good thursday morning. wome welcome to another hour of "squawk on the street." today elon musk's message to advertisers. is this the end of the beginning for x? a look at how everyday consumers and businesses are thinking about spending. the ceos of kroger and hpe are with us. finally, the ceo of service now, just named one of the top companies for career growth. shares are up 75% this year. we'll talk to him. market's holding some gains. s&p is up only a couple points. the dow up 300 benefiting from

some big names like a salesforce. yields were cooperating until we got some hottish numbers, particularly out of chicago pmi. and that elevated yields a little bit, but still holding onto gains, not quite for the week. we'll see if we can -- >> was that auto production related on -- because everything else pointed to economy slowing down a bit, jobless claims, continuing claims. and inflation, more importantly, like core cpi, moderating again back down to 2021 levels, especially on core. that's important. the indices are set to close out november with sizeable gains ending a three-month losing streak. month-to-date, nasdaq is up 10%. s&p is up 8%. so is the do you dow, which hit the highest level of the year earlier today. the move on the back of the economic data painting a goldilocks picture, with most predicting the fed is done raising interest rates. let's get to the outlook to year-end with andrew

hollenhorst. goldilocks, is that an overused word, soft landing, is that what the data is telling us? >> it's what the data are telling us right now, but i think that's what we have to be careful with. goldilocks is a pretty short story and that may end up being true in the data also. right now activity is moderang, ination cooling. as we get into next year, it may be more complicated. more sticky inflation and slower growing. >> why do you say sticky inflatio >> we have seen goods inflation that's come down significantly. you are seeing some stickiness in services -- you didn't see it today. >> super core was okay today, right? >> super core was okay. that'she issue, we'll have months where these readings look better and months where they look worse. it's more volatile inflation also. that's what i woulworry about next year. >> are you in the camp we get

to, say, target by '25? >> we may be at target by '25. if we're at target by '25, it's probably a scenario where we've gone through recession. i worry about running higher inflation. again, particularly in the services sector. and in housing as well. that's another area where we stilsee housing prices rising quitrapidly. >> do you think theyl have another rate hike? >> all the rhetoric has gone the other way. i think that's part of the reason treasy yields are lower. the fed signaling they're probably done with rate hikes. >> are you thiing the fed will wait to cut? >> i think the cut will depend on what happens with the activity data more than what happens with the inflation data. inflation willrobably be sticky enough to keep the fed from cutting just because ination has come down. if we run down perfectly,

smoothly, core inflation, maybe they could get to the point late next year where they're confident that, okay, they can be cutting due to inflation coming down. more likely they'll be waiting for activity data to weaken. >> whereou see job growth bottoming out next year? >> we think around the middle of next year we'll probably see negative readings on job growth. still very early but we are seeing continuing jobless claims. you saw it ain this morning. the unemployment rate moving up. seeing some early signs of slowing. having said that, we'll get a jobs report next week and it will probably be a pretty strong i don't think we'll see at in the near term but around the middle of next year. >> "the times" had a great look looking at corporate debt interest rates, so many treasuries locked in decent rates for now. those payments have rolled over. we have the share of households that are mortgage-free at an all-time high. do we have -- i think b of a

called it partial rate immunity from what's happened? >> definitely, definitely a lot of resiliency to higher rates because people locked in lower rates. individuals through mortgages, corporates through borrowing longer term. now, there is a divergence there, a differential between those households who have a 30-year fixed rate mortgage and if you're renting, you're not benefiting from low mortgage rates. if you think about smaller firms, that's where we see credit conditions tightening. a lot ofhose firms weren't able to lock in longer term, lower interest rates. that's where i would look for signs of weakness. >> it's all about the consumer. it makes sense the excess savings are running out, consumers are feeling the impact of inflation and higher rates, and yet we get new spending numbers out around black friday and cyber monday and they're better than expected. >> that's what keeps happening. i think the unemployment rate is low, people are working, people have jobs. household net worth is actually

