last 40 years, the decline of unions has been notable. a significant decline of unions and many have argued the disparity between the wealthiest and the working that we needed a resurgence in unionization, which the president agrees with in order to bring wages up for these people >> i think you ask the president who the magnificent seven was, and he would say, i remember yule and i think steve was terrific a first name basis pause he's actually older someone's older than i am. >> he is older than you. >> he realized the horse didn't make it and robert thorn didn't make it. also by the way, an amazing man. >> let's get back to some movers this morning we mentioned the $36 billion market cap coming in stock's down a lot. >> he gave you a bad forecast. >> he gave you a bad forecast.

the guidance indicates an 8% quarter over quarter revenue decline, and expected to decline by 80 basis points and that is driving the stock down as much as 15% we've largely seen strength previously in auto and non noncancellable orders and so forth. we're getting a call >> i have had him on many times and he's very, very good as ceo. i think it's interesting that he's reverberating immediately to the other auto semi company which was texas instruments and they're barely down. i would think that's something that the people who are really smart about the semis would say, oh, this is a golden opportunity to put out a short >> we haven't mentioned western dig, and the splash business in the public companies. >> glaets. i don't want either. salt to you, david you can have all those that you want >> that's funny.

>> to me >> yeah. >> to you. just driving flash you know what? we don't want a company that has two divisions we don't want. we have two divisions. the other companies that are doing well have no need to finance. f western digital does not have a good finance sheet the companies that are well known and i don't have to say them again, are the ones most likely to come through this un unscathed and those are the ones we know as the magnificent seven. >> does that include amd which we'll get tomorrow >> there are a lot of people who feel amd will shade down they have important products in the pipeline, but there was a -- i'm going to get pat this, and i have been -- i have been judicious in how i view it, but pat had a good quarter even though that's not how i view advanced micro even though they're a better company a very good quarter i was surprised. they have a very good cfo now.

they did a lot to be able to -- let's say restore credibility? fair enough? >> sure. >> yeah. >> you know, the folks jim has talked about as well, this is a deal to require broadcom that there was a lot of doubt because they had not received antitrust from the chinese they still haven't, and this morning we did a get a press release very early saying, we expect we'll close it soon. >> very soon >> soon. my understanding, jim, is the top ten or the ceo who has spent a lot of time in china and been there recently believes this is not political which would in many ways perhaps signal a more significant delay, but is bureaucratic, it's simply perhaps another agency taking

their time working its way through, and therefore soon means in the next few days now i would also add i don't care how deep you think you are in china in terms of understanding what's going on. it's still a black box. >> very true. >> he expected to be able to close today and that was wrong. >> i agree with you, and let's use a chess neanalogy. i don't think that hock tan is a pawn in this, u.s. versus china. i do believe there's a tremendous amount of paperwork to be done however, i think that if you want to take his comments to the bank, that's probably a mistake because -- >> right >> -- that means you think you have an edge on china and i don't think anyone has an edge on china. >> no. it's so difficult, and so you really are left just guessing. but again, we can share at least what we're hearing which is that mr. tan does believe it's bureaucratic and not political take it for what it's worth. >> if anyone's going to get something through china, it's someone who spent a lot of time

in china and understands the chinese and i know they're saying they're not a pawn, but david, this is an era with china where i know we're finally starting to talk with them >> we have some senators who have been certainly and/or gavin newsom was over there as well. >> gavin newsom. what did he accomplish >> we were talking about kpclimt stuff. california obviously, in terms of all renewables, right >> china's the worst every week. >> the biggest in terms of renewables and they also open a coal plant all the time. >> did wine come up? >> cabernet. >> why >> because they're big consumers of cabernet. >> gavin newsom knows the whine business >> whine. >> never mind. i'm missing here with david. way too obscure. >> you are being very obscure. >> i'm just trying to entertain our viewers who are tired of

losing money >> well, they may be tired of it, but it doesn't mean they're tired of us. >> i think gavin newsom is a very smart guy, but -- >> let's move on from gavin newsom. >> look. can i just say i have been there multiple times >> plump jack? >> it's a fabulous cab, but it's an unbelievable zinfandel, but i'm not that kind of drinker >> are you done? >> yeah, i'm done. >> you had to make an election stock for cash and you're locked for connection, but that will be the case for the foreseeable future they had delisted the stock. they had it relisted this morning. that was bizarre and again, you're locked into the election, whatever you chose last week >> is it not extraordinary, you know, that there's no doubt that hock tan would buy every single share that was for sale here he loves this stock.

i love the vm ware it's a way to be able to get this mobile up i think this is one of the more important stories out there for many different reasons i think that broad com is a remarkable company it is on the fringes of ai like a semi, and we would be talking about this ai role if we weren't involved with this thing. >> one thing even steady on is there is a -- it's bullish in energy right now, and we do have an upgraded chevron this morning. >> i think this deal was great john hess might say, you know, look short-term, this wasn't perfect, but i think that we are not even pumping and we're doing really well i think that is the bull market in this market i also think the gold stocks are about to catch up. people don't really care about those, but would i buy chevron sneer they did the right thing with hess, but i think, david, the most undervalued piece of property was next pioneer.

>> is it weird that crude is down 5% this month >> yes, it is because i would have thought with what's going on in the horror of the middle east that you would have ex expected and many people did expect that crude would go up. i'm seeing downgrades of things like valero which are making fortunes here. it's quite shocking that crude couldn't rally in this because i think the russians are pumping extra. ukraine is winning right now that is not talked about at all. >> really quick, gas prices, $3.45. that's a seven-month lower lower than we were this time last year and that's going to benefit the consumer at least somewhat >> i'm going to do a little quiz and end this part of my diatribe which side is your gas tank? >> the gas pump? the tank >> mine's on the right side. why? >> i wanted to be sure you knew it >> i know. >> i'm not asking for the price of milk.

