continue to do two things. it means that you have front end rates falling pretty much across the world, which is definitely a boon for equities, and the second piece you also have is that the japanese yen has been relatively stable which has been another good boost for equities globally. >> barbara, thank you. >> thank you. >> i want to wish everybody a great weekend. joe, becky, we'll see you monday. make sure you join us next week. "squawk on the street" begins right now. ♪ good friday morning, welcome to "squawk on the street," i'm david faber with sara eisen and mike santoli. we are live, and we're at post nine at the new york stock exchange. carl and jim have the morning off. let's give you a look at futures as we get ready to wrap up the trading week. you can see once again we're looking for a higher open, and our road map does begin with those markets, of course, looking to set new milestones, this one day after the s&p 500 posted its 42nd record closing high. as for the fed's preferred

inflation gauge, pce coming in a bit tamer than expected, year over year, and also ahead, the let's say you're deep in a show or a game or the game. on a train, at home, at work. okay, maybe not at work. point is at xfinity. we're constantly engineering new ways to get the entertainment you love to you faster and easier than ever. that's what i do. is that love island?

august versus 0.4% prior so consumer softness, i think, is part of that narrative and the only other thing i wanted to mention is the savings rate ticked down, which is the lowest since december 2023. so, watching that savings rate comes down, again, speaks to a little softness. it's a good number, though, i would think, mike, for the markets, because look, if the fed does 50, if the fed does 25, we can debate it every single day like we did last time. the most important thing is that the bar's pretty high for them to stop easing right now. nobody's talking about that, and as long as they're in easing mode and we're not in recessionary mode, which these numbers don't necessarily speak to, and now we've got the china stimulus, it's all things go. >> right. and the pce inflation piece definitely validates people's hope and assumption that we

could start to set aside the inflationary trends. they have been very, very close to target and very mild. and i think all that sort of suggests we are basically on growth watch. i agree on the fed. the fed's on the case. they've told us with last week's action that they're going to vow

little bit since the fed. treasury yields have been a little firmer since the fed. we're going the other way this morning, but some interesting sort of cross-currents. gold has performed better than the s&p 500 this year. continues to make new highs. bitcoin has had a really good -- and that makes sense, post fed easing, right? so -- >> although i think gold -- gold, you can't even persuade me what the narrative is on gold. i was just looking on a five-year basis, it's looked a lot like the s&p with a little bit of a lag. it did nothing during the inflationary shock when real yields were negative and now real yields are super positive and everyone's excited about growth and risk assets are back in play, and all of a sudden, people want to buy gold. to me, it's not necessarily pure safety trade.

it's a risk asset as well, but i agree that it's been a strong month, almost up 1% in the s&p. the quarter has held in there without really the clear leadership of the mag seven. >> look at the gold, 37% higher. the bank of america flow report that came out today, it was the number one high-conviction trade, and they put in parentheses around the gold trend, inflation and populism hedge. maybe that's why it's going up every day. >> it iss were.

this one seems like it's stronger. it's got more momentum. it's also maybe less like connected to the kind of reflation trade. it's much more maybe there's a chance domestically there will be a little improvement, so i do think that might be a little bit of a difference. it's been easy to say, well, we kind of missed it. this trade went vertical. volumes, yesterday, in the china-related etfs were absolutely astronomical, and so it does show you there's this rush to get in there. and also, i think there's a scarcity of places in the global markets that seem like they have

not been played out to this point as, you know -- >> everyone is on the other side of this trade. important to know the context here. if the high-conviction trades were gold and tech and s semiconductors, the low -- i mean, high-conviction trade against china, and look at the biggest winners in the s&p this week, besides micron, which had good earnings. estee lauder, week to date, up 18.5%. freeport, las vegas sands on macao, up 15%. wynn resorts, up. these stocks have been held back on the china story. the question now is, is this a

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announcement a day and a half, two days ago. have we seen anything more there? it's always difficult for us to know what actually was said and what really is being done. >> reporter: yeah, actually, we even had more commentary out of the stocks regulator today who was addressing, again, the expansion with equity funds, saying that the increase -- there's a need for the increase to the scale and proportion of equity funds to create stable and long-term returns. also, there was a lot of other action from the central bank, which was flagged earlier in the week, and that is that they cut short-term rates. the seven-day reverse repo rate by 20 basis points. also, they cut the reserve requirement ratio for banks, so that's the amount of money that bank

gloomy. i mean, i know that overseas and in the markets here, too, there is some excitement over some of these policy announcements, and a lot of times, when investors here think of investing, they look at the direction of the

chinese government. so, from a short-term perspective, there is a lot of excitement, but longer term, the conversations that i hear the most are about the job market, how difficult it is to find a job, to keep a job, the property sector, and the value of people's homes. and of course, as you guys were talking about, there aren't a whole lot of places where people can put their money. a lot of it is wrapped up in their homes, and they're seeing the value of their homes decline with not a whole lot of, you know, bright outlooks. so, the fact that the government did this is a good acknowledgement. it's also interesting because next week is the national day holiday, so it's the 75th birthday of the people's republic of china, so they want to get people excited and possibly consuming. that might be one factor. but a lot of people, generally speaking, are not feeling very confident. >> eunice, thank you. we'll be checking in with you, of course, as we continue to.

so, hopefully, those crews are

getting in at this point and they'll be able to restore some of that, bring people back online, but as this system now moves through georgia, it's got at least 800,000 without power there. that number's going to go up. south carolina already reporting half a million without power. that number's going to go up as well, and so, this is going to continue to build. it is just a tropical storm, "just," it's still 70-mile-an-hour winds but it's the rain and the water that's going to continue to be be primary problem with this system, and helene's not done. let's talk about the staying power of this storm. it was still a category 1 when it moved into georgia overnight and now, as it pushes to the southeast, we're going tosee it lash out in the carolinas. i think we'll see significant flooding there over the weekend. kentucky, tennessee, this thing's just going to keep moving and keep causing problems, even as they start to assess the situation in areas like this, tallahassee, and start to clean up and try and

repair, restore some of the power. it's still going to be wreaking havoc, so we're not done with this yet. just to wrap up with an example of that. 60 million people, 12 states currently under watches or warnings that deal with helene, so again, we're going to see, for the next couple of days, this storm cause some really serious problems. >> jay, thank you. jay gray in tallahassee. the continued impact of helene. when we come back right here, we'll have the latest on a potential deal that would tie together directv and dish, both of those satellite television services. let's give you another look at futures as we get started with trading here, about 15 minutes from now. we are looking for a higher open for the broader averages. we got a lot more "squawk on the street" for you straight ahead. s life-changing medical breakthroughs, every second counts. but without investment, those breakthroughs are often paused. citi's seamlessly connected banking, markets

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welcome back. reports late yesterday that i can confirm about a potential deal in which dish would be essentially sold by its owner, echo star, and merged with directv. again, both these satellite paid tv providers coming together to create a new company that would have as many as almost 20 million potential or at least subscribers. overall, of course, as our viewers well know, the businesses have been under pressure for quite some period of time. dish's business, for example, lost, i think, 182,000 subscribers in the last quarter. and the tv -- satellite tv business there has been shrinking at about a 12% rate, which, of course, as you know, is not good.