increased over the pandemic period and through today. that's giving consumers a lot of confidence to go out and spend. that's part of probably what keeps inflation sticky. >> does it last through next year? >> i think that's what's going to turn next year. we've been resilient f a long time. credit card delinquencies you see coming up. >> finally you're u.s.-centric, but can you comment on how europe is doing in terms of managing inflation? >> we're seeing both in europe and the u.s., the opposite of what we saw last year. the inflation data keeps coming in a littlfter that means the ecb could be cutting next year as well. the big question nows, who's going to cut first, the fed or the ecb? >> who is it? >> we're pricing in an april ecb cut for the first time. >> they're priced almost the same. >> april, may? >> yeah. you could imagine, though, the activity data in the u.s., to your point, sara, holding up a little longer, a little more resilient. let's see how that all plays out. >> but yet the ecb cares more about inflation.

>> single mandate. >> than the fed. that's a tossup. >> yeah, it -- >> i think neith want to be first. >> i think that's probably true. >> andrew, thank you. >> thank you. >> we'll probably talk to you before either one cuts. in the meantime, let's turn to energy. oil at the lows of the day as opec plus oil producers meet. brian sullivan has had an eventful morning, week, year. >> a lot going on. >> yes. what do we make of this latest round? >> there's nothing to make yet. there's been headlines out there that opec has agreed to a cut of 1 million barrels a day. maybe. but the meeting is still going on. there's three meetings oday, opec -- they're all virtual. we do teams meetings all day long. you had 100 for your documentary, every day, which was excellent, by the way. >> thank you. >> opec, the technical meeting and the opec plus meeting. they're still going on. reports are another million barrels a day but the saudis don't want to eat that

themselves. the reason oil is down is because the longer this meeting goes on, carl, it's going to be perceived they can't come to some kind of a conclusion with a cut. there's one huge headline we have had, and brazil is going to join opec plus. if you don't know, brazil was 2.9 million barrels a day two years ago. they're at 3.5, probably going to 3.7. you throw in a little guyana, on top of that, and you have a lot of extra oil adding to the market. brazil joining opec plus. should take their daily percentage market share to about 42 to 43% of global oil output. >> yeah. i think it was morgan stanley earlier in the week that said non-opec supply could fulfill demand growth through '26. >> you're reading this stuff. they did. >> does this change the calculus

if brazil were to join? >> i would say the other way, darn right. the united states is at 13.1 total liquids. most is oil. that's a record high. brazil, 3.5 and going higher. guyana, that's effectively -- guyana is a sovereign nation, but the oil is pumped out by exxon and hess, which is becoming chevron, to u.s. companies. sort of a semi-de facto. something else to watch with guyana, there is this territorial dispute between venezuela and guyana where venezuela is claiming guyana is part of it. there are people, market chatter, is there a pocket venezuela does something to or at guyana? it's an interesting story. i'll tweet out the reuters story around it. it's got oil traders on edge. the oi peculiar meeting now. they don't put to a decision today, carl, i think oil drops 3% to 5%.

if they go 1.5 million barrels a day, i think it goes up 3 to 5 bucks. >> i have two questions. one is how much we should care about opec if it does cut? john kildoff said a lot of members don't commit to the cuts -- >> they can't. >> -- or they don't follow through with that. >> because they can't. >> and then the u.s. production at a record high. how much does it matter? >> i think it matters if they go over 1 million barrels a day. it's an excellent questions. if they go over 1 million barrels a day and for how long? if they come out and say we're cutting 1 million to 1.5 million barrels a day into the middle of 2024, i think oil goes up 3 to 5 bucks instantly, if we get that. if you don't get that, oil could go the other way and soon will probably be below $70. if they don't come to a deal today, if it's perceived as a fraction or fissure, you could

see oil fall a lot more. opec does matter, but to your point,ara, the u.s. also really, really matters. not just supply but also demand. you need to drive that tahoe more. >> it got too efficient. >> drive around. we'll see what happens. china, of course, is the big variable. if we get a big surprise cut -- by the w, last thing i'll say is this, today ithe first day of the big cop28 climate summit. it's in dubai. uae is a massive member of opec. it's interesting they're having >> and saudi ally?- >> it's interesting day to have the opec meeting. >> do you miss tho meetings? >> only the sausage -- >> pushing the other tv reporter out of the way? >> i don't miss the stairwell, if that's what you're referring to. >> i remember that shot. >> we used to gather in the airwell and they would open it up. i'm a larger dude so i had to be

