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.

we'll look at things with the ceo of on semi, as that stock sinks. why financials and oil companies are significantly undervalued in today's market. we'll talk about his stocks to target later on. first up on stocks, the s&p 500 up a little more than 0.5% we were up a full percent around the open the dow is up 300 points and the nasdaq climbing back after last weeks. let's bring in senior markets commentator mike santoli you're watching the consumer discretionary sector what's moving here >> specifically, if you contrast how well the economic numbers have been coming in, and everything we heard last week about pce and the total spending levels, and then you look at how the market's reacted to it, it's so clear that the market is at least fearful that we're emptying the tank on the consumer the economic surprise index has been riding high for months. that is large part due to the consumer you look at the equal-weight

consumer discretionary index in the last three months, it's completely the most rate sensitive move you're going to see. it's very much like this morning's option, too. people see there's a lot of twitchiness around every basis point that longer term yields go up at some point get ee qquiequili, especially if you get a rally in bonds. to me, it seems if you want to argue the consumer's going to hang in there, then the market's giving you a lot to do, because you're going to look at these stocks i'm not saying they priced in a recession. i don't think investors play it cool through the actual negative gdp period stock gets cheaper in a recession. you priced in definitely a lot of earnings hiccups on the consumer. >> it's not like oil and gas prices have gone to the moon employment is solid. we'll see about friday. >> anything rate sensitive that, you know, is related to the consumer >> a boat, a house - >> if you carry a credit card balance, all of that stuff

i think it's also because we have this entrenched rate cycle psychology that was going to be there anyway, even if yields didn't start to fly. it was going to be there because the fed's almost done. we've had this weird cycle already below 4% on unemployment, how much stronger can we get if you have that sense we're constantly looking around the corner for the erosion of activity, i think the instinct is, any time you see something doesn't look quite right or rates move fast, have you to price that in. >> the excess savings being drawn down and weave seen the savings rate down to the lowest of the year and real incomes are not rising you factor in inflation. potential sources of weakness but you say the market is set up for it. >> i think the market has taken a lot of account for it. i don't know it's set up in the sense if we start getting negative numbers in terms of retail sales and unemployment goes up, i don't think we're quite there. it's very difficult to tell a growth scare that goes away, that turns out it was an overshoot from the market is

viewing the onset of a consumer recession. >> which goes against the whole idea that bonds are only selling off because of the good growth if that were true, you would see -- >> i don't think bonds are only selling off for any one reason it's like this huge cocktail there's no doubt that if the economy was 4.9 last quarter, then 3.7 on the ten-year was the wrong place for it i think there can be a lot of things going on at once. >> thanks, treasury secretary yellen our next guest sticking with one of the boast beaten up sector in the market, that is banks. joining us of the oakmark select fund, alex fitch great to have you back >> thanks for having me. >> what do you make of how banks have been treated so far in earnings season? >> well, i think more broadly investors have really internalized the lessons of 2008 and 2020, which is that banks meaningfully underperform in any

economic downturn. all the recession fears, i think, investors -- a lot of investors are unwilling to own banks today. and the problem we have with that analysis is that it ignores the price you're paying. if you looked just before '08 or just before 2020, banks were trading at -- the s&p banks were trading at around 12 times earnings you fast forward to today, the s&p 500 banks are around seven times earnings the market's already discounting the banks by about the same amount as they typically underperform in a recession. that's not to say they can't go down in the recession, but it might mean very different things for the point-to-point returns from here. >> right are you sensing best value in regionals, in money centers, in wealth management, investment banking? >> it's a mix. one of our largest holdings in the oakmark select fund is first citizens that bought silicon valley's assets out of

rereceivership earlier this year it's an excellent bank, very well managed doesn't get the attention it deserves for its track record and its size, being a top 20 institution today. the stock's up more than 150% from the lows this spring. in our view, that's fully justified by the growth and the earnings power we've seen since then this company was going to earn around $70 per share before buying silicon valley. now it's on pace to earn around $200 per share next year at around 1400 for the stock price, we're still paying just seven times earnings it's companies like that, the large banks and some regionals where we have faith in the deposit franchise and see a low multiple. >> we were talking last hour with anthony of sofi, if the fed goes even further in december, it's not necessarily priced in, but just the size and scope of the unrealized losses on the