they also own sling tv. dish's pay tv revenue was down 10% year over year as of the last quarter. and cash flow at the company, echostar, has been under significant pressure given the company has a significant debt load. why? well, remember all the money it paid to buy all that spectrum to become a potentially nationwide provider of wireless services? that is still a possibility, but of course, many investors have been focused on the balance sheet, and what will happen to it. and the potential for how they're going to deal with a debt load that is as much as 11 times ebitda is a key concern. you can take a look at echostar shares, though. they have been moving higher, and those who try to understand the value of the company certainly look through and try and understand the value of that spectrum. what would this deal mean? my understanding is it is highly likely to occur. in fact, most likely to be signed in the near term, so we

would expect, perhaps, that we will see a deal as soon as monday. how will it be structured? that's a key. the limited understanding that i have is it would be fairly complex, but that said, it would involve cash going from directv to dish and perhaps if not even more importantly the assumption of certain amount of debt as well, and that would create some debt capacity, perhaps, for echostar to continue to pursue its hopes and dreams when it comes to the wireless business. and of course, mike, i think i like to turn to you, because sara's still very young, but you have been around not quite as long as me. >> almost. >> you are. you are. >> just compared to you. >> yes. that's true. >> i have three bags of cough drops, by the way, i'm okay. >> she's back and better than ever. but i'm looking back at a press release of a deal i remember well announced almost 23 years

ago, october of 2001, in which gmus and echostar were planning to merge. what happened, of course, anti antitrust regulators. at the time, they were amongst the more dominant providers of these services. the deal was stopped, never went through. the department of justice did file a suit to block that acquisition of muse electronics which was essentially directv at the time. i don't believe that would present the same threat to a deal this time. >> obviously, there has always been this objective among regulators and the government to say, well, there are some areas not served by cable, so therefore, these providers have some kind of privileged position, but i mean, the overall market is obviously gotten so big and different than it was back then and the obvious analog is xm sirius, right? at one point, they couldn't merge because satellite radio was its own thing and then you make audio content its own

category. >> particularly as they compete with broadband and the likes of starlink and other satellite service that is providing, obviously, video throughout, its customers in many of those rural areas. >> exactly. >> so, you don't need satellite for pay tv anymore. >> that's why it keeps going down about 12% a year for dish, significant declines, and they have yet to make good on their significant ambitions to become a nationwide wireless player. if and when we get the deal, we'll certainly look through and try and explain what may be a complicated structure, but what it will ultimately mean for the one public company here. remember, directv is a private company owned by tpg, run by they management but still 70% owned as of now by at&t >> i'm not as old as you, but i do feel like i have deja vu on this merger story. >> it is 23 years ago. you were there. >> it's been the most obvious deal that never happened. >> two old stories. paramount, i'm following that

for months and months. of course, 30-plus years ago, it was that fight. now we got this one again. >> what's old is new. >> exactly. take another look at futures here as we dowcount you down toe opening bell. dow futures up 100. s&p futures up 11, looking to ilon tsebud ho record highs. more "squawk on the street" when we come right back. they respons with phone-calls... they wear business sneakers and pad their keyboards with something that makes their clickety- clacking... clickety-clackier. but no one loves logistics as much as they do. you need tamra, izzy and emma. they need a retirement plan. work with principal so we can help you with a retirement and benefits plan that's right for your team. let our expertise round out yours. i can't believe you corporate types are still calling each other rock stars. you're a rock star. we're all rock stars. oooo look look at my data driven insights, i'm a rock star. great job putting finance and hr on one platform with workday. thank you! guys, can you keep it down. i'm working.

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all right, take a look at the nasdaq 100 gainers. of course, we get started with trading about four minutes from now. you can see, once again, china certainly an important part of the mix here with pdd, which has had a very strong week, potentially up yet again on semi, and tesla rounding out the llusa w nus ayawait the opening be jt femiteaw.

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>> announcer: the opening bell is brought to you by nuveen, a leader in income, alternatives, and responsible investing. keeping an eye on wti. you can see well below $70. it was down yesterday on these reports about the saudis abandoning the sort of $100 a barrel target, mike, and this despite what may be an uptick in demand from china if they actually do get things going there. >> yeah, it's been the exception to the usual china reflation playbook, which really was executed yesterday. you're seeing metals move. you're seeing a lot of the commodity-related stuff move, but oil, really acting like a well supplied market. really stays out of the way.

obviously, could be a powerful mix in terms of just this idea that we have a lot of liquidity, you have a lot of confidence in soft landing. yields are tame, and gasoline's staying out of the way. >> two sectors lower on the week, down 3%. >> here's the opening bell. here at the big board, legacy. it's celebrating an ipo. at the nasdaq, global engine group, the provider of information communication technologies, also celebrating a recent ipo. so, i talk about the fact that there aren't that many ipos. well, there are some. we may not get quite as high a profile as the ones we might be awaiting at some point down the road if they ever come. >> when you're really in a sweet spot for deals, you kind of can't keep up with the ipos. literally, some fall by the wayside. you have multiple pricing on a thursday, so that's certainly we're not there yet, and by a

lot of measures, we're really underachieving in terms of level of capital markets flow versus where the market is versus size of the economy versus a lot of things. >> given the year that we have had, mike, in terms of being up over 20% on the s&p, and to your point, not to mention many companies that were unable to get out given the pandemic and other things, and then the money that's flowed into a.i.-related, i think it is somewhat surprising we have not seen the kind of avalanche, because this period is somewhat reminiscent, though not quite the same as the bubble period, certainly, but my good, during that period of the late '90s, to your point, every company -- they were very low quality, many of them, but man, they were coming fast. >> coming fast. i'm trying to remember the number. it might have been 500 in '99 or something like that. but i would say we had a mini-version of that in late 2020 and early 2021. you had a lot of sort of

lower-quality, risk -- >> and the spacs. >> and it's been this very long hangover from that period. >> fed hiking rates has given way into election uncertainty now. >> and the other piece of it is, the a.i. boom seems like such a game of scale, and spending power and capacity. it just seems like it's tough to get that story out there when you're not just, like, oh, we could buy the most nvidia gpus, therefore we're going to win. a start-up can't do that. >> we're not really at the point, it would seem, where there are applications that are very specific to a particular company that sort of invented something based on all new compute power and everything else. >> exactly. >> fair point. that said, there are plenty of companies we can all sit here and think about, wonder, gee, why aren't they? the depth of the private capital markets is so much different than certainly it was 20 years ago, even 5 years ago, that companies can stay private far longer. >> and it's all -- it's really almost by design now, too. not so much vc but private

equity, buying stuff up along the way, and just assuming they're going to buy and hold for a long period of time, not forever. but they do have -- >> they have to instill that they actually generate return. >> they just sort of rotate it around. >> a plot of them end up selling to other private equity firms instead of taking the opportunity to monetize for the public markets. >> we go up again, and almost all sectors are opening higher. there are a few standout stocks to talk about today. one i wanted to mention was dollar general, because it got a sell, kind of a brutal sell from citigroup, from neutral to sell, target price goes down to $73 on dollar general. we know they have had issues and been challenged in their earnings, and this report says there's a fundamental change in the industry dynamics over the past five years on their competitive positioning, specifically against walmart, so why is walmart doing well at a time where everyone wants value and dollar general not? walmart is tough to compete with on prices, even for dollar general, they say, and while dg