careful where i tread. i do kind of ms it then covid hit and i don't miss it. i don't want to be packed in windowless, ventless stairwells, carl, but i do miss the nights in vienna. >> those global reporters and doorsteping, it's aggressive. >> there are like 250 people that go to these meetings. yeah, they are spectacularly aggressive. >> brian, thank you. we're happy have you here. >> thank you, 2 train from times square to here, boom. eight stops. stl to come this hour, a lot of questions about what happens to x next. elon musk's message to adverters and thsocial llout that could com the ceo of hpe, the company says order demand, especially in a.i., probably strong. stock now up 5, almost 6 for the year. 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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maker, n giving microsoft a nonvoting board seat. openai's co-founder elon musk with strong words about the startup and to advertisers on his platform x. joining us for "techcheck," deirdre bosa and julia boorstin. good morning, ladies. >> good morning. >> good morning. >> dee, what do you want to tackle first? >> i mean, there is so much to choose from. you mentioned generative a.i., so let's talk about that one first. elon musk didn't mince any words here. he really hit at the debate that's been going on here in silicon valley over the last few weeks. this idea of effective altruism, which some believe led to altman's ousting, or those who want to commercialize generative a.i. his comments on how dangerous it is. he talked about how generative a.i. is a double-edged sword. he likes to work on technologies that are a little more

straightforward, that do more good in the world. even the idea that the a.i. drag keeps them up at night, that was powerful from him. >> what about on the advertisers, julia, what's going to be the fallout from those comments? >> deirdre, it certainly puts linda yaccarino, the ceo of x, and advertisers in an uncomfortable position. there were a lot of jaws that dropped to the floor when elon musk responded to questions about the fact that a number of advertisers have chosen to pause ads on x given some of his comments and anti-mitic comments. he spoke directly to bob iger saying, quote f someone is going to try to blackmail we advertising, blackmail me with money, go f yourself. he drops the f-bomb a number of times. i thk is raises the question, what is the future of twitter?

they are ad supported. this he are trying to build the even before this latest controversy and concerabout anti-semitism in the past couple of weeks, ad revenue in 2023 had already dropped an estimated 54% from the prior year. so, this is a company that needs advertisg, but the challenge here now, de is that elon musk says he doest need advertisers. how does that all play out? i think we have that clip, right? let's listen to it. >> don't advertise. >> you don't want them to advertise? >> no. >> what do you mean? >> if somebody's going to try to blackmail with advertising, blackmail me with money, gf yourself. go [ bleep ] yourself. is that clear? i hope it is.

hey, bob, if you're in the audience. >> so, certainly puts -- >> no matter how many times i see that i'm uncomfortable. >> she's in the crowd. >> julia, go ahead. >> deirdre, i was just going to say linda yaccarino called the interview wide-ranging and candid. the question is how much damage does this do with her relationship with advertisers? when e eamon musk said advertiss weren't impoant to him. he would be able to build up the subscription business. you need to realize it is still an ad-supported business. >> the last thing i would add is

there was a discussion as well about what's happened at openai and some developments there as well. we know now microsoft is going to get a nonvoting observeseat on the board as that continues to shake out. looking for more board members. but that, to me, seems like a best case scenarioor them. it allows them to have a better understanding of what's going at the actual company or nonprofit while having it at a bit of arm's length. some reputational risks, they get to say, listen, we don't actually get to determine what happens. we just have a view of it. so, some of those reputational things that openai and chatgpt is still working out. like theallucinating side of the chatbot. microsoft can say, that's not us, they're still essentially a research lab because we have inveed biions and billions of dollars, we know now what's going on. >> guys, thank you for the perspeive on both ends. the openai and the x story. after the brk, the ceo of serve now med one of t top companiewhen it comes to

helping employees advance their cares. we'll get a check on the dow. new 52ee-wk high. haven't done that since august 1st as we hang onto gains somewhere in the 300-point range. back in two minutes. when you think of investment risk, do you consider climate risk? changing weather patterns are impacting the way we live and the value of businesses largend small. this can mean disruption to supply chains, changing demanfor products and shifting regulation. what does is mean for your business, your clients, and your investments? ice fers data and markets that can provi critical insight. manage your climate risk with ice.