>> if you are in a rental car and you're unclear, there's that little arrow >> he's one of us. did you see the burlington the downdprgrade of burlington? a t-shirt, they give it to you for free >> gas for free? >> no. dollar general -- i'm just talking about -- >> you're just talking, like, i don't even know. >> i'm trying to find stocks that could go up fast. >> i'm going to end with this deal >> what? >> a deal so boring it will just put you to sleep it's worth mentioning because realty >> between this and the chiefs game >> $4 billion, they did have a lot of debt. created a $63 billion enterprise value for realty for .762 issue of shares

it's even equity value. >> it is very hard to find where it is, where the real black holes are. >> there's no transaction volume. >> because, look everyone thought that blackstone had it everyone thought wells had it. >> there's a lot of banks. a lot of regionals >> but the banks seem -- by the way, you know o is really good i have them on constantly. >> you do? >> do you know why they pay their dividend monthly and a lot of people who watch our show want a monthly distribution and they're very smart, and i think a monthly distribution, david, if you ever were to retire, i think you would be happy with that. >> i sure would. they say it's a leverage transaction. there's no reliance on capital market needed for the deal at all. >>s the a good deal. >> they're assuming the existing debt low-rate debt by the way they point to your point and say it will deliver 2.5% to the funds from operations. >> i really like that deal and

i'm glad you brought it to people's attention >> as for cre though, jim, it is -- it may be slow, but it's a slow-moving wreck. >> for the insurance companies that have not been that -- not been vetted properly and we don't really know what they're doing with their capital. >> you've got it if you own a building that's 50% occupied and you've got refinancing coming up in the next few years and your equity has fallen, you are not in a good place the bank doesn't want the keys they'll try to figure out a way to do something with you. >> really income here with the 6.5% yield, it's very attractive given the fact that you want monthly distributions. that's a good way to get it and again, that's a terrific way to invest and to have something in your pocket. so it's good >> all three indices here up about a percent. >> apple is leading things, and again, i haven't been a huge fan of apple i'm not saying this is the quarter given the fact i don't think the -- other than the numbers that will be softened,

which indicated they have been the principle promoter, david, of this. it's very strong, and you can also argue -- >> the promoter of the iphone 15. >> but verizon's balance sheet lets them be a player. >> you're not thrown by these headlines of resurgence in china? >> i've read that story a zillion times. how many times can they resurge? five-time resurge. enough enough resurge >> well, they can resurge. >> you know what's interesting we're getting the end of the gop moment, i think. >> the end of the glp moment, yeah glp 1. >> people really starting to realize, wait a second, you know, they're not taking glp 1 >> portion control is when you are on these, it becomes much easier you don't order as much. it doesn't even mean you won't go to mcdonald's maybe you just won't order a

giant tub of fries. >> yeah. >> yeah. so who knows >> so what movie did marlon brando use the phrase tub of goo? >> tub of goo? to carl. it wasn't on the water front they were both in that movie. >> it's cad "one-eyed jax. >> i was more of a san francisco kind of guy. >> he says, give me a beer >> he easy that in "on the waterfront." >> i know this >> he was going to be the head of jeopardy. aaron rodgers is going to play at the end of the year >> things are moving slow. what can i tell you? >> i have to go beyond this stock market given the fact we have a good day today and i don't want to focus on it because i don't think tomorrow is a good day. >> we'll see only three mondays have been -- no two mondays have been down the last three months. >> all fridays have been down.

we didn't even get to siding with nelson. >> i knew that i'm sorry. it seemed obvious given -- >> were you shocked that was the new story today? >> they actually had that as part of their effort that's a story for another way. >> get out of my oscar world >> i know. i don't have answer for you. >> who's had four oscars >> who's had four oscars >> there's one person. >> really? >> meryl streep? >> no. she won three. >> you are full of trivia today. >> i just find myself focused after i had cries and that stock didn't work. i'm going back and seeing what movies impacted tv. >> that's a good one >> we have to go, jeez >> jim also right though the market looks good for the moment do you up 320. quick reminder you can always get in on the cnbc investing club with jim sign up and find out more on cnbc.c cnbc.com/jointheclub for bonds, a lot of data headed

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pretty decent open nasdaq is leading, all sectors at least on the s&p are green and the vix around 20. cbs's evolve global summit by the way is virtual thursday, november 2nd we'll gather leaders and innovators from around the world and talk about strategies and tactics necessary for adapting, innovating and changing in the new era of business. register at cnbc events.com/evolve.

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let's get to jim and stop trading. >> a lot of people have asked me, look, what defense contractor has been left behind. this morning, raymond james goes from hold to buy for l 3 harris. this is a remarkable company that probably has many, many orders that the defense department is going to give them, and is really -- it opened the market, it did open 10 points off it lows

high was 250 i endorse this and if you feel like there's going to be a huge defense budget, as i do, this is the one that's going to get more than its fair share. >> how about tonight, jim? >> a lot of people have been saying what is going to happen with vf corp not one but two activists and it's great to find out because it's the first time he's spoken publicly josh weinstein, a lot of feeling that cruise companies aren't getting their due. there's been a lot of people, like the old days, signing up, but the stocks are nowhere let's find out what's going on. >> that's a lot. we're going to get through a ton of consumer angsts this week. >> find out what's going on with the consumer because so many people have written them off why are they taking so many cruises and going place snooze y s -- >> you started the show kind of depressed. >> it's a great opportunity to - >> lighten up? >> i do. there's nothing cooking. nothing. nothing cooking.