balance sheet and potential more deposit pressure we could see in some of these regionals if the fed keeps raising. >>. >> it makes the deposit franchise that much more important. our view on banking has always been one of the most important competitive advantages you can have is a strong deposit franchise. you want customers to be banking with you for a reason other than price. if you look at the really large banks today, they are incredibly diversified, commercial accounts, retail accounts, generally small sizes, fdic insured. they're sticky franchises. that's why they were able to step in earlier this spring and actually provide a form of a bailout rather than being the ones that needed to be bailed out. the banks with the good deposit franchises, i think, we believe should be able to weather whatever storms come >> as for energy and oil, alex, so many cool cross-currents. obviously, there's geopolitics, we're watching demand levels, some m&a activity in the space finally. what do you like >> well, the space is

interesting in general you know, you're by and large getting double digit free cash flow most of that is coming back to shareholders these are companies still growing their underlying businesses, high single digit or mid-single digit rates i think investors, like the banks, may have learned the wrong lesson from recent history. you've had this 10, 15-year period where any time there were supply problems in the market, growth from u.s. shale would bail us out. you had persistent growth in u.s. shale production. it's much more difficult for that to be the case today. the original growth drivers are both producing much less than they did at peak the permian running into issues. you might not have that available supply you had in the past it might mean very different

things for how prices look over the next decade. >> yeah. not to mention some of the u-turns in policy we've seen in certain parts of the country extending that window of peak demand if we get there good stuff, both on banks and oil. talk soon. thanks >> thanks for having me. still to come this morning, oppenheimer cutting its apple price target at earnings and the company's event tonight. we'll talk to the analyst behind that call. on semi, tumbling after results. the ceo joins us. plus, sam bankman-fried back on the stand in his $8 billion fraud trial. we'll go outside the crtuse ouho with the latest when "squawk on the street" comes back and stab. and deliver solutions that meet complex needs. massmutual. partnering with financial professionals, benefits brokers, and institutions.

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wti crude oil down 3% right now. brings us to the latest in the middle east.

israeli troops are on the ground in gaza. our jay gray is in tel aviv with the latest jay? >> reporter: hey there, sara they are expanding their advances in gaza as well we know that troops are on the ground slowly moving in increments into gaza we know that they will set up a defensive line and at that point work outward the idf saying over the last 24 hours more than 600 targets have been hit, including ammunition centers, dozens of tank installations. they are still focused on underground tunnels in the areas where they can strike as well. they're getting help from air strikes. they will target an area air strikes will move in, clear the way and then they take another step forward and they're getting some help from the israeli navy off the coast, which is also made some significant strikes, according to the idf we need to talk about the hostage situation. they have upped the numbers, the

idf, to 311 hostages, they say, are being held in gaza they did release a video this evening here in israel three of the hostages. we're not going to show it to you. we don't want to reveal their identities frankly, we have no idea what this -- how this video was made. the situation surrounding this video. we don't know if they are reading from a script from hamas. we don't know the duress they were under during the filming, what was going on behind the camera, before the filming it does, in general terms, talk about the attacks of october 7th and frustration. there's one woman in the video who is obviously angry with prime minister benjamin netanyahu and there is some talk and some thoughts about trading the hostages currently being held for the palestinians in jails in israel. again, we don't know the background in all of this. we don't know the circumstances

surrounding this so, i want to make sure we make that clear benjamin netanyahu's office has released just within the last few minutes a response to that video, calling it cruel, psychological propaganda and he says, we hug the families we will do everything to return all the kidnapped and missing people home. so, that's the latest as far as the hostages are concerned carl, sara >> what do we know, jay, about any potential u.s. involvement right now? i think the pentagon said several coalition forces were attacked across the middle east, iraq, syria and other places >> reporter: yeah, syria has been a sticking point. we know we have seen attacks from syria on u.s. troops and responses by u.s. fighters we are moving more troops into the region, including a marine quick deploy team, which is set to be here in the next couple of days there's a big concern about this spreading. guys, i was just three miles or so from the lebanon border over