12,000 employees within metro nashville. >> this place is on re. >> cities of success, nashville. >> this city has a butiful way of taking someone who's not from here and making them feel like they belong here. >> premieres wednesday at 8:00 a.m. european markets closing higher today after positive

inflation data. both the headline and core numbers beating the street's expectations. falling energy prices and lower growth and food and services prices were the main driver of the move lower. we did get weak data in the region across the economy. french quarter gdp contracting 0.1%. german unemployment rising a little bit on the month. that deflationary trend has hurt the euro a little bit. it's weaker against the dollar this morning. dollar index has regained a little bit of ground over the past few days despite the how farly 3% drop for the dollar in october. this morning's dollar gains also got a little boost by that surprise in chicago pmi, above 50 for the first time since august 2022, carl. the only other data point i would mention is in china there were some weaker manufacturing mbers but the market rallied off that with the idea that maybe they need to put in a little more stimulus to juice that economy. >> 494, two straight months of contraction. pele are waiting for

government to make their move. let's get a news update th courtney reagan. antony blinken in a meeting with benjamin netanyahu this morning. a state department spokespson said blinken reiterated israel's right to defend itself, but urged israel to hold settler extremists accountable for increasing attacks on palestinians in the west bank. blinken voiced u.s. support for a two-state solution and told netanyahu to account for civilian protection in southern gaza before military operations. the house of representatives is set to start the potential expulsion of congressman george santos today. republican whip sent a message to his party saying the actual vote to expel will be tomorrow. santos has maintained his innocence and claims the vote is bullying. a new york appeals court just reinstated the gag order in trump's civil case. the decision comes two weeks after an appellate judge put the

decision on hold. the american opportunity index just out with a new ranking today. the index is a measure of how well the nation's largest companies maximize talent and advance employees' careers. service now coming in at number five out of 400 of the country's largest companies. the stock is up 75% this year. service now ceo bill mcdermott joins us now. it's great to have you. and i love this index because it looks at not just data like diversity hiring, but also how people are able to progress in their careers. what are you doing that other companies are not? >> well, i think -- i got to do a call out, first of all, sara, to the schultz family foundation. i know this was howard's signature program, the american opportunity index. you know, what he did at starbucks is truly remarkable. and i think it sets the benchmark, it sets the pace for all of us to create companies that really put people first. and create an environment where people can bring their whole

self to work and also work each day to be the best version of themselves. we have a very ambitious goal at service now. we want a workforce that reflects the population. and five in ten of our new hire hires for leadership roles are women. the number of interns from underrepresented minority groups have increased by 50% in 2023 and our retention rates are the highest in the information technology industry. so, we really believe in putting people first and it's making a big difference. >> i wonder what you think -- you know, part of what's in this index is pay and mobility and how much the job market, the fact we've had a very tight labor market and there's been demand for labor at the same time where the supply has been low, factors in here for you and whether that's about to change? >> yeah, i mean, you have to look at this equal opportunity for everybody is not only a duty but also a trillion dollar market opportunity. the global skills gap, if we

closed it as a society globally, it would be an $11.5 trillion opportunity by 2028. so, it's clearly something that has to be done. we have to take a blue ocean approach to talent sourcing and look at new places. so, that nontraditional talent pools can enter into high-paying, high-performance companies like service now. and i believe that's really what we're achieving. you know, lots of moms that went out of the workforce during covid are coming back and they're coming to companies like service now. and we're really living the dream that our founders said when he started the company, he really wanted a company that stood tall for culture and stood tall for humility and we always had to act with integrity. we're very confident, but we're not arrogant. we really believe that if you put people first and give them