>> unlike him. >> what? to be clear-headed and somewhat negative and -- or is it about the reserve has nothing to do with it? >> see you at 6:00 p.m. eastern time as we go to break we are getting a bounce after a tough stretch of course we know how treacherous october has been we'll wrap up these last two days of the month in a moment.

♪ upbeat music ♪ upbeat music

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 president biden at the new york stock exchange take a look at stocks starting off the week strong. the s&p 500 up more than 1% actually bouncing back from a big down week last week. you do have every sector higher right now. energy is under praeshing. it's only up a quarter of 1% strength in technology, communication services, consumer discretionary, bouncing back from a tough reaction i would say last week to earnings, especially from some of the magnificent 7. show you the picture in treasuries always important. starting the week with more

selling. 10-year note yield below that 5% level, but it's going to get a number of tests this week. we have a fed and bank of japan and a lot of economic data to talk about including jobs. we'll preview that in just a moment we're 30 minutes into the trading session, here's some movers we're watching. earnings out of sophie and mcdonald's sending those shares higher sofi's ceo joins us first on cnbc in a moment and a read on mcdonald's with the number one restaurant analyst in the sector western digital searching as well one of the top gainers on the s&p 500 after announcing plans to split its disk drive and flash memory business into two independent companies. we're watching microsoft today the only mega cap still trading above its 50-day moving average. some technical levels breaking down last week on the back of a sell-off this is a big week it's one of those weeks if you're focused on macro you cannot miss it that's because it starts

tonight, tuesday, bank of japan meeting. why is this so important well, they're expected to announce a big adjustment to their yield curve control because they're face something upside risk on growth and inflation. that's tonight we're also going to get a lot of earnings and the fed decision on wednesday. we're going to get a jobs report on friday. i would say the jolts report is also really important, the job openings and labor turnover which comes the same day as the private sector read on jobs, adp report, and then you know i've been flagging this treasury refunding announcement on wednesday. i'm actually going to say today is important on that front as well because today is when we get the financing announcement from the treasury and it's a little different than wednesday's refunding announcement here's the difference. today we're going to learn how much the fed -- the treasury needs to borrow in the fourth quarter so these last three months of the year that july 31st date a lot of people look at that might have

spooked investors, that was when the financing news came out when joe ja janet yellen said we have to borrow higher. >> i thought we were getting that wednesday. >> wednesday is the breakdown of the auction sizes and how they're going to issue it. both of them from my research can be tradeable events because is it going to skew towards more bills this time. last time the auction skewed towards longer treasuries which caused concern about the demand. >> we'll know the number today. >> at 3:00 p.m that's the financing announcement. >> that's important. it comes well above -- i don't know if there are expectations >> there are. >> what are they >> $852 billion what they said last quarter they would need to borrow this quarter. what happened last time around is that trillion dollar number came in 200 or $300 billion more than the previous forecast $852 billion is kind of the number to watch if it goes 200 or $300 billion more could cause

concern. >> receipts have been lagging basically. i mean you haven't been collecting as much in tax revenues. >> that's part of the problem. >> yeah. >> net interest cost the government is paying a lot more - >> $634 billion a year in interest costs right now. >> capital gains have been weaker as far as, you know, bringing in tax money in the last year or so. the fed is not buying treasuries is the backdrop. there's been demand. i don't want to raise alarm bells about demand asset managers and institutional buy vcr been there, and they've stepped in on the shorter end, but it does bring the focus on the deficit and just how much we're going to need to fund it i would say that janet yellen comments lately have been the rise in long-term bond yields that's not because of the deficit, it's because of growth. you could make that argument as well, but it does suggest she's not concerned about the size. >> we had this discussion with jim a few moments ago about her comments last week about this being about economic growth.

we did a giant gdp number for the last quarter, although expectations for q4 are in the 1.6 i think is where goldman is. >> a big step back from the, what 4.9% growth we had. still points to robust growth. that's why the jobs numbers are going to be important. as far as the fed, it's kind of the least -- it's the least suspenseful event of the week. there's nearly 100% odds they do nothing. we heard from powell ahead of the blackout phase where he said we're going to proceed cautiously and the data suggests they can do that still only a 20% or so chance they're going to raise interest rates in december. here's my chart of the day the financial conditions are tightening and that goes along with higher mortgage rates and yields and a stronger dollar and what you can see is the top one is the mortgage rate, the 30 year, the way the fed is tightening the economy, the blue line, while they're not as tight as they have been, that's the tight pentagon let's see if the

market will do the pfed's work and slow the economy it allows them to proceed cautiously, suggesting maybe they can be done with raising rates. they're not going to say it the other point of caution, what we've heard from companies and earnings and we've highlighted that the earnings may have been better or may beb better, but the outlooks are cautious here's what mcdonald's see said about the consumer. >> specific to the u.s., we've been talking about how the consumer is more discriminating because of all the price pressures they're facing as well as interest rates, things like that what you end up seeing is that the pressure is felt more on the lower income consumer, and so one of the things that we saw industry wide is that that low income consumer, which we would

say is 45k and under, was negative from an industry standpoint. >> still talking about the pressure on the low-end income consumer, a theme in this earnings and has been for the last few quarters. you know, it's not -- it still speaks to the fact that there's going to be an impact of higher rates, of course, of inflation, despite this very strong jobs number and growth numbers we've been seeing in the economy the caution comes from ceos. you hear it across the board. >> yeah. a lot of talk about value on the mcdonald's call today. meantime the s&p and nasdaq as you know around correction territory. let's bring in mike santoli and get his take, i guess, on the recent slide and some desk cutting their year-end targets as a result of today. >> everyone is marking their view to market down 10% in three months and down 10% over the past two years. that's relevant in terms of where we sit relative to the old highs. the nasdaq peaked in november 2021 we're coming up on the second anniversary of that. over the same three months, the