is known for convenience, since the pandemic, walmart has been the place for consumers on this front. it's also benefitting from the tailwind of having the higher-income consumer trade down or seek value, as walmart would say, and so that's been an outperformer, and here's citi, expecting more pressure on dollar general. >> i mean, they really are just ubiquity and convenience is what they were selling, and obviously, not necessarily price leadership. comes with, i mean, it's a different market, but costco's -- the reaction to its results, which were just a little bit light, not necessarily concerning, but didn't wow anybody. but it's been an incredible stock. >> they always give you the sales ahead of time. look at the one-year chart. look at the five-year, the ten-year chart. it's an incredible chart, and if you look at some of the analyst commentary around costco, nobody really sees any issues there. they did put in place this membership increase cost in july, which kicks in, in september, but we haven't seen

the results of that. but they spoke pretty positively about it on the call. >> the only issue with costco is that it trades at 50 times earnings. it's always traded at a big premium. now the premium is even higher and it's because of the pricing power, the fact that it's really just a subscription business, in a price-leading kind of value-oriented consumer market, that's how costco is built. even in the best of times, they cap their margins, pass along cost savings, make it up on the membership fee. so, i think that's one of the reasons people love it. i was also looking, you know, 80% gains over -- i don't know, over the last two years, i think, similar to walmart. those two stocks together are, like, 17, 18% of the staples. so, when staples perform, it isn't necessarily diapers and toothpaste. >> average market caps together, you're over a trillion dollars in market caps for the -- i mean, by far the two largest retailers in that sense. well, amazon, obviously, is its

own -- >> that's right. >> if you look at the street, deutsche bank, jpmorgan, barclay's, they all raise their price target today on costco. i thought this was interesting. one of the analysts highlighted some bullish information we got from costco on the demographics. about half of the new members were under the age of 40, according to the cfo, so they're expanding and here's what else we heard about the consumer from costco's cfo. >> we have seen that as inflation has dissipated, our members have started to spend more on non-food items, which is really encouraging in our mind and what we're really pleased about is the widespread nature of that across the different categories that we have seen in nonfoods. >> so, better inflation leads to better consumer discretionary spending. we've heard that from walmart. we've heard that from kroger. so, i don't know. not much that they're worried about in terms of the street on

this one. maybe just a chance to come back from what's been a very stunning outperformance. >> there has been a -- especially yesterday, this sort of sell the year-to-date winners has been a pretty strong effect, people rotating into other areas of the market. lilly was weak yesterday. it's down another 2.5% today. netflix, walmart, some of the big bellwether winners of the year have been backing off as this market tries to rotate around and go toward other groups. yesterday, consumer cyclicals up more than 1%, banks up more than 1%. it was a pretty restrained response in the u.s. market at the s&p level to the china move, but below the surface, it was relatively reassuring in terms of the macromessage of what was happening. >> helped in part by wells fargo yesterday, which was up more than the group as a result of the reports that the asset cap might be removed. >> definitely. it's all fitting together. again, it's one of those things, the scary september that we were supposed to have, we have the s&p up about 1% on a month-to-date basis with, you

know, after today, one more trading day to go. i don't think you can overlook the fact that the markets run into trouble during jobs week the last two months. early august, early september, you had this growth scare, you had a bit of a gut check in the markets as people were wondering about the fed. you wonder if that's different now that the fed kind of safety net is a little more explicit than it was prior two months. >> nvidia's down, so the nasdaq 100 is down. it had a good week. >> lilly is down about 3%. so, that -- you know, some of the year's winners. >> yeah. >> the rotation that you talk about, mike, how do you -- is there a way to understand whether it's sustainable in some fashion? >> yeah, i mean -- >> what do you look at to sort of try to see? >> i think that's the current obsession. just this kind of, like, okay, you know, the pendulum swings a little bit, you give the nasdaq 100 three months to cool off and maybe it resumes. yesterday there were signs semis wanted to grab the lead again. i think one of the issues the

market will have in general is there's a little less open-ended. you kind of already have a 17, 18 times forward multiple on the non-mag seven stocks. it's not like they're super cheap, and i think it's one of those issues. goldman-sachs today, tony pasquariello note talking about what the s&p multiple was in the first fed rate cut in prior soft landings, and we're, like, way above. you were, like, 15-ish, 14-ish, 11, maybe 17 if you widogo back let's say, 2017, 2018, 2019. you've already made more progress on valuation, even if you do get that really benign soft landing scenario. >> people don't pay attention to multiple anymore. >> they don't pay attention to it except when they look for a reason why the market's selling off. they don't look to it to dictate the next move. it does inform -- it should inform --

>> how should we think about the multiple in the s&p when it's nvidia -- when it's the mega cap stocks? i mean, that's another point of why the multiple's changed. >> that is a big reason. >> yeah, well, 35% of the s&p is ten companies. >> right. >> right. >> so, maybe it should be higher. >> the other 493 are at, like, 18 times. it's not like they're cheap. they're just less expensive. and equal weight is like 16, 17. i agree with you. there's no reason somebody should change what they do today or tomorrow based on valuations. it should help set expectations for future returns. if you think, things are great, fed is easing, economy's growing, earnings are heading higher, you at least have to have that sort of pang in your mind that says, maybe the market's figured some of that out already. >> i just want to point out, again, another very strong day for these china-related names. wynn resorts with the macao exposure, up 4.4%. las vegas sands, mgm resorts international.

my chart of the week, which i was going to show you before i had a coughing fit, was the chinese property stocks. this has been the center of the pain in china, and clearly, there's a big spike this week, but what you can see is that the last few spikes we have had in this index have given way to down turns and they have been tested, and they have gone lower. will this time be different? it depends how much commitment we're going to get here toward fixing the problem. very high housing inventory. you know, people's sentiment has been dented by what's happening in the housing market and the house prices coming down. so, this is a chart to watch as i think a litmus test, a little bit, for how much the china stimulus is taking effect and how much they're doing to correct what is the fundamental problem here. >> yeah. absolutely. >> you know, it's funny, when i think about the major u.s. companies in terms of china, you think of apple, nike, starbucks, tesla. they haven't reacted as much, it would seem, this week. >> some of the more beaten-up

names. >> yeah. >> they got a little bit. >> they did, but it's unclear. tesla's obviously had a decent week. it's now positive for the year, some 3.5%. but unclear, i mean, again, they're in a dog fight in the domestic market in china, given the ev makers there. >> also, nike reports earnings next week, and there's some thinking that it's not going to be a great quarter. john donahoe still at the helm. he steps off in a few weeks, so if there's a quarter to kind of kitchen sink or lower the bar for the new ceo, this is probably it. and jpmorgan opened a net of catalyst watch around earnings. one thing is for sure, though. the macro in china matters for this company and has been a source of pain. it's not just that they haven't had hits and they haven't had shelf space. i mean, that's been the story with the ceo, but weaker china definitely hurts, and we've seen that in the results as well. so, any sign of a turnaround there should ultimately help. the question is, how long is this going to take?