an opportunity, they can really surprise you on the upside. you know, one of the things we've done recently, we have a master class for all generative a.i. insight in the company. so, everything that we're developing, we're now bringing every employee, regardless of their function, into the learning process and that's really making a big difference. you know, not only have we doubled the size of the workforce in the last few years, we tripled the market cap, but we now have a workforce that understands the generative a.i. on the service now platform is revolutionizing business around the world in every industry, in every geography for every persona. so, they love making a difference. >> bill, it's carl. you're right about the growth that's happening at now and across the software space. a lot of that operating leverage has come from tough decisions earlier in the year regardless head count. i wonder if you think that cautiousness bleeds into next year, if hiring trends stay as

robust? >> yeah, carl, it's a really important point. if you remember, we were, as far as i know, the only large-scale enterprise software company that came out when things were rough and very unclear with the statement that we will have no layoffs in service now. we had no layoffs in service now. and i really believe that built the people pact on a foundation of trust where the leaders, even when we didn't have a clear 2020 vision on where markets were going, we're going to stand by the people, because once the markets clear up, you're always going to need inspired people to carry the company forward. so in terms of hiring, i think the market has improved dramatically. i think the visibility is much better. companies are doing very well, especially in technology. and i expect hiring to be up. and i also expect, and i predicted this and it's coming true, that generative a.i. would be the ultimate revolution for

information technology. my friend jensen talked about the $8 trillion data center reinvention. we're doing that with nvidia. and i.t. budgets are going to, instead of increasing on an annual basis of around 3.5%, it's clear now that they'll be at least 7%. and i predict 10% at least because if companies don't catch the generative a.i. revolution, they will not win and they will not be viable going forward. >> since we're talking about labor and how to take care of employees, do you -- where do you come down on the debate about generative a.i. and workers? is it a net jobs creator or destroyer? >> it's absolutely a net jobs creator. because companies have been focused on cutting costs, improving productivity. but the growth story has been a little off to the side because of the uncertainty in the markets. with generative a.i., you can

now deflect so much of the soul-crushing work that people don't want to do. so, people can focus on the high-value things they should do. and i think this will be an economic renaissance in the global economy. you know, someone said to me yesterday, sara, had we had service now as a foundational platform to build our business on 20 years ago, we wouldn't be stuck in the rut we are in today. and i explained to them that we can fill in all the gaps and we're generative a.i. on the service now platform, you don't need to be stuck. we can lift you up and we can grow again. so, i think we're heading into a growth resurgence. and companies that adopt this technology, but they have to do it now. >> bill, it's interesting. i mean, you paint such a great picture of productivity and job satisfaction, you roll in what some think a.i. is going to do to the work week where we're maybe only doing three days a

week. how could it be so perfect? there must be some downside that we're not accounting for. >> well, the downside is in having a bias for do nothing. if you do nothing there's going to be plenty of downside because the companies that do something are the companies that are going to win. i feel that the idea of last mover advantage on this generative a.i. revolution will be the wrong idea. we have companies today that can fundamentally rethink health care, can rethink insurance, can rethink manufacturing. we can move from an object-oriented world where people had very high difficulty in getting a consumer grade experience or moving objects in a way that attributed to tasks. a task-oriented world is a world in which people get what they want. they're part of a work flow.

they're part of an automation revolution. when apple came out with the iphone in 2008, that began the revolution for consumer grade tech in the enterprise. generative a.i. now puts that on steroids. where it's going to make it clear that if you don't have a consumer-grade experience, if you can't automate the way work flows and how humans can contribute to the greater good of the company and see themselves in the picture, then you're going to lose. but if you adopt this now, you change, you automate, you innovate, you're going to win bigger than you think. >> my last question, and it is related to workplace, labor issues. it's about dei. do we need a rethink of dei inside of companies and universities? there was an explosion of dei after the murder of george floyd. and lately, you know, with the rise of anti-semitism, for