the weekend. there was constant trades of mortar fire, of jets flying overhead there was a lot of activity with hezbollah fighters and israeli forces along the lebanon border. so, this concern about the situation growing is one, i think, that has become very real and a lot of people very concerned about right now. >> understandably so, jay. thanks so much jay gray in tel aviv tonight. a price target cut at oppenheimer. takes apple to $200, lowers estimates for '24. comes ahead of tonight's mac event and earnings later in the week joining us is the analyst behind that call, oppenheimer's martin yang thanks for the time. i guess i'm wondering, what's the locust of the activity you're seeing? is it about china demand and what some are calling the resurgence of huawei

>> china demand concern is one of the reasons we cut our forecast the other are macro-related factors. we're not seeing consumer sentiment coming back, improving in major markets china included also we're seeing a worsening fx headwinds into the fourth quarter due to those geopolitical events. so, all things put together, we believe the iphone as well as mac and ipad shipments going forward in the near term, next 12 months, will be a little weaker than what we expected. >> what's your read on demand in europe and north america >> north america and europe seems to be pretty healthy we're still seeing robust net adds from the carriers those are -- those are the market where iphone has the most stable share >> but aren't some of those concerns already reflected in the price? the stock is down almost 50%

from the 52-week highs leading into this report >> yeah, definitely we're seeing those -- particularly concerns over china reflected in the stock price. we're adjusting our price target and estimates to that. maybe at a slightly later pace than what the stock is reflecting. >> i wonder what you make about their pace of innovation there's been a lot of reporting whether it's true or not the degree to which a.i. caught them by surprise, at least the a.i. craze, and they didn't take advantage early enough compared to microsoft google. also some setbacks regarding modem chips and their relationship with qualcomm do you find them behind the eight ball >> not necessarily i think we're still at an early stage of mass consumer adoption of a.i., running natively on our handheld devices apple is definitely on paper seems to be later as they go to

market with a consumer-facing app relative to chatgpt. but i don't think apple is going to lose -- without any competing devices on the market. >> what about the event today, the scary fast event, which our steve kovach previewed as potentially relating to the semiconnecter -- or the chip production, the fast chip apple has in the works how much of that fits into the thesis to buy the stock or not >> i think it will fit into very long-term thesis where apple has native advantage of software integration. and i think through this -- tonight's event, one thing about tonight's event is it is held at 8:00 p.m. eastern time, which is quite different from an historical event typically held around early afternoon this may speak to us how those devices are targeting and what

are the key selling points maybe there will be a bigger consumer-facing selling point regarding gaming and media consumer and media editing i think those are really key points we're following especially the in-house chip and how that presents advantage over other less integrated consumer hardware companies. >> yeah, prime time -- east coast prime time definitely getting some people's attention tonight. we'll see what they bring. martin, thanks martin yang at oppenheimer . citigroup staying bullish on the market saying we could see an 11% rally he'll tell us why. how the uaw strike is weighing on semi stocks. we'll talk to on semi about that when "squawk on the street" returns.

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mcdonald's investors loving it this morning after beat across the board revenue up 14 as price hikes do boost domestic sales comps grew nearly 9% around the world. more than 8% in the united states ceo said the macro is unfolding in line with company expectations shares up almost 2%, although slightly negative for the full year i think down about a percent and a half a lot on the heels about gop1s. >> you started to see a sharp

drop in the last month on so. european market seeing a strong start to the week travel stocks leading the gains. europe is still facing this uphill battle. the stoxx 600 on course for roughly 4% dip in the month of october. europe yaes biggest bank by assets is taking a hit hsbc seeing a massive 235% jump in post-tax profit in the third quarter but that number fell short of investor expectations the stock losing some early morning gains. goer mane also in the spotlight, struggling to grow gdp beats investor expectations for the third quarter but still shrinking, raising the risk that europe's largest economy is headed for a recession overnight the big news will be bank of japan. the japanese ten-year bond yield is near an 11-year high. there was news this morning from the nikkei out of japan, the news leaking that they could be looking at raising the band or increasing the band they let the

ten-year trade in. it's bond bearish. the currency, which has been weak, is strengthening on the back of that news. i think the biggest question will be, is that already baked into the market, a market that influences the u.s. rate market as well? or is it going to prove more bond bearish for u.s. treasuries >> we'll see dollar index back below 106 this morning. a couple hours into trading, let's get post to post with bob pisani. >> we're up but there's been an enormous amount of technical damage it's not that third quarter earnings have been terrible. they haven't been. the market's reaction to them, whether it's the body language of the way the reports are going or the guidance it's provided from the earnings calls, the stocks have generally reacted negatively to the earnings reports. that's really what's going on. so, i'll show you a couple examples the drug companies have been horrible the responses to their earnings reports.