china has -- is going through some deleveraging. >> yeah, and it's not as though it's going to happen overnight or a short amount of time. we continue to follow the vitriol between southwest and its largest shareholder, elliott, which is trying to seat ten board members, basically essentially take over the board of directors, certainly. that proxy fight or what will happen in terms of a special meeting that elliott would like to call and then be able to actually call for that is in process. yesterday, phil lebeau sat down with southwest's ceo after their investor day. by the way, the stock did react very positively yesterday to a number of the initiatives that were unveiled or at least more detail provided on. and he also talked about just in general the engagement so far with elliott. take a listen. >> there's really been no meaningful conversation with elliott at all. we've asked to engage, offered to engage, offered to interview their slate of board members, and they've really said, no, at

every turn. >> he called their plan inane or at least some of what they're -- what they are trying to present at elliott. elliott, for its part, put a new statement out, basically saying, we want the same things we want, which is essentially, we want that guy, bob jordan, gone. stock up yet again. >> yeah. i mean, i guess the idea they're not going to go away. we talked about the buyback yesterday and what that's going to mean in terms of, you know, just sort of shrinking the capital base and maybe preserving elliott's influence and all the rest of it. big questions in terms of whether you can expect southwest customers to change behavior quickly and meet these targets. we had a conversation, sara, yesterday about that, in terms of whether everyone's going to be paying for premium seating. >> more leg room. >> yeah. >> right. >> assigned seats. >> elliott questioning how long a timeline it will take them to actually make that change.

>> they're talking about 2027 targets. that's what the company's talking about. >> does seem an awfully long time to roll out something of that nature, but to your point, changing behavior of the customer base. >> yeah. >> i just want to point out, we're seeing a huge move in the japanese yen, which we know matters for markets all over the world, and it's stronger by 1.5% today. so, cautionary symbol on this rally here. >> i was trying to articulate this to you yesterday in part by encapsulating some of the things that tepper had said, and i did pull it. i don't know if you want to listen to yesterday, because he did have a view on the yen and perhaps it's already starting to play out. take a listen to david tepper on the impact of china's stimulus in terms of what it might mean for japan and the yen. >> if china runs and you get the economy going and the animal spirits going, what happens? chinese throw a lot of money in their economy, who's one of the biggest beneficiaries in their own economy? it's japan. and japan, if they get -- if they start running faster, i don't care what this election is, and they're worried about

this candidate and that candidate, some candidates might want to go to abe-nomics, and i don't care. they don't understand it yet. this just happened last night. the market doesn't understand it yet, what's going to happen. japan's going to run too fast if they really stimulate there, and when japan runs too fast, they're either going to have to raise rates, and when they raise rates, the yen's going to appreciate, and if the yen appreciates, then you have to be careful about the stock market. >> yes. he laid it out well. >> he does, doesn't he? >> so, stronger japan, higher interest rates in japan. they're already in their hiking cycle. >> stronger japan. >> stronger china, stronger japan, higher interest rates, stronger yen, headwind potentially for the markets. that's what tepper was saying and the other catalyst today is now there's a new party head that they're going to put up for prime minister. the former defense minister and he has previously voiced support for higher interest rates. so, that's another potential catalyst and warning sign for the overall markets. before we head to break,

want to show you what's happening with bonds, for our bond report, how treasurys are faring. there's been a bid in treasurys this morning, reversing a trend we've seen post-fed. we got some inflation numbers. the fed preferred measure comes in a little bit tamer than expected, perhaps leading some to buy. we've got this new range, sort of 3.5 to 4% on the ten-year. we'll be right back on "squawk on the street."

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free guide. humana. a more human way to healthcare. it's been an up and down week for shares of the world's largest company by market value. some almost let's call it $3.5 trillion at apple. concerns about the rollout of the new phone in terms of orders and how many people are lining up or not. maybe a benefit in part from the chinese stimulus as well, sort of helping a bit here, but kind of puts it in some perspective for apple up othwen e ek let's call it one quarter mof 1%. we're right back.

♪ ♪ this one is for you. .

dock workers could go on strike as soon as tuesday if they can't reach a contract agreement with port operators. major companies are taking steps to mitigate disruption from a work stoppage.

our frank holland is in new jersey with the details. this could get ugly, frank. >> good morning, sara. the likelihood of a strike seems to be increasing in the minds of many. as you mentioned we're near the port of new york and new jersey, one of those east coast gulfports that move more than $2 billion in goods every day. the cranes up in the area, the open slots normally those cranes would be moving and the slots full. a sign freight is moving to other ports. the cranes sitting up and the slots empty. td cowen and bank of america saying the likelihood of a strike is increasing. the shoreman ila is asking for more compensation and restrictions on automation and negotiations with port operators known as the usmx. the fear of disruption why stocks like fedex, and c.h. robinson that offer logistics and air freight are outperforming. i spoke to c.h. robinson, there is a scramble for companies to find new routes. >> if you've got goods from

europe you need for the holiday season you want to look at alternatives, come through canada, the canadian gateway, come through a non. >> ila port. there are a couple ports that fall into that category. you have air freight as an option. >> according to national association of manufacturers, more than two-thirds of container exports and half of imports moved through the east coast and gulf coast ports. the president i spoke to on world wide exchange expects to see the biggest immediate impact to pharmaceuticals and the aerospace industry and the ceo of rxo that include ford, amazon, pepsi and coke, and he says a prolonged strike could raise the cost of shipping long term and a bidding season in a few weeks when companies contract for the next 12 months. >> the biggest thing is, you know, if this causes tightening of capacity, then, you know, you will see rates shoot up. this is a long strike, then you're going to have tightening of capacity across a lot of

pockets across the country which will impact rates for which you're talking about the next year at that point. >> some companies tell me they're charging as much as two times normal rates to their contract customers to help them find alternative routes. again, really a scramble as we get to the deadline for this negotiation and a possible strike. >> it came up on the costco call, there's contin yen gensies in place, preparing to use different ports. to what extent are we going to feel this as consumers as we go into holiday season, election, trying to get inflation to come back down? all of this sort of disrupts that, doesn't it? >> well, i mean, let me start off with your questions in order. the holiday season, the estimates are that about 80% of the things for the holiday season in the u.s. in a normal year at this point we only have about 70%. it's not clear if it's going to meaningfully impact the holiday season. when it comes to everything else the increases in cost to

shipping gets passed on to consumers. >> yeah. we don't need that right now. thank you, frank. frank holland in bayonne. >> thank you. >> that does it for this hour of "squawk on the street." mike santoli, very much appreciate your withstanding that coughing fit from our colleague. >> happy to be here for it. >> it was brief that got choked up. >> thank you. >> just in case. >> got my cough drops. two more hours to go. taking the coughing -- >> if he's out next week you know why. ta otharton's jeremy siegel offr a ken e markets as the blue chips hit another record high. keep it here. finance and h.r. on one platform. tim, you are a rock star. using responsible ai doesn't make you a rock star. it kinda does. you are not rock stars. (clears throat) okay. most of you are not rock stars. oooh. data driven insights, and large language models.