instance, at universities, there's questions about how inclusive these programs really are. >> there's never been more job opportunities and there's never been a great mismatch of the opportunity and the people to fill these jobs. it's at a 20-year high. what we have to do is go into this blue ocean approach and reach out to folks and get them into the workforce. the problem is not about scorecards and is it yellow, red or green. the opportunity is the problem. we have to get to people, we have to work hard at training people. we have a rise up with servicenow program where we're training a million people to initiate them into this new frontier, this generative a.i. workforce. but we're also reaching out to the ecosystem. i had a fantastic meeting with some of our partners over the last four days to basically encourage them. some of them have workforces

that are 20, 30, 40 times bigger than mine. so, i want to team up with them. so, it's really about initiating people. you know, it was very interesting to me in the '90s, there was a bipartisan effort in washington. it was caldwelled welfare to wo. what i learned as being a part of that movement, there's a lot of issues you have to overcome to initiate people in the workforce. it's like transportation, it's like child care, it's training. it's all the stuff that's really hard to do. so, if you're going to play it out as a red, yellow, green and a report for some annual report, that's not really going to get you very far. it's really about work. you have to work at this. >> well, good to hear some of your philosophy on all of these important issues, bill. thank you for joining us today. >> thank you so much, sara and carl. see you soon. >> bill mcdermott of servicenow. coming up after the break,

ceo of hpe is talking about results. stock now positive on the year. we're back after this. crypto watch is sponsored by grayscale.

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hpe shares are higher after posting a beat. revenue just under consensus. guide in line for the first quarter. joining us with a first on cnbc, hpe ceo, antonio. what a period we're in regarding software, enterprise demd and spend. we talked a few weeks ago. i wonder if we're trking above your expectations even recently? >>ell, good morning, carl. thanks for having me. i'm here in barcelona hosting

our european customer event, hpe discover. it's so fun to be out talking to customers and partners. it actually helps inform to the question you just asked me. the vibe and the enthusiasm about this new type of technologies, obviously driven by a.i., is growing incredibly. and so to ve you a perspective, today i had my keynot it was obviously all about a.i. e intest is much higher than i ever anticipated. and you look at our results, carl, we announced an impressive scalear 2023, we grew revenue faster than we anticipated for the full year, we deliverross margins that were above what we expted, a most importantly, we achieve record-breaking performance for our areholders in terms of n-gaep. what we e now is -- associated with a.i. in fact, in my earlier remarks i

said a.i. is expding. we see customers building models and in 2024 we see enterprise with models. it is an enormous opportunity. we're excited to participate in this massive inflection point. >> what about the old saw that the mad rush for a.i. is going to start crowding out other types of cloud spend? >> no. in fact, i will say the following -- when you think about the work we are doing with hp greenlake, our hybrid cloud platform. by the way, we now have 29,000 customers on that platform. we are bringing two types, the cloud native world and the a.i. native world. the two have to co-exist. that's one of the things that customers appreciated about it. they can continue to do what they need to do in a cloud native environment whether it's traditional, to manage their data, to deliver business outcomes out to their data. at the same time the new

technologies that are completely different architecture. we. don't see yet economicization of that. we see incremental spend. obviously, when you think about the core business that we have been experiencing for the last two years, there is still some digestion taking place. our customers continue to m modernize as well as deploying a.i. to deliver business outcomes. >> can you quantify it, antonio? how much of the service orders were related to a.i. platforms? and where does that number go? >> good morning, sara. >> good morning. >> in my commentary, in the earnings, here is the telling story. at the beginning of the year we had very little, maybe less than $100 million in orders for servers that use what we call decelerated process unit. at the end of the year, in just four quarters, include super computer data exceeded $3.6

billion. where we see the pipeline is enormous. in terms of percentages, now today a representative of the total server market, which is always very large, 25% related to a.i. but when you look at the specific a.i. piece of that, which is this large a.i. scale systems that need these huge amount of acceleration for training, that's above 80%. so, it's an inflection point, a massive shift that's taken place as we witness every day. >> finally, antonio, the street's on the lookout for any friction to grow factors. they always point to gpu supply. getting better? >> they are getting better. i will say, carl, that the lead team has shrunk a little bit, but the demand is outpacing every capacity of supply we have. but today here i had a series of