johnson & johnson was 156. they reported a couple weeks ago. a new low on friday. we hit 146 we went from 156 to 146. and they're not the only one lilly and pfizer both saw lower earnings estimates merck had their numbers cut, fourth quarter numbers cut as well so, the drug companies have not had a very good response at all to their earnings. here's home depot. again, this happens a while ago. home depot earnings came out a while ago in august. it was 330 or so when the earnings came out. look at 278 right now. hit a 52-week low on friday. so did johnson & johnson we're seeing a lot of responses just like this in the banks, morgan stanley, citigroup, they all had numbers out. it wasn't terrible it was 77 when it reported for morgan stanley now it's 70 on friday. so that's a new low. citigroup, new low morgan stanley new low on friday american express -- no, here's

morgan stanley, though i was just talking about them. that was a new low on friday here $70. a little better. fractionally today american express, here it is right next to it 142 today. their earnings came out on the 20th 52-week low on friday. and they talked about the consumer being strong. but the market is acting like the consumer is not that strong. they're selling off american express, even though they had a decent earnings report we talked about some of the other transports u.p.s. was at a new low as well. that also went essentially straight down. it's pretty basic here the response to the -- the earnings themselves have not been terrible. either the body language or commentary on the earnings calls have caused a number of downgrades or reductions to the fourth quarter earnings estimates. that's causing much of the selloff in the markets right now. we'll talk more about how we're looking in the second half of earnings season in the next day

or so. not good so far. guys, back to you. >> a lot of uncertainty in the macro economic front commentary from earnings. thank you, bob still to come, citigroup's u.s. equities strategist scott chronert on the parts that keep him up at night. and on semi shares lower more than half of its revenue tied to autos. what's the long-term outlook we'll talk to the ceo next i.

cornell university has sent extra police to a jewish center on campus after threatening statements were posted on a discussion board yesterday the president described them as horrendous, anti-semitic messages, threatening violence against the school's jewish community. the school in central new york says it also notified the fbi of a potential hate crime. police forces across maine were alerted just last month to veiled threats made by the u.s. army reservist who later carried out the worst mass shooting in the state's history. they told the associated press that statewide alerts were sent out in mid-september, but after weeks of increased patrols at his base and a visit to his home, there was no sign of the man and police just moved on. fifa banned the former soccer federation president for three years for his conduct at the world cup. where he forcibly kissed a female player on the lips at their trophy ceremony.

he's also under criminal investigation in madrid. he has denied any wrongdoing carl >> thanks. contessa brewer. taking a look at some automakers this morning after gm did reach a tentative with the uaw. details of that deal have yet to be announced it follows agreements with stellantis over the weekend. possibly bringing an end to the strike that has done some serious damage to automakers gm and ford shares down nearly 20% since the beginning of those walkouts. a number of chip stocks getting hit hard since the beginning of the auto strikes. kristina partsinevelos has more on some of those names with exposure >> a lot of these chipmakers have been tight-lipped on the impact of the auto strike but the stock to some of the most exposed companies say otherwise. say the smh, a general barometer for the chip sector. down 8% since the strike was first announced in mid-september. it's those names with the most exposure to auto that are the hardest hit like silicon carbide

makers down 36%. st electronics, on semi down 20%. onsemi hosted a call this morning and blame weak q4 outlook on europe. you have analog devices ceo that was more direct on their earnings call. they said, quote, the effect on our business have been very dim diminmous. texas instrument and intel both actually agreed recently in the last week, auto demand remains pretty resilient, and so many of these analog chip names across the space used in autos are down double digits. texas instruments hit a 52-week low. could these names be unfairly punished because of the uaw strike u of a believes so saying they are unlikely to see impact to