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relax, you booked a vrbo. (♪♪) happy friday. good morning. welcome to another hour of "squawk on the street." i'm sara eisen with david faber, live as always from post nine of the new york stock exchange. carl has the morning off.

take a look at stocks right now. we're higher a little bit but building on record highs. it's been really a good week overall for stocks after the fed cuts, after china stimulates. week to date up almost a percent on the s&p. nasdaq composite up almost 1.5%. not huge moves,but pointing higher. apple, tesla, pdd, the chinese company, they're all helping the nasdaq, but you've got nvidia lower and amazon and microsoft. we've got strength in most of the sectors this morning in the s&p. only information technology is a little bit weaker after what's been an overall strong week. super micro coming back after a terrible day yesterday. as for treasuries they're getting bought. yields are little lower. 10-year yield sticking around where it's been all week, 3.76%. the latest read on inflation benine for pce. 30 minutes into the trading session here are movers we are watching. bristol-myers shares gaining on news the fda has approved the

company's schizophrenia drug, a twice daily pill, the first type of treatment for the mental disorder in seven decades. stories of the week here, casino stocks like wynn, las vegas sands and louis vuitton adding to big gains as china's csi 300 its index closes at its best weekly performance since 2008. costco shares are under pressure after missing quarterly sales estimates. shopper traffic did gain in the u.s. but consumer spent slightly less per trip compared to last year. the revenue was a bit of a miss. the chart, though, shows that this has been a big gainer over the last year. so giving back about 2%. >> let's get the consumer sentiment out just moments ago. rick santelli has those numbers for us. rick? >> yes. david, now these are final reads that will replace the readings from two weeks ago. i will tell you that these just like the conference board's confidence numbers, have improved. if you look at the headline it

moved from 69 to 70.1, the best level originally was may and now moves back a month to april and if you look at current conditions it moved higher as well from 62.9 to 63.3. comp remains of june of this year. what lies ahead are expectations also improved from 73 to 74.4. best since april of '24, comp stays the same. and the inflation numbers while the growth numbers based on growth in the economy, the equity markets, that's what normally moves confidence higher we did not see any change in the inflation data, one-year inflation remained at 2.7, the lightest since december of 2020. but we see stickiness in the five to ten-year read, which was an increase from the last -- from every month this year. and if you consider 3.1 actually is the highest level going all the way back to 3.2 which was

november of last year, we want to pay really close attention to these. i'm a little surprised rates haven't come up a little bit more on the better confidence even though, of course, inflation we didn't make much progress. monitored 3.74% for the 10-year because that's where it closed last week. right now twos and tens, they're basically both very close to unchanged on the week. with the long dated treasuries just a little bit higher. sara, back to you. >> i think, you know, this confidence data, rick, feel like we have to take it with a grain of salt. it's been always over the map, and it doesn't necessarily match up with the spending data -- >> mostly stronger. >> gotten a consumer confidence read this week -- >> it jolted the markets higher. confidence seemed as an improvement. the equities seemed to like it. >> thank you. we did get spending data after the confidence data today, which was a little bit light.

but still showed that consumers are spending. bond market may be teeing off of the inflation numbers that we got. the 0.1% read in august, which was better, lower, than the .2%. the year over year rate goes to 2.7 in august from 2.6 in july. fed likely to look at this as more improvement. they get what they want in terms of the monthly readings coming in line or less. so that's overall a good sign. the next big report to watch will be the jobs report next friday because we know they're worried about the labor market. on one side you have better initial jobless claims which should help, but on the other side, you know, weaker expectations like in that last consumer confidence of jobs and fewer hiring numbers that within expected overall. want to bring survey numbers. cnbc does a survey of small business and few highlights stood out to me in this one. only three -- only one in three

small business owners, 33%, there's the first bullet, believe inflation has peaked and that is up nine points from the last quarter so that's good from 24%. it's still only 33%. so appro po of some of the inflation data. half of small business owners think donald trump will have a positive impact on the business, only 22% say the same for kamala harris. the first time we asked you that question. gives you a little sense of the sentiment around small business, maybe they are looking forward to lower corporate tax rates and deregulation, that typically helps small business. morgan stanley had a report today on tariffs trying to quantify the impact of 10% across-the-board impact of -- 10% across-the-board tariffs. 1.4% drag to real gdp growth with headline prices rises 0.9% and we'll feel that more rapidly than the gdp impact. that's a little bit of a balance there on how wall street is thinking about the trump and

harris policies. >> >> we heard about the port strike, but i know you also have comments there from the atlanta fed gdp or at least -- >> we're waiting for atlanta fed gdp. >> i'm looking at the wrong sound bite. costco had comments about it, yeah. >> we're wondering how big a deal this is going to be in terms of supply chain disruption, higher prices, how retailers are preparing. here's how costco ceo said that he's planning. >> the port strike is something we've been watching very closely for some time. we knew about the timing of this as well. when you think about the impact to our business we import primarily nonfoods and some limited food and sundries come in, but nonfoods about 25% of our total business and only a subset of that is imported. there's some domestic goods in there as well that are not imported in nonfoods. we have done a little bit of everything that you spoke about. we have contingency plans. we've cleared the ports. we've preshipped and we've done

several different things we could to get holiday goods in ahead of this timeframe and looked at alternate plans that we could execute with moving goods to different ports and coming across the country if needed. >> just a taste of how big retailer has to prepare for something that could be disruptive. as far as the fed and any price impact likely to look through it as temporary. >> yeah. >> once it gets fixed. but transitory inflation wasn't so transitory last time. >> it wasn't. we heard from frank holland who said 80% of the goods needed for the holiday season have arrived on our shores. >> that's good. >> meantime the market continues to go higher. s&p now coming off its 42nd record close of the year hovering at fresh highs this morning after the pce number the fed's key inflation gauge, lower than expected. wharton school of finance professor jeremy siegel joins us now. i wonder how much of a game changer you think that could be for global markets diffgiven whe

heard? >> i listened to david tepper, and wow, he makes a lot of sense the only way -- a little bit i disagree with him is that i think you can ride japan for a while. he was worried about a have very long-term appreciation hurts their exports and raises interest rates. in the meantime you get a double whammy with a rising yen and we take a look at yesterday you got 2% on the yen, 2% on the nikkei and a 4% gain. i think that could be ridden. i think what china is doing is very positive and listen, his philosophy, i mean, you can't go very wrong when you buy a market at 10 price earnings ratio. i mean, unless you think chairman anxi is going to aboli private enterprise and that doesn't look like where they're going right now -- >> no, but you don't know ever.