announcements with nvidia. so, we have a relationship with jensen and the team, continues to grow to a level we haven't seen before. we announced new generative a.i. solutions for customers to fine tune with the data. but lead times in gpus has improved. the reality is our demand is outpacing every capacity we have seen. but i'm very confident that the back half of 2024 will continue to see improvement. the good news is that of all i just talked about, 3.6 million, very, very little was converted to revenue so far. >> the market is excited about the expanded nvidia partnership. barron says you're getting some of nvidia's stardust. how much of a competitive edge is it for you? >> it's huge. hp and nvidia have a partnership for decades. that started in the -- what we call the cloud computing, super computing. we have built some of the largest super computers together. but those were discreet systems for unique customers. now we're taking that super

computing capacity and democrat ties it in terms of generative a.i. for all enterprises. two weeks ago the super computing confidence, we announced a specific turnkey solution with hewlett-packard a.i. and super computing which is software driven to deliver these large-scale for training. today here in barcelona, we announced a generative solution for enterprise because they don't want to move the data outside their locations because they want to control that data. they want to protect it. . we had aong chat aboutthics and how we manage that. >> look forward to welcoming you next time you're in town. >> thank you. getting a statement from disney now after news that nelson peltz and trian seeking twboard seats at the company. julia boorstin is watching that. hi again, julia. >> cl, that's right, disney

responding, noting its track record of delivering long-term value and noting that it's delivering a $7.5 billion in cost savings, $2 billion more than its original target. also adding the board's appointments yesterday of morgan stanley ceo james gore man and former sky ceo reflect a focus on strategic growth initiatives, e succession planning process and increasing shareholder value. now, they also note that isaak pearl mutter says, this dynamic is relevant to assessing mrm mr. peltz and nominees he may put forward as mr. perlmutter was ousted. carl and sa, cerinly interesting to note the flag of potential sour grapes there. >> disney is getting defensive. thank you very much.

julia boorstin. the only point i would make, carl, and we heard earlier from trian and peltz saying they're going to take their case of change directly to investors and shareholders, is what peltz has going for him, what trian has going for them is the stock price. remember in february when he called it off, when peltz called it off here on cnbc, where was the stock? it was at $118. where is it now? in the low 90s and got to the low 80s. i think there's still some questions about iger's strategy. that's probably the case trian will make. >> even after all the communication from iger this week about marvel and the changing movie business and how they're getting aggressive on succession. but no details. >> not inspiring the kind of move trian and other investors want to see. still to ce,om the ceo of kroger, trying to break a three-week losing streak. rodney mcmullen joins us next.

that first time you take a step back. i made that. with your ve own online store. i sold that. and you can manage it all in one place. i built this. and it was easy, with a partner that puts you first. godaddy.

look at kroger stock trading up after an up-and-down morning following third quarter earnings.

beating on the top and bottom lines but issuing a cut to its full-year sales guidance to, quote, reflect the impact of near-term economic pressure and food at home disinflation. joining us now on a cnbc exclusive, kroger ceo rodney mcmullen. welcome back. great to see you. tell us about what you're seeing that led you to downgrade yo expectations of sales growth. >> it's really, if you look at as inflaon slowed down, inflation has slowed down faster than we expected, and the tonnage improvement is happening but the tonnage improving is slower than what we had expected before. it's lking at those two factors. that together is why we made the change. >> what about what you're seeing from the consume any big changes? >> if you look at thanksgiving, thanksgiving was a last-minute holiday, and the behavr was exactly the way it was precovid. you can see customers are

getting comfortable with a product being available. customers are very aggressive on smaller baskets, smaller size items, going to our brands as oppod to national brands, things like that. if you look at the upscale customers, they continue to behave just like it was before. and the inflation the last couple of years has had no effect on them. for us, one of the things that's a positive is thatustomer we're growing with, that loyal shopper, that customer is more profitable than a customer on a budget. that's the reason why when you look at the numbers overall they turned out good. >> it is a story on pricing right now, and i would love for to you dig into this inflation versus deflation versus disinflation. your competitor, walmart, did use the deflation word, and i'm wondering what your view is into 2024, what's going to happen to pricing? >> yeah, obviously when walmart