the strike many have yet to report their earnings maybe we'll get further details about the impact, if there's any. >> thank you very much you just set it up perfectly on semi, one of those chip companies with exposure to the sector, 53% of revenue comes from the auto segment. right now the stock's on pace for its worst day since march of 2020 as q4 guidance disappoints. let's bring in on semi ceo hassane el khoury. thank you for joining us is the downbeat in guidance related to the auto strike in any way? >> thank you for having me no, the down view we've had for the q4 guidance is not really related to the uaw, although we don't see the impact directly from the uaw obviously, time will tell, i think you mentioned earlier, the design cycle, the latency of it, but there's no district impact we've seen from the uaw, the commentary we've this is more of a broader view of the

automotive. >> talk us through that broader view and why it came as such a surprise to wall street. >> yeah. we've always talked about small pockets of inventory that everybody has really talked about from a periphery couple that with high interest rates are impacting now the end demand it's going to take longer to bleed that inventory you know, we thought the bleeding of the inventory will happen in a shortened phase. with demand slowing, given the high interest rates, we see that inventory lasting longer we're taking a very cautious approach of not making the problem worse by shipping above in demand, so we're taking what we can control, which is what we ship to the market, until we see a more favorable inventory and really demand environment for us to pick back up. >> it's coming on the same day where panasonic cuts their domestic battery production forecast they cite weaker demand of some

tesla models like the s and the x. to what degree is this an ev story? >> so, ev story, obviously, there is some impact from ev we've had that in our q4 guide, specifically on silicon carbide outlook. one thing i want to touch on, the reduction -- or outlook for silicon carbide doesn't mean evs are going down or silicon carbide revenue specifically for us is going down it's actually the opposite even in weaker guide q4, silicon carbide is still going up, which is strength in ev. we highlighted on the call in 2024 silicon carbide is still going to grow about 2x the ev market, which is also growing, you know, depending on the reports you look at, between 30% and 40%. for us, silicon carbide is going to be 2x that market strength in ev is still there. we're not managing our ev exposure or our ev-related investment on a quarter-to-quarter basis we look at it from a long-term

view and long term is still very bullish because it is a mega trend. >> that's sort of what i was going to ask that your case has been this is a secular growth story when it comes to evs, the industries you're in and you have a market-leading position in silicon carbide. how do we square that with some of the now cyclical concerns and the tougher macro economic environment you point to today >> yeah. the growth is still there. again, it depends what you believe or you believed the growth for ev was going to be versus what it is now given the softer demand. but that doesn't mean that demand is going down that's the distinction i want to really make sure everybody understands. ev is going to increase. the number of ev percent of evs sold, a total percent of vehicles made, is going to increase again next year so, the trend, the mega trend we talk about that we're investing in, and the industry is investing in, remains intact

it may be a different rate in the short term than we would like to see. nevertheless, it is growth we are still investing in that growth we'll see the result of that investment with us going 2x silicon carbide, 2x to ev. >> one of the concerns last week with texas instruments' earnings was inventory moving in the wrong direction. can you talk about what you're seeing from your point of view on inventory >> part of the approach, the cautious approach we've had, is controlling which we can, which is our own execution that relates specifically to inventory. our inventory clicked up if you break it down between strategic, you know, building for fab transfers. we've been on transformation for fab footprint. our base inventory, the inventory directly tied to the day-to-day demand or quarterly demand is actually down. we've been managing that very well it's going in the right direction. we also talked on the call with our cautious outlook for our

business we're going to take utilization or our fab operation slightly down from where it is today to even manage inventory more down and relief a little on the balance sheet. look, if the environment gets better than what we think it will be today, we can turn it back on and all of that turns into tailwinds for us. what we did not want to do is run the business with a very favorable outlook and then have the inventory go the other way if the outlook doesn't materialize. we're taking a very different approach, a very cautious approach that i think will be very well received in the long run. >> what about china, that's been a big growth market you've talked about and emphasized. what are you seeing there specifically related to auto demand >> there's still strength. a lot of the demand in china for us is electric vehicles. electric vehicles in china is still very healthy we talked on the call, we have engagement in design and long-term supply agreements with