forward system for s&p earnings have inched higher they're about 3% higher. so to whatever degree we had a serious valuation problem across the market three months ago, it's slows now the real issue to me is market is really looking right through all the strong economic numbers right now. if you look at the way industrials and transports have traded in the last few months as rates have gob up, as investors have basically manifest the fear through the tighter financial conditions sara is talking about that the economy really can't handle it that easily, that sort of shows you you've given up whatever advantage you had in the cyclical parts of this market the question is if you want to take the other side of that and say that this is going to be more resilient economy, the fed is about done, are yields topping? who knows. they're in an uptrend right now. we have to see them absorb all the other supply news and everything else, but all that built to a pretty significant oversold condition today we'll get this bounce. my standard for whether this is

more than a basic reflex bounce is probably up another 2 to 3% minimum. 4275 because otherwise a typical oversold rally nothing more than that, is going to stall around that 20-day average on the technical side. >> we have a couple negative notes, not unexpectedly. mike wilson, and jpmorgan, i don't know if you saw -- >> absolutely. >> it's just like your take. it's very negative, but basically says given the move up in short-term real rates and total in terms of overall current level of real rates, the s&p 500 multiple is 2.4 times overvalued. >> yes if you did a standard, okay, real rates 2.5% or whatever, so inflation adjusted rates where does that bring us based on the historical averages? it does get you a little bit rich if you want to complain that overall index is rich, the market cap weighting results is a lot of that. top five stocks that drag the multiple from somewhere like 14 up to 17

so you can decide whether you want to agree on that curve or not. i think it's a significant challenge. to me it's all about are the yields going to really ding the economy and, therefore, earnings much more than are yields going to translate through the valuation algebra to a lower stock market to me if your earnings are growing and the economy is okay, you do -- you only have so much downside. >> i highlight things like the bank of japan. might think who cares, but actually, it's a pressure point and could let the 10-year, our 10-year, go back above 5%. depending on what's priced in there. it's bond bearish. another factor. >> the bank of japan adjusting yield curve control, came right with the last treasury refunding announcement in late july. it enabled everybody to say the thing i've been warning about all along why yields are true, too, low is coming to roost. it's not weird to have near 5% you have to kind of build all that

by the way, my favorite thing, though, is everybody is fixated on the treasury supply stuff this week. rightly so reminds when we were fixated on the fed's h 8 report. >> everything we never cared about. >> we don't care about it now really. >> we do. >> the storm passed and it's not a market mover this one is. >> thank goodness for the esoteric releases from treasury and the fed. >> 3:00 p.m. today my. we find out. >> financing >> financing number. >> i will be here. >> and on wednesday we find out the day dense in terms of whatever - >> how much in the way of long-term stuff they will stuff into the market. >> look at you. >> i'm listening to you. i thought wednesday and then today you tripped me up, you're suddenly telling me i have to pay attention to today. >> the numbers come first and then the breakdown. >> thanks, mike. big news this morning, the strike is over from the uaw reaching tentative deals with stellantis and gm. let's get to phil lebeau to fill us in on what's going on >> reporter: david, 45 days

after 45 days of picketing all the strikes revolving around the big three have been at least temporarily resolved we think they're going to be permanently resolved tentative agreements reached with everybody general motors, they reached an agreement with the uaw within last half hour we reached out to the uaw and gm for a comment and details about the agreement. both have declined to comment so far. generally speaking this is what we expect. what we've seen from ford, seeing from stellantis, you're looking at a 25% pay raise over the next 4 1/2 years for uaw members, over 30% when you factor in cost of living adjustments. much higher wages for new hires and temporary hires and greater retiree benefits stellantis, also won a big commitment, a uaw won a big commitment from stlellantis stellantis agreeing to reopen its plant outside of rockford, illinois, putting a battery facility there that's a huge win for the uaw.

as you take a look at shares of ford, keep in mind that ford has said they are gradually resuming production at the plants that were on strike over the last month, month and three weeks, month and a week or two, so the bottom line is this guys, we will get details and the ratification votes, details over the next couple days on stellantis and gm, ratification votes will take place over the next week or two back to you. >> phil, thank you phil lebeau with that breaking news on gm's deal. oil prices are easing right now despite middle east tensions rising today, the world bank saying oil prices could reach, quote, unchartered waters if the israel-hamas war escalates comments as the conflict enters the fourth day now let's get to jay gray live in tel aviv with the latest >> reporter: good morning. to something that's unfolding right now, hamas has released a video with three of the hostages that are being held. now, obviously, we're not going to show you that video to protect the identity of those

who are in the video, and we have no idea what's going on before or during this video, behind the camera, what type of duress they're in. what we can tell you is that one of the women in this video, it's three women, one of them is very angry and angry with israeli prime minister benjamin netanyahu, saying -- blaming him for the october 7th attacks saying that there was no preparation and no help there. and then talking about the idea that she wants him to facilitate the release of all of the hostages by releasing all of the palestinian prisoners currently being held by israel that's some 6,000 plus right now. again, i think it bears repeating, we don't know the duress that these women are under. we don't know exactly the circumstances surrounding this video, but it has been released. released without any warning from hamas let's talk about the expanding