says something, we all pay attention to it, but everything we can see, we would continue to expect slight inflation through the balance of the year and as you look into 2024. now none of us have a crystal ball, and you're just making the best guess you can. if you look in the grocery area there's more deflation there if you look at eggs and things like that, you certainly see deflation there, but when you look at meat, we expect in beef that inflation will be there. when you blend it all out we expect slight inflation through the balance of the year. we would also -- that's what we would expect for 2024 as well. >> do you think suppliers have taken more than their fair share? do you think they need to start lowering prices, the companies that make the food and household products? >> well, if you look, it's one of the reasons why our brands is so important because when a national brand takes prices that

they haven't earned, our brand always gains share in what we find is customers try our brand because the price, but the repeat rate is high because of quality. when you look at certain -- some cpgs are getting more aggressive because of trade dollars and promoting, and that's something we're happy to partner with. a few still are taking cost increases more than they deserve, and for us, it's one of those things where you're trying to do everything you can to help the customer's budget get stretched. >> rodney, one thing we've been keeping our eye on, the comments about the low end. that was made pretty clear this week by some of the discounters. are you seeing a real bifurcation in the slowdown between the low end and the rest of the income spectrum? >> yes, definitely. and a lot more behavior changes at the customer that's really trying to stretch their budget. if you think about customers that are on s.n.a.p., there's

been a 30% reduction in s.n.a.p. this year versus a year ago and that's been throughout the year. if you look at student loans, that's just starting to affect customers. and customers that are strained on a budget definitely bigger behavior changes there than the customers that don't have that same constraint. >> when you think about threats to household spending, where do you rank gasoline? we're seeing volatility in oil, gas has come down for 60 straight days. would a bouncing damaging to their consumer patterns, their buying patterns? >> if you look at gas, it's one of the things we have a fuel rewards program, so when you spend money in one of our stores you get a fuel discount, and that's been incredibly successful for us for several years, and that's really helping customers stretch their budget, and we're seeing more people engage in that. certainly customers are appreciating the fact that fuel prices are going down, but

there's still a lot of concern because of the volatility you've mentioned. >> i wanted to hit on the digital sales growth. 11% this quarter. what are you seeing there, because there was also this view that coming out of covid, as everything normalized that would come down as well. is that happening? >> no. if you look at the trend lines of growth, it looks just like pre-covid, and you had the huge bounce from covid. you had a year of kind of flatness and now it's growing again. everything that we can see, the customer really appreciates that convenience of being able to pick it up at a store, have delivery to their house, and they still will go into a store. we call it seamless, but everything we can see is incredibly important to be able to serve the customer any way they want to engage with us, and we just don't see that changing. and, for us, over time that's a positive for us because we're able to gain household share. >> what about the acquisition?

you're trying to merge with albertsons, trying to bring them in. you updated investors on the milestone with the antitrust authorities, rodney. what is that? and what would you say is your confidence level at this point in this deal getting done? >> yeah, if you look at our merger with albertsons, and i've mentioned it before, just so impressed with the talent and i can't wait until it actually happens. we know starting day one the customer will be able to save money and there will be better job security and we'll be able to continue to invest in wages and no one will lose their job. we finalized everything with the ftc and have constructive dia dialogue, so feel really good about where we are and we would continue to expect to close in early 2024. >> all right, well, that sounds confident enough. rodney, thank you very much for the update. appreciate it. rodney mcmullen from cincinnati, the leader of kroger there.

the important comments on the consumer, the bifurcation still. there's not really been a change with the higher end consumer as far as spending patterns. it's the lower consumer feeling it. >> he's been warning about that, it's the pricing that's changing, the disinflation. >> no cuts in the opec release. the 52-week high on the dow. let's get to the judge. carl, thanks so much. welcome to "the halftime report." i'm scott wapner. front and center this hour, the best month for stocks in nearly a year and a half is in the books. what lies ahead for your money with the investment committee. brad gerstner will be with us. also josh brown, jenny harrington, jim lebenthal. the dow is good for about 286. the nasdaq is having a rough day. the s&p is virtually flat, d