four of the top five chinese ev vendors. we are what we call market share gainer, we're ramping. so any increase in demand in china is favorable for us. i know there's some hesitation about is the market in china ev going to be as strong as everybody believes from where on semi sits, this is going to an incremental positive for us because we're coming from a very small position. so any increase in demand is favorable to our overall demand. we see it very favorably. >> i have to ask you about the stock price. it's come back a little bit but down more than 18% in raeshgz to some of the guidance you just gave on the tougher environment, the caution, the inventories is the market overreacting how are your investor conversations going? >> incan-vestor conversations, long-term investors are bullish on the stock our story is not a quarter story. it's not a two-quarter story

it's a long-term story we've created value. our position in how we're managing the business today is showing resilience against a softening or uncertain macro back drop. long investors, where we put the value, are seeing through that and that's a great opportunity for them to capitalize on the reaction today but i do see it as a short-term reaction we'll recover and i think we are very well positioned as 2024 comes around. >> we certainly appreciate you joining us to talk through the reaction and some of what you're saying today good to see you, hassane el khoury >> you, too. still to come, ftx founder sam bankman-fried is back on the stand. we're live at the uroucothse with the very latest after this quick break. i stand by these promises. as a fiduciary, i promise to be the financial steward that you and your family need. i promise to put your long-term financial well-being

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ftx founder sam bankman-fried is back on the

stand testifying in his own fraud trial. kate rooney is outside the courthouse in manhattan with the very latest in our "techcheck." >> reporter: good morning. just behind me they started with the defense. they just started cross-examination from the government's side. that kicked off in the last ten minutes or so. that's going to likely come with much tougher questions and some curveballs for sam bankman-fried on the stand this morning we did start to hear about the defendant's final days running ftx he seemed more calm, speaking more slowly. he seems more prepared after the weekend. the prosecutor argues the public statements he made at the time were deceptive and misled customers. bankman-fried saying he truly believed the crypto company was solvent. ahead of the bankruptcy he tweeted at one point, ftx is fine assets are fine. and bankman-fried says he believed that to be true at the time he also told the jury he did not know ftx had an $8 billion hole in its balance sheet as he put it, my view was that

the exchange was okay and there were no holes in the assets. he also said he thought ftx was solvent when he went to the middle east to raise money so far his lawyers have tried to portray this whole story as an image of a startup that grew too quickly while arguing the founder was acting in good faith and didn't have criminal intent. and also testified about some mistakes at ftx acknowledging that a lot of people got hurt in the collapse of his crypto exchange saying his biggest mistake was not controlling risks, but he's also claimed he did not commit fraud, did not have criminal intent he's tried to shift the blame to other executives saying he was too busy to keep tabs on his hedge fund he blamed his former girlfriend, carolyn ellison. she ran that hedge fund. he said she didn't protect to the downside he also said he saw no reason at the time why he could not use funds from his hedge fund to pay for things like celebrity endorsements, real estate venture investments. he said he thought that was

okay prosecutors say those funds actually were coming from ftx. we'll likely get a lot more this it afternoon back to you. >> kate, any sense so far on how the jury's reacting to him >> reporter: so, they seem really dialed in they're paying close attention to things like his body language and really legal experts i've been talking to say it's just c he's saying and his mannerisms up there today is likely going to be a big shift. they haven't given much away they've been taking notes, almost studio listening to this. they haven't given anything away in terms of the tone or what they're thinking today will be a big test for him. his mannerisms when we got a sample of this last week, the jury had to leave the room, cross-examination started with this hearing within a hearing where the jury was gone. he did not hold up nearly as well as he did when the defense was questioning him. he was stalling.

the judge multiple times said, answer the question, be clear. so, if it's anything like that, the jury will likely take that into consideration in terms of his trustworthiness. it's very much his word versus the top executives we've already heard from a lot of the evidence was actually deleted they had this auto delete feature. evidence was deleted, and they had an auto delete feature >> thank you very much citi group's u.s. equity, scott chronert is up next. stay with us