ground advance right now by israeli defense forces they are gathering more land in gaza we are told that that will continue, that they will continue to slowly move forward, identifying targets more than 600 in the last 24 hours we know that they have hit weapon depots, dozens of anti-tank installations as well as command and control centers they are telling us. it appears the current strategy is that they identify areas of interest and areas of targets. there are air strikes that move in there are strikes now from the israeli navy off the coast and then the ground advance moves slowly forward instead of what many thought would be just a very aggressive push on the ground once inside, it appears that they are doing this in slices, moving forward, setting a defensive front, and then continuing to push on so that's the latest on the

ground there as for humanitarian aid, we know that it's desperately needed we know that fuel is something that is in very small supply and is not going to come in, according to the idf until this war is over. there appears to be some movement on the idea that israeli forces will allow more trucks to move in, and we've seen more move in over the last 24 hours than we've seen since the start of the war here. more in one day i should point out. water, food, medicine, but again, without fuel, it's really starting to crumble inside we've seen thousands breaking into u.n. warehouses to take just the basics, flour, hygiene supplies, and so that's something everyone is watching very closely as well. >> aren't there reports, jay, that hamas has plenty of fuel, certainly for the rockets they're firing are they keeping it from

civilians? >> that is what the idf says they have said repeatedly and posted on social media, if you need fuel inside of gaza, ask hamas for it they feel like hamas has plenty of fuel and they've shown some of the depots where they believe that fuel is located. >> jay gray, thank you very much for the update from tel aviv this evening. as we lead to break our road map for the rest of the hour on this show. sofi's ceo anthony noto shares popped double digits on strong results. >> tom lee missed a big week for economic data and the fed, why he's calling for an end of the negative doom for stocks. >> the top restaurant analyst calling mcdonald's a buy don't miss that. bish sllhe don't go away.

(fisher investments) it's easy to think that all money managers are pretty much the same, but at fisher investments we're clearly different. (other money manager) different how? you sell high commission investment products, right? (fisher investments) nope. fisher avoids them. (other money manager) well, you must earn commissions on trades. (fisher investments) never at fisher investments. (other money manager) ok, then you probably sneak in some hidden and layered fees. (fisher investments) no. we structure our fees so we do better when clients do better. that might be why most of our clients come from other money managers. at fisher investments, we're clearly different.

shares of sofi up over 3% after the company reported stronger than expected revenue for the quarter boosted by treng in the student loan unit and the company raised guidance for the current quarter. let's get to sofi ceo anthony noto joining us in a first on cnbc always good to see you student loans, at least the analysts seem to be short here in terms of what they anticipated it may have come in i think on the call you seemed to indicate you expected that surge, but tell us a bit abilout the that d what you're seeing, whether the cadence, a one-time thing, and it gets back to normal or going

to be significant demand for the loans for some time? >> yeah. so david, i think there's a misperception that student loans were a big driver in the quarter. they were not. 67% of our absolute growth and revenue dollars were from nonlending as well as from our financial services businesses which include checking and savings and invest in credit card we saw a recovery in the student loan business from about $400 bm million origination value to $900 million, but it wasn't that big of an impact on the pnl given how those values are -- those loans are valued the driver was the strong performance from tech platform and financial services and continued strong demand for personal loans on the student loan side to answer your question specifically we think it will be a slow, steady, gradual increase over time, in that we're going knot going to get back to where we were in the fourth quarter of 2019, about $2.4 billion

origination volume a quarter not until 2025. >> got it. well on the call as well, you seemed to focus the analysts on the technology platform. explain what you're talking about here, anthony, when you say the pipeline is pretty visible and it's the most robust i've seen. just explain what exactly that means. >> sure. our technology platform has a number of different products but we're providing processing on the platform with a number of apis that allows a developer to build just an app on top of it it could be for a consumer facing bank. it could be for b2b services, it could for government payment services in addition we have what's called the core banking platform which is really an operating system for different products whether checking or savings or credit card or loans we bought two businesses over the past five years to power sofi but they also power third

parties. about 135 million accounts and 8 billion transactions a year. what what we're seeing is traditional banks, large income of banks, looking to upgra i-- upgrade to a modern processer and a modern core and throughout the quarter we have been responding to a number of rfps from the largest banks in the country and they're updating that technology. we're seeing a lot of demand from other incumbents that want to switch to us that are not big, large banks but financial institutions or they have a large amount of patients or direct to consumer offerings in terms of checking or savings accounts in terms of financial products seeing a nice pick-up and a need for the industry to upgrade their ability to manage assets and liabilities in real time. >> you sounded upbeat about the macro environment on the call. can you tell us, you have a unique demographic that you serve and what sort of consumer trends you're seeing so far into

october? >> yeah. i wanted to be clear for the audience sofi is taking market share from incumbents an we're not really a key indicator of the economic environment or the cycle. we're gaining market share from existing market, even if the market is not growing. we're seeing demand for our loan products our sofi checking account, 4.6% interest, no fees. you get a free certified financial planner. you can pay anybody anywhere with your phone or debit card or p 2 p by having a phone number that product is seeing a significant amount of demand as well in that product, we are seeing an increase in deposits per account, which is more of a measure of how the economy is, as well as increased spending per account as opposed to just being driven by new account openings we're seeing good increases in aum, in our invest business, clearly a market share gain on the back of doing three ipos