>> you don't really know. obviously, the bears, obviously, the bears on china, you know, are going to say, you know, just going to go downhill and his attitude is not certainly is capital friendly as people hoped, but you know, warren buffet used to taublk about tha margin of safety he gets by buying a low p/e market and the china market, now it's probably 12, 13 p/e, but it was 10 p/e for a year. it was around the lowest and i think brazil was the only market that was actually lower than that in terms of price earnings ratio. so, yeah, he makes a lot of sense. i think he makes a lot of sense. and the u.s. is expensive. we had the best growth. i'm not bearish, but where do you think the best gains are? he even mentioned europe, a 15, 14, p/e ratio. again in the long run, that is usually a very, very favorable factor for returns. >> so you think the u.s. market

looks full here? >> i mean it looks -- listen, i love the new trajectory of the fed. i think they only need -- i mean, if they do a quarter point every meeting we will be at 3.by the middle of next year. that's where i think the fed should be, 3.5. the fed dot plot talks about 2.9. i don't think it's going to get that low unless we have a recession that's not an equilibrium. all we need is a quarter point the next six meetings which gets us to the june meeting next year and that's where we should be. and, you know, that -- >> based on -- based on the inflation? >> yeah. the inflation data -- >> because we're still on target -- >> i mean i think he's on a -- they don't have to do 50. i mean, i would prefer there -- i think the data says they

should be at 4. so they're going down a little slower, but much faster than it looked like before the last meeting. so instead of getting to, you know, 3.5, 4% in 2026, a quarter point is -- they're going to get there probably in the middle of 2025. you can say how much harm is the economy in? maybe it's a little high, high for a few months but if they get there and the market thinks they're going to get there, the rest of the year does not look as bad. one reason why the long bond went up, which doesn't surprise me at all, is that recession risk is lowered by the pivot or the recalibration of the fed. >> you know, jeremy, one of the questions always is when is any of the money going to start moving out of money market assetings as the yields comes down. the latest report $6.4 trillion after the fed cut.

the inflows continue. do you have any thoughts on that. >> i think very honestly, what stocks might benefit the most from the lowering of the fed funds rate and the money market which will go right with that fed funds is there are a lot of great stocks now 3.5, 4% dividends with growth and inflation protection which you don't get with a money market at all, and, you know, they've certainly been ignored because the mag seven has taken off on the market, but you get those lower rates and people say i rather sit in a 3.5% dividend stock with great protection and increases in the future, rather than my 3.5% money market fund. that would be a positive for that group of stocks. >> what's your sense of what to do with consumer stocks and what's happening overall with the consumer? because rick just mentioned better consumer confidence,

worse consumer confidence this week. initial jobless claims tame, don't speak to at love layoffs, but job market is softening, people have felt the impact of inflation and higher interests. so what do you do? >> i think it's going to be okay. i don't think it's gang busters. i mean you're right, i think the report that we got on tuesday was more important. this was actually a revision of the university of michigan report that we got before the conference board came tuesday which really was a little bit of a jolt lower on that data. i think that that's going to -- however, one piece of data that no one really talked about, at 8:30 this morning, was the trade deficit came in much lower than expected. that could boost this third quarter gdp well above 3% now. you know we're at 2.9. i'm waiting for that atlanta fed

lower deficit figures prominently in the gdp data and we'll see how that comes out. this quarter that, you know, we're almost near the end right now a few days left, really could be a three plus quarter on the year. >> i don't know if you were listening last hour, sara said multiples don't really matter that much. mike was, when you back out the top seven market caps you're talking about 18 times the remainder 418 stocks in the s&p do they matter to you and are you concerned about what is not still, but what is a fairly high multiple even when you back out the biggest market caps? >> don't forget when you back out the mag seven you have a lot of tech in there. i mean there's -- you know, if you take out the tech sector of the s&p which is well into the 30s on p/e, then you're getting into the, you know, 15, 16 if you take value stocks you're at

15, small stocks you're at 13 times earnings, so certainly the market is not cheap, it's not like -- it's not like china, europe, and there is good reason it isn't cheap because our economy has been doing well and our earnings have been doing well certainly, but i think, you know, my feeling is equilibrium p/e of all the market is in the 20 range, not in the 15, 16 because of all the liquidity in the market, the indexing in the market, the ability to buy and trade stocks at so little cost compared to history. so, you know, i would say the new normal p/e is 20 and we're right in that ballpark. so, you know, a good economy and good earnings can still provide us with a boost, but, you know, am i looking for a 20% gain over the next 12 months, no, i'm not.

>> all right. wharton school professor jeremy siegel, thank you. you're going to hear a lot of inflation numbers cited today. the year over year number on pce, 2.2% from 2.5. it's the core year over year number the fed watches closely that went up to 2.7%. so we're nearing target but still a little elevated. >> all right. let's move on to talking a bit about hurricane helene because it made landfall as one of the strongest storms that hit the continental u.s. in years moving north. let's get to nbc news's george solis live from asheville, north carolina, with the latest. george? >> hey, good morning, good to be with you. yes, tropical storm helene now coming into the region here delivering some impact. we're seeing some trees down here in the downtown area. you can see actually one right there that was toppled over. this, obviously, just scratching the surface of the bigger picture of damage that we're about to see here in this region. this is not an area that is used to hurricanes like this, so

there are flood warnings in effect for much of this region right now as some of the rivers and tributaries are swollen with water from hurricane helene, now tropical storm helene. governor here declaring a state of emergency. there are local states of emergency. keep in mind there's actually a system that stalled here for a few days, delivering rain upon rain, inches and inches here, already creating a problem. so now we have even more rain, more flooding. it is expected to be catastrophic when it is all said and done, and again, this is a region that really isn't used to seeing these hurricane-force winds. every so often you can see as much these winds, it has tapered some since early this morning when we started to see the 30, 40-mile-an-hour gusts of wind. again it is picking up still periodically and the rain really hasn't stopped at this point. i can say we were actually at a gas station last night with some of that rainfall and we actually helped out one of the owners there try to protect the gas

station. fortunately this morning he checked in to no avail. that is under water at this point. that's a sense of some of the flooding we're about to see. thousand year flood levels in this region. again at this point, to assess the damage it is not safe to go out. you are starting to see some traffic here in the area, but the advice from the officials stay in until this all passes because this might linger for a little bit as tropical storm helene wreaks its wrath here in the carolinas. guys? >> look at all the trees behind you. thank you. be careful. george solis, appreciate the report from asheville this morning. as we head to break here's our road map for the rest of the hour. s&p on pace for another week in the green. plus a look at the trillion dollar reason that is getting nvidia investors more bullish. those shares are up nearly 150% so far this year. and speaking of nvidia, ceo jensen huang making fresh remarks in washington this hour at a rare fireside chat focused on ai, and its energy consumption. we're going to share the

highlights. he's really making his rounds hdo. . >>e es >> big show still ahead. "squawk on the street" will be right back.

welcome back from "squawk on the street." bain consulting giving video bulls this week the firm focusing on the trillion dollar ai opportunity forecasting a total addressable mart for ai products and services will grow between 40 and 55% annually hitting about a trillion dollars

by 2027. global head of technology, ann heckers joins us now. nice to have you. we're all or many people in the equity markets certainly are awaiting concrete evidence of use of generative ai in the enterprise and as somebody who is consulting with so many companies what can you tell us in terms of the progress being made there that is giving rise to the forecast i just shared? >> yeah. it's a great question. when we're working with our clients we really are seeing these ai use cases starting to take hold. it definitely is nascent in some areas but we're seeing a lot of growth. some specific examples customer service in call centers, companies are seeing north of 20, 30% savings when they're really integrating ai through their overall work flows, content creation and marketing 30 to 50% savings. software development which is one of the early use cases and