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plenty of new commentary from wall street on the end of year outlook tpfor the s&p 500, and joining us is scott chronert your target is 4,600 on the s&p, scott, so why do you remain constructive as the risks pile up >> we are getting the fundamental response we were expecting with the q3 earnings, and the surprise element, what we think it will translate into is an earnings lift in terms of the full '23 year end numbers, and it sets the stage for what we think will be a 2024 earning picture, and in terms of issues here, i think we are confronting clearly the geopolitical situation in the middle east

along with high interest rates, and those are shorter term roadblocks, and we think from an intermediate term perspective, it's set for a good next year. >> do bond yields have to stop going up for you to stay bullish? >> yeah, the process of evaluation between stocks and bonds and it's an issue we have been highlighting for several months, and the latest 100 basis point move is clouding the picture, and we think it's keeping money on the sidelines in short terms fixed income, and at some point it should be a source of buying power for u.s. equities but not quite yet >> you had some great notes on friday, just looking at how strong the data has been in the last couple of months, whether that's payroll or retail sales, and you pushed up to q2? >> yeah, a mild recession going

for a couple quarters, and that is factored into our earnings outlook for next year as well. >> does it mean the pushback for any rate cuts? >> what it does is keep that rate overhang in the way, if you will, because, yeah, the house view is you are looking at mid year before you see relief from the fed, and more importantly is what is happening with rates, you can look at that in one of two ways one is that it makes rates look somewhat attractive from this point. on the other hand, it does create an ongoing overhang that keeps the pressure on equities as fixed income is perceived as the more attractive intermediate term asset allocation spot to be right now. >> what about the guidance we are getting from earnings? i know the third quarter seems to be decent but across industries, scott, we are seeing concerns about the macro

economic outlook >> yeah, i think that's a fair point. with rates where they are and geopolitics as they are, no surprise you are seeing c suites keeping it close to the vest in terms of the out looks, and this is an issue we have been confronting for the better part of a year and it keeps the lid on expectations, and when we get through the actuals, we will get through q3 and then look at q4 actuals, and i think we will see something decent in terms of the surprise element that will keep the tail wwind to our out look r next year. >> just this week we got lot of big reports coming out from the jobs report to the fed decision and the bank of japan and england, and what do you think is key for equity investors this week to maintain some of your

optimism here? >> i think we want to see ten-year yields hold at current levels and not move lower, so i will focus on the ten-year versus fed funds because i think that's what is coming into play a little more in terms of this equity bond math right now i really do think it's relief on the ten-year, which basically will come back to, you know, increased and ongoing confidence that the fed is most of the way through their hawkish positioning and we can begin to talk about ongoing improvement in the inflation picture as we head into 2024 that's going to be key in our view >> agree thank you, scott all the action takes off tonight when we hear from the bank of japan, and their yield curve is higher and it has been weighing on u.s. treasuries and bonds everywhere, pushing the yields up >> one thing we have not talked much about is the journal piece,

just looking at the affect of the long-term rate rises, what they are worth in the way of rate hikes in his view, and in the view of some that he talked to, it could take care of the last hike that was in some of the projections. >> i have seen commentary that the move in ten-year yields that we have seen lately is good for 25 or even a 50-basis point hike, and it ultimately should slow the economy you may wonder why that has not happened so far with the tightening, but there's a lagged effect and the country was sitting on a lot of stimulus and continues to pump out a lot of the stimulus, and it comes from instead of the consumer side the industrial side. that's a question, can that preserve the demand for jobs which keeps the consumer healthy? we just don't know >> certainly has not done much for materials or industrials in

terms of the stock price we will see. we moved past the bank part of earnings, sort of, and we have five or seven mega tech caps out of the way, and -- >> apple is later in the week as well i think as far as earnings, you know, the read continues to be okay, but then it's the guidance that is a little more worry some in some of the cautious commentary >> let's get to the judge. welcome to the "halftime report." i am scott wapner. the fed meeting, apple earnings and jobs reports all on deck likely to move markets with me, joe terranova, steve weiss and jim lebenthal. checking the markets, i said we have a bounce and we do across the board. there you go a pretty good day on this monday which is the most important, joe, fed decision, apple earnings, jobs repor