we're seeing really strong demand for our products. more broadly, if we're going to be in an environment higher for longer i'm worried about the conditions and the financial industry more broadly and that will cause us to be more conservative and balanced to maintain the right safety and soundness of our balance sheet and aisbility to sev our member. >> i was going to ask how much of the deposit growth is from people using you as the primarily bank can you talk about what you're concerned about in the system. >> we added $2.9 billion in deposits they're really high quality. 90% over $15.7 billion deposits that are from consumers are from direct deposit customers sticky customers using us as their primary bank and in fact, we shared for the first time we had over a billion dollars of spending in the quarter through debit spend through the accounts annualized at $5 billion spending in addition to that we're seeing

strong trends in the ability to bring in deposits that are diversified, so 98% of our deposits are insured deposits which means they're diversifying a lot of banks are not seeing deposit growth in addition they can't offset the higher rates with hedges or passing out higher rates to consumers and loans, both of which we can do because we have the ability to manage our assets and liabilities in real time. >> but anthony, just to come back to it, you mentioned on your last answer you were concerned higher for longer could bring some -- i don't want to use the word you're comfortable with but dislocation amongst the larger financial companies. can you sort of explain how you're seeing things >> sure. at sofi we feel great about the quality over loans we have a high-end customer with fico stores 750 and high income at over $150,000 and our life loan losses are not back to where they were in 2019 although we expect them to get back to that level and our student loans are performing quite well with

less than a 1% life of loan loss what i'm worried about the unrealized gains out there in the financial services industry. we aggregate off bank reports each quarter the total amount unrealized losses in the industry approaching a trill dollars in the high $700 billion range. if you take rates up another 25 to 50 basis points against that portfolio of assets it's only going to increase the amount of unrealized losses that have to be funded with additional capital or have to perform -- out perform as it relates to the longevity and duration of the loans. it's a real risk for the financial services industry as a whole. >> yeah. although many of them are not losses that have to be realized to be fair, right. you know, only becomes an issue if you have a deposit flight, doesn't it >> i agree 100%. that's what i was trying to allude to. if you can hold the loan to the maturation and duration and

performs, they're fine a deposit issue that has to be paid out, then those assets would have to be sold to pay off those deposits that's the risk. >> always appreciate thank you for spending time with us. >> thank you, david. >> still to come what investors need to know ahead of apple's product event tonight. we're back in two minutes with the dow up more than 250 points. when you're looking for answers, it's good to have help. because the right information, at the right

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i'm contessa brewer. your cnbc news update this hour. inside gaza israel's ground operations are expanding the chief spokesperson for israel's military says it's progressing gradually. u.n. security council is also preparing for an emergency meeting where the united arab emirates will reportedly seek a resolution for a humanitarian pause in the fighting. arguments begin in denver in a lawsuit seeking to ban former president donald trump from the colorado ballot because of his role on january 6th. that lawsuit was filed on behalf of six voters in denver. authorities in los angeles

say the initial autopsy results for matthew perry are inconclusive and the cause of death has been deferred pending a toxicology report. the "friends" star died saturday after an apparent drowning at his l.a. home. sara >> apple shares are trading higher ahead of its new product event tonight called scary fast. and the event, of course, comes ahead of halloween, and its earnings this week steve covac joins us with what we can expect. what dot clues tell you. >> >> yeah we got a double whammy from apple this week. the virtual event tonight where apple is expected to update its mac lineup with a new chip called the m 3, the third generation of the in-house chip for mac computers, calling the event scary fast to expect a lot of talk about the m 3's performance and plenty of goofy halloween dad jokes. apple loves to do that stuff announcement after qualcomm revealed its new computer chips

boasting they were faster than apple's that could change tonight. apple reporting q4 earnings nis thursday the company told us to expect fourth quarter in a of declining sales. the fourth quarter will likely beat the streets a muted expectations but expect disappointing guidance for the holiday quarter citing supply dynamics with the iphone lineup. the dynamics not expected to help much. pc demand down after the pandemic buying. the headwinds in china, key bank pointing out strong u.s. dollar and increased competition from china's huawei as primary concerns for apple's holiday quarter in that country. now despite all those headwinds, jpmorgan analysts this morning say they expect apple to guide towards top line growth this quarter after a full fiscal year of declining sales comps, they're much easier after last year's supply chain problems in china. carl, send things back over to you.

>> steve, we'll be on the lookout tonight and later in the week steve covac on apple after the break a long-time market bull, fundstrat cofounder tom lee what it might take for the market to get stronger into year end stay with us (♪♪) our therapists give their all each day. and while we're in the business of taking care of others, it's important to make sure our therapists know that with benefits from principal, they're taken care of too. (♪♪) ♪ is it possible to fall in love with your home... ...before you even step inside? ♪ discover the magnolia home james hardie collection. available now in siding colors, styles and textures. curated by joanna gaines. ♪ unnecessary action hero! ♪

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>> ftx founder sam bankman-fried back on the stand today after starting to tell his side of the story on friday. cate rooney live outside the courtroom with the latest. >> reporter: hey, sara, good morning. sam bankman-fried is back on the stand inside the courthouse behind me. more direct questioning expected from his attorneys today then we get the government's side, expected to start cross-examination as soon as this afternoon his lawyers have tried to

portray this image of a start-up that just grew too quickly, arguing that founder was acting in good faith and didn't have criminal intent. sbf testified about mistakes over at ftx acknowledging, quote, a lot of people got hurt in the collapse of the crypto exchange and saying his biggest mistake was not controlling risks. sbf claimed he didn't commit fraud or have criminal intent, key for them to prove here, try to shift the blame to other executives, saying he was too busy to keep tabs on his hedge fund, too busy to get a haircut even, and didn't have the time or energy for a relationship with caroline ellison, former girlfriend and ceo of the hedge fund who has testified against him. he said he saw no reason he couldn't use funds from his hedge fund to pay for things like celebrity endorsements, real estate, venture investments. prosecutors say those funds came from ftx customers. >> thank you talk soon. kate rooney.