also back office use cases. so we're starting to see our clients really get real value out of integrating the new ai tools and work flows into their productions. we're still in the early days. growth still to come both in the use of this technology and then we're going to see this technology expand which leads to the billion dollar market opportunity. >> yeah. i mean, again, call centers comes up a lot. it seems to be sort of a very -- you can understand fairly simply why it would be so effective. beyond that, when you get to more complex things in the enterprise, what's the learning curve? how is that adoption going to take place? why do you believe let's say within three years or so we're going to see significant increase in that adoption? >> yeah. i think a lot of companies where they startsed is experimentatio, small pilots how can they use these tools, where can they drive innovation for their own products or efficiencies in their own companies, and i think now we're at the stage people

are saying how do i scale these smaller use cases into bigger programs that are going to drive more effectiveness. content creation. knowledge workers like synthesizing all of the knowledge that's out there stored in lots of different places. we are seeing companies starting to use these differently. we think of that driver of that billion dollars, the first piece we've seen first is with the hyper scalers, the digital infrastructure, software to drive these large language models. two other big drivers we see, one is building out at the enterprise level, this would be smaller models, more open source with data sets, specific companies are looking to start to build in their own data centers and the third is the enterprise software companies who are integrating ai into the products the companies are using all the time already. as the ai gets integrated into a lot of more of the software products that's going to drive more need for the digital infrastructure behind ai as well

as ai software and services. >> yeah. you know, it's not as though the technology is static. it's going to continue to improve. many of us wonder just how much it will. i winter and when you think about the efficiencies that will be introduced how much is going to mean replacing workers? i know that's a ways away, but it's something that is on the minds of many? >> yeah. that's definitely something that has been looked at a lot. how is ai going to impact overall workplace, what jobs might it augment versus replace, and as we look at this with a lot of technology innovations, it does change the way people do work for sure and our clients are spending a lot of time training our people to use these new tools to make their own jobs more efficient. i think this ai as you said is not static and it will create new jobs as well as people innovate on the new platforms and come up with new use cases, form factor, so it's going to

drive changes in how we do work for sure and drive new opportunities for talent, not only in the software space but if we think much how do you build out such a huge digital infrastructure that touches innovation up and down the supply chain. >> you don't as its knowledge increases it will replace knowledge workers? >> i don't think it will replace knowledge workers. i think it will make knowledge workers more efficient and just like other technology tools that have come out over the decades, right, when question got excel and power point didn't replace knowledge workers it made us more efficient and people spend their time thinking about different parts of their job. it will drive more innovation, thinking through the insights the big data set can bring forward. >> appreciate you taking the time. thank you. >> watching bitcoin because it's holding above 65k. what investors need to know. it aut6 w teth 'sbo 6noafr is break.

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in manhattan this morning as he faces charges. he accepted illegal contributions and gifts from people looking to buy influence in the city. he is scheduled to be arraigned at noon eastern. zillow adding climate risk information to its property listings in the u.s. the data will include flood, wildfire, wind, heat and air quality risks and will list any climate related insurance requirements. and maggie smith has died. the oscar winning british actress beloved for her roles in the harry potter films and "downton abbey" diamed peaceful according it a statement from her family. she was 89 years old. >> didn't look that old. countess grantham. thank you very much. a check on the crypto trading action. bitcoin back above the key $65,000 level, above 66, ahead of a $5.8 billion options expiration. bitcoin up about 12% this

morning bucking the average 6% decline in september in past years with stocks. meanwhile some news here. robinhood reportedly looking to join revolut launching a coin into the market. stricter regulations from the eu and elsewhere will create more room for competition in the $170 billion digital asset market. bitcoin continues to go strong as a goldman sachs trading note put it this morning,he t ultimate liquidity sponge. "squawk on the street" will be right back. when it comes to amgen's life-changing medical breakthroughs, every second counts. but without investment, those breakthroughs are often paused. citi's seamlessly connected banking, markets and services businesses, deliver global financial solutions. so our client can keep investing in innovations for patients around the world. without pause.

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. all right. september, of course, has had a number of gains including a key area for the rally we haven't talked about that much is the travel names booking holdings, hilton, united, royal caribbean all right around fresh 52-week highs. airline stocks such as united

and delta cruise lines norwegian, carnival, royal caribbean posting double-digit gains this month. >> very cyclical. things looking up for the u.s. consumer. we got the new read on the atlanta fed gdp tracker. they input all the recent data and it's up. we're now tracking 3.1% for our third quarter growth up 2.9% growth which it saw a few weeks ago. moving higher. we did get weaker spending numbers today, but that was offset by increases in real gross private domestic growth and the contribution of net exports to third quarter gdp, something jeremy siegel mentioned should help the economy overall. so if you're looking at gdp as a measure of how we're doing things are looking up for the third quarter. just wanted to bring the immediate news to you. >> i'm glad you did. >> s&p trying for its 43rd record close of the year. we're going to count every single one. despite a strong september our

next guest says there could be further upside. joining us is rbc capital laurie alba siena. you're feeling good. >> i feel like in the short term if i'm thinking through year end things feel full whether i'm looking at valuation or sentiment. when i run my numbers for next year i can come up for 6200 and if i take an aggressive optimistic view on earnings i can get to around 6500. that's looking at one of our models not the only thing we use in our targeting process. as long as we can get out of the economic pothole like we're stuck in this debate over whether the economy is weakening and weight going on with the labor market. i'm assuming we're not tipping into a recession and we will have a healthy 2% gdp growth next year. that's a good setup for stocks. >> isn't that where the market is already? >> we're trading above 5700. i have sort of a hard time justifying getting excited over

the next few months. when i take that longer sort of 12 to 18 month view i can get back on board with the rally. >> i know you refreshed your stress tests recently. >> yeah. >> in terms of the s&p and went back and go back a long time. >> yeah. >> what did you find in terms of valuation? >> what we found and we have a different mouse trap than most people. you have to realize we're using a different model going back to 1962 and we try to project the p/e based on trends and inflation. we use pce fed funds and 10-year yields and look at street assumptions on those things and come up with an implied p/e. what we found we did three different stress tests with slightly different sets of assumptions, all of them showing continued improvement for next year and they were all getting me to a low, you know, kind of 23ish times p/e multiple which is a little bit higher than most people think the market deserves. our view is that if you take a long look at history and a long look in terms of where these

data points are relative to that history you can sustain a higher multiple than what most people assume and we find there's a little more room next year. it's not necessarily the most exciting call. it gets exciting when you plot it out with the math and put these s&p numbers down. >> does that mean it's driven by growth over value? >> i think it's ultimately got to be driven by growth behaving and not collapsing, but i do think you need to see the value part of the market really kind of move back in, kind of that s&p equal weighted rest of market. we have another valuation, you know, set of data that we look at and we look at the top ten names in the s&p 500 and they're at a ceiling trading around 27 times right now. you go back the past five, six years, prepandemic, a little post pandemic, they can't breach 30 times and stay there and they hit 32 over the summer and we started to see this rotation take hold. look at the rest of the market we're above average but below peak. our median p/e is around 18 times. it's not cheap but you could

move above 20 there right. i think we're still in sort of this position we need to see that catch up trade to get higher. >> a lot has to go right on the cyclical front, economic front. >> and on earnings. >> and look they're related and look, i'll tell you, zer to 2% gdp, i did a piece in july thinking about gdp dynamics, and we revisited this one model, 0 to 2% gdp the stock market is typically down. 2 to 4 in real terms it's typically very strong solid returns kind of in the low teens. what's interesting right now you look at consensus gdp for next year. >> heard it from atlanta. >> atlanta fed tracking 3.1 for third quarter. >> that's running hotter than consensus expectations for next year when the economists write their numbers down, and it gets captured in the surveys the number still agts at 1.8. we've seen this year's number rise up to 2.5, but people are still sort of stuck in the muck and thinking about next year. you have to assume we're going to kind of push on the