as the market is off the opening highs, dow up 260. more on what's moving this morning with dominic chu. >> carl, most sectors in positive territory right now communication services is leading the way from a sector perspectivers but health care is the laggard in early action among some of the decliners there. align technology, the invisline maker off 10% as investors continue digesting weak guidance in prior quarter results and among the s&p biggest decliners today is revety. the life sciences and diagnostic equipment maker cut its full-year forecast and missed estimates. on the earnings call executives noted increased challenges from the company's pharma and biotech customers due to the ongoing macro economic pressures out there. revenue shares off 18%, sara i'll send things back down to you. >> all right dom, thank you all eyes on the treasury refunding this week. that's one of the big kris

catalysts. our next guest watching economic data which should be softish that sounds like fundstrat global adviser tom lee what is your level of conviction in the bull case for stocks to year end right now >> it's actually high. i know it's been a tough three months, brutal october, but i think stocks are getting washed out now and the effects of the jump in long-term rates is starting to bite, and i think we'll see it this week in the economic data. i think that's going to push sort of the fed to be patient, right, because this jump in rates in the past couple months is equal to four hikes, and that should get investors a little more constructive about how the fed reacts to incoming data. with positioning, economy okay but slowing and rates could stabilize or fall and the fed turning more dovish, i think it is a formula for - >> what about the leadership in this market. last week it wasn't like the big

mega cap tech earnings were awful, but the reactions were. >> that's right. i think the mood of investors has turned cautious, so they faded decent earnings. i don't think f.a.a.n.g.'s fundamentals are weaker. they're at the center of the ai secular story. f.a.a.n.g. leads into year end and also helps lift the s&p. >> is your view based on the idea that rates are going to start to come down, it's not going to be higher for longer, and therefore, perhaps that we aren't going to see a significant impact on earnings as a result of these higher rates over time? >> yes to an extent there was a great report by goldman sachs economists about what fair value is for the 10-year and used three models and came up with 3.8%. the 10-year at 5 is reflecting this uncertainty about inflation, how high the fed has to be. if the data softens we'll see investors say look, the fed %

reactio reaction function they're going to cut i think we're seeing the peakish points in the rates right now. >> doesn't the market transition to bad news being bad news >> yeah. i mean that's a bad quadrant to be in. you know, if it's -- if we're slowing, but it's consistent with soft landing, that's bad news is good news. if it's a sudden slowdown in economic activity because we just ran out of gasoline, that's actually bad news is bad news. i think right now it's open to interpretation, but to us it feels like we're tracking for a soft landing. >> the goldman desk takes a look at the dislocation within earnings, morgan stanley, google, verizon, like top five, you know, biggest under performances on a t-1 basis in several years. what do you think that's about >> i don't think it's inflated earnings expectations. i think the mood of the market has gotten cautious because of the geopolitical tensions.

i noticed over the weekend a conversation with a friend or family or client talks about what's going on in the middle east i don't know if someone wants to be adding risk even if they think the earnings were decent i think the mood is cautious of course as you know when positioning gets too bearish, that's when bad news becomes good news. >> i wanted to dig in to that for a moment on the geopolitical risk you would have thought it might have been more of a bullish factor for bonds if people are feeling so negatively about risk, and the equity impact suspect clear to me. war can be also very bullish and stimulative to certain industries in particular how do you think about all that? >> i think that's been a source of confusion i spoke to a couple fixed income clients over the weekend and they were saying that bond market is acting like the war is not -- is a limited war. that's why you're not seeing a flight to bonds. but the stock market, i think, is -- it's not trying to discount the defense spending issue. i think it's trying to discount,

is this leading to a conflict that could become, you know, much larger. and, you know, in that case, people are just changing risk premium. i think stocks are being hit while bonds haven't been hit you're right if it turns out that the war is a regional conflict, this is actually bullish for equities because stocks converge with bonds. >> okay. tom, thank you appreciate your updated views. tom lee from fundstrat. >> still ahead, decent results out of mcdonald's giving shares a nice boost still a big under performer on the year, of course. what one of the street's top restaurant analysts thinks about the stock from here. target's brian cornell at cnbc's evolve summit on thursday. time to register scan the qr code on your screen or go to cnbc.com/events for more on that ba aer bakckft are

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

to help you save money, and pay some of the costs medicare doesn't. depending on the medicare supplement plan you select, you could have no deductibles or copayments for doctor visits, hospital stays, emergency care, and more. you can keep the doctors you have now, ones you know and trust, with no referrals needed. plus, you can get medical care anywhere in the country, even when you're traveling! with humana, you get a competitive monthly premium, and personalized service, from a healthcare partner working to make healthcare simpler and easier for you. you can choose from a wide range of standardized plans. each one is designed to work seamlessly with medicare and help save you money! so how do you find the plan that's right for you? one that fits your needs and your budget? call humana now at the number on your screen for this free guide. it's just one of the ways that humana is making healthcare simpler. 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

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welcome back to "squawk on the street." mcdonald's with a beat on the top and bottom lines some strategic price hikes did fuel sales in the united states. our next guest says his most important stock call throughout his entire career remains mcdonald's, which he launched with a buy back when trading at $20 a share. david palmer, restaurant package food analyst has a buy rating on mcdonald's and price target of 315. he was named the number one institutional investor in the restaurant category. david, great to have you. >> thanks. >> we'll talk about the stock in a moment but sounds like the quarter was more resilient than you expected >> yeah. there was a lot of good here i mean they did high teens epps growth that is a much stronger than the street expected, ability 6 percentage stronger points of growth, 9% globally. the multiyear trends for the regions were strong, particularly the u.s. and the

developing markets the international operating -- operated market which is really the developed markets, that comp trend was a little slower, so a bit of a slowdown on a multiyear. that's something we'll have to keep an eye on clearly europe is dealing with a lot of energy headwinds and the company is talking about doing more value, but the competitive position of this company is extremely strong right now and that came through on the earnings call. >> all right it does sound like you think in order to meet the q4 comp estimate, but really you have to nail it in the next, what, eight weeks or so, right >> yeah. well in the u.s., for sure the street feels a little high there. we're at 3.5 the street at 4.5. the comp in october we think it's 1.5 to 2% it's light it's a lot lighter than the 8% that they just did for 3q. the reason the comparison were brutal in october, they have this crazy popular adult happy

meal last year and that caused them to slow down. the industry has slowed as well. so they're going to have to do something great towards the end of the year. i think they're going to be pushing hard later in the quarter so that should help the tone but we have to get used to moderating growth. they -- they had price increases, 10% price increases these days are going to be over. in '24 more moderate growth. the street is there, but that's something we have to navigate. >> david, the stock is still down about 12% over the last three months how much of that is just this fear over the glp-1s we've seen reflected in similar at least companies? >> yeah. glp-1s at most this could be a half a percent to traffic out there in the industry. other food companies that have had to answer to this are more than mcdonald's, said it's virtually nothing right now. right now we would think about 5

million people are on these drugs that our experts believe it could get to 15 million we're talking about tripling something modest right now in impact there's bigger fish to fry right now. there's the economic factors that are -- and the inflation factors. inflation is coming down that's going to mean less franchising for franchise business models. mcdonald's is in a great spot competitively to continue to gain share both u.s. and important markets like europe. >> david, i'm trying to figure out how old you are because i'm trying to figure out the last time mcdonald's stock was at $20. looks like you initiated some time in maybe the early 2000s. we'll leave it there on the price, you have a significantly higher price target what gets us there is it aweaker economic environment? what entices investors at this type of valuation where the stock is still trading near its

highs? >> it should be in a great spot to gain share, to do something like 4% plus comps into '24. that makes this a better staple. this is an inflation-protected staple, a company with pricing power that can also feature value while getting that pricing. these cycles can cause this. wage prices are going up we talked about mcdonald's talk about the minimum wane increases going on in california that's good news for mcdonald's and will help their demand as well bottom line is this deserves a premium pe to growth ratio, which should make this a good upside name. not great but good in a tough market >> yeah, that california discussion they talked about maybe taking some share out as a result of those wage hikes david, thanks for that congratulations as always. david palmer at evercore. >> thanks. still ahead at 11:00 a.m. hourof "squawk on the street,"

the ceo of on semi as shares slump. we'll break down the numbers with the head of the company and whether he's seeing a bottom for chip demand. big exposure to the auto sector. dow up 291 azy. she has no idea she's sitting on a goldmine. well she doesn't know that if she owns a life insurance policy of $100,000 or more she can sell all or part of it to coventry for cash. even a term policy. even a term policy? even a term policy! find out if you're sitting on a goldmine. call coventry direct today at the number on your screen, or visit coventrydirect.com.

the biden administration unveiling the u.s. government's first ever a.i. executive order. eamon javers has more on what that means good morning. >> reporter: good morning, carl. it is a pretty big deal. this is an extraordinary wide-ranging executive order directing just about every federal agency to regulate the growth of a.i. to protect the public, the economy, national security in here among the safety measures listed, biden will require some developers to share their safety test results with the u.s. government the national institutes of standards and technology will set what they're calling regular rigorous standards for extensive red team testing to ensure safety before public release of these a.i. products. agencies that do biotech projects will be required to develop strong new standards for biological synthesis screening at the department of commerce

they'll develop guidance for content authentication and watermarkings so verify content. and the administration says it will use a.i. tools to find and fix vulnerabilities in critical software it will provide guidance to lappedlords and federal contractors to keep a.i. algorithms to be used to worsen discrimination, which is one of the unintended consequences they're worried about here in a nod to concerns that a.i. could be on the brink of eliminating millions of jobs, biden is directing his administration to write a report on a.i.'s potential labor market impacts and a study and identify option for strengthening federal support for workers facing labor disruptions that result from a.i., guys back over to you >> eamon, thank you. keep us posted eamon javers with another a.i. executive order. quick programming note before we go, we've got an exclusive interview tomorrow with the executive chairman of shein, donald tang and vice

chairman marcelo claure, the first interview on tv since he took over that second in demand. a lot to talk about. >> such as >> the company is growing very quickly. they're taking a lot of shares, especially in the u.s. they face all sorts of criticisms that most of the factory production is in china, even if they say they're not necessarily a chinese company. they're making deals, too. they signed a big licensing deal with forever 21, buying licensing from a british company. so, they're continuing to expand globally. >> got it. we've got the broader market is up but giving up some gains they've seen so far tdiinrang a lot more on "squawk on the street." how's the chicken? the prawns are delicious. oh, i have a shellfish allergy. one prawn. very good.

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your sleep number setting. and now save up to $500 on our new sleep number smart beds. sleep next level. shop for a limited time only at sleep number. good monday morning. i'm carl quintanilla on the floor with sara eisen. citi remains bullish on the year-end outlook for the s&p price target, 4600 we'll check in with u.s. equity strategist scott kronert coming up. uaw and gm strike a tentative deal but the damage has already been done, especially in the chip sector.