accelerator and get ourselves out of this pothole to sort of sustain these gains. i think we can do it. post pandemic we keep underestimating gdp and chasing our tails and having to ratchet it up. >> now we've got the fed. >> if you look precovid, constantly people were over estimating gdp and pulling their numbers down. it's a completely different dynamic post-covid. we have to change our psychology a little bit. >> it matters what the long and variable lags look like, how long they take on now the upside as well. you've given us a lot to think about. >> thanks for having me. >> rbc capital markets. >> we have fresh news out involving openai on the funding front. let's get over to kate rooney for the details. kate? >> good morning. so openai's cfo sending a letter to its investors looking to reassure them the start-up is in a strong competitive position and says they are still on track to close a major funding round next week despite losing top

talent this week in an open e-mail to openai's financial backers sent by a source, the cfo first tackles the departure of their chief technology officer and researchers all stepped down on wednesday and other departures have raised questions about the culture and competitive edge at openai. fryer in this e-mail looks to put the fears to rest and wanted to, quote, personally reach out following the news and emphasizes that we are in a strong position as she says with a talented leadership bench to guide us forward. we have been reporting that openai is in the midst of closing a multibillion dollar funding round at $150 billion valuation. the cfo in an e-mail says that's supposed to close next week and that it was also over subscribed and says, quote, they remain laser focused on bringing ai to everyone and building sustainable revenue models that fuel our operations and deliver value to our investors and employees. openai did decline to comment on this one. back to you. >> i mean, roughly on the $4 billion in revenues we're

talking over 30 multiple on revenues in terms of where that valuation is. you know, that being the case, it doesn't seem to be stopping any of the investors that i'm aware of from what i understand, they, you know, they have been lining up to participate in this, despite what are often paying fees on fees to the funds that participate in these kinds of deals as well. i understand they may be cutting people off in terms of it. unlimited demand, i don't know. significant demand. >> yeah. i've talked to some silicon valley investors who have not been able to get into this round. there's also these sort of special purpose vehicles or spvs that are raising money from other smaller investors so thrive is putting in a billion dollars but also doing this through an sv becomes. they're doing their mini fundraising. there's a ton of interest and investors that have been left on the sidelines here, a ton of demand. i would say the structural change is big, that it will now

become a for profit from what we're hearing from sources and then a lot of hand wringing around sam altman's equity and how much he's going to get as part of this. they pushed back yesterday on the equity package, the board saying that has not been decided and the 7% figure that was out there, they say that's just not true. >> yeah. important point as well, unlike previous funding rounds where you were capped in terms of your ultimate investment return that will not be the case with this, correct? >> that's right. yeah. so that's what we're hearing from sources. no cap. and sam altman, i should say, is expected to get some piece of the pie here but they're saying it's not as large as it's been reported and the board has not made any decisions. i'm told that's still ongoing. we should get some news next week. it is expected to close at some point next week. stay tuned. >> always intriguing with that one. thank you, kate rooney. still to come nvidia ceo jensen huang speaking at a erreside chat breaking down ai's engy impact. we'll share headlines from that.

stay with us.

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ceo jensen huang speaking at the bipartisan policy center in washington, d.c. this hour. let's get to seema moody. she's got the key takeaways. he's talking a lot and we monitor everything he says. >> the topic of this conversation something that you like to talk about ai in the scarcity of power. this discussion was in d.c. nvidia ceo jensen huang acknowledged the strain of the ai boom on the grid and explained before the industry issues uses ai the teaching or training process consumes a lot of energy because there is a lot of trial and error but he expects demand for power to only increase over time. listen in. >> these data centers could consume today maybe 100 megawatts and in the future probably several ten times, 20

times more than that. it doesn't have to necessarily be built in one place but the amount of data that we're going to train it with and the ai models will use synthetic data. >> to accommodate the increase in demand the industry needs to rely on renewable energy, build data centers closer to energy sources and demystify the importance of ai to policymakers and partner with governments that tackle the power issue and get better at using smart grids as xhantsds center to dispatch energy more efficiently. one of the beneficiaries not mentioned in this chat but getting more attention on wall street is ge vernova hit a new high yesterday and up over 80% since spinning off from general electric in april specializes in smart grids. back to nvidia, you mentioned that media tour. jensen huang has been public in the last couple weeks since the company reported disappointing earnings on august 28th speaking at goldman's communicopia and dreamforce and d.c., it has coincided with a strong rebound

in nvidia shares up about 12% since early september. the broader semiconductor etf up about 10% since this month and that china stimulus helping the sector. they've got the exposure, sara. >> faels like he's taking his place as the industry leader as the king of a still ahead this hour, gold prices hitting record after record. the ceo of wheaton precious metals will join us to break down whether that rally can 'lben on mer hel o"meyovs" at 11:00. stay with us.

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while a.i. continues to fuel productivity gains for main street, it's also impacting the way people learn and grow. let's get to julia boorstin for what that means for schools, an angle we haven't hit on that much, julia. >> that's right. just in the past -- even the past year, sara, leaps in generative a.i. are offering teachers new tools and powering the fast growth of a.i. education startups. with teacher shortages putting more demands on educators than ever, this year teachers are using new a.i. tools to help

them do more with less. a leading a.i. startup magic school is used by 3 million educators across the country. while most of those teachers are using it for free, 5,500 schools pay for a premium version for about $5 per student per year. one of those subscribers, green dot, took us inside one of its 18 los angeles charter schools to show us how a.i. is helping teachers teach. james fiddler is a green dot assistant principal. after a trial period last year, his school just started paying for a full rollout of the software this semester. he showed us how his teachers use the platform's 70-plus tools, everything from grading and crafting lesson plans, to building presentations with generative a.i. >> all of these queries are being answered to quickly. how much time do this save for our teachers? >> our teachers are asked to do a lot to prepare. so, this gives teachers an opportunity to spend less time

doing more. >> magic school started rolling out 40-plus tools for students, including chatbots that teachers can customize based on each student. >> the teacher will decide the tools they want to launch to their student. they will customize them, make sure they work the way they want, they're appropriate for the grade level. then they'll test them in their own playground to make sure they're appropriate for their students. and then they'll launch them to students. >> magic school is one of the 67 a.i. education companies that have raised $518 million so far this year, according to pitch book. with $3.3 billion invested into a.i. education startups since 2020. one of them, goodnotes, is an a.i.-powered digital note-taking platform. it helps students with things like spellcheck and math equation. but with new technology comes new concerns around a lack of human interaction in classrooms or the potential for a.i. to be used for cheating. have you gotten pushback from parents or students like, hey, why are you using a.i. instead

of just teaching yourself? >> yeah, i wouldn't say from parents or students. i think our district is doing a great job of setting expectations about what a.i. use looks like. a.i. is here and it's here to stay. and so how do we adapt and adjust to that? >> now, it's not just startups embracing a.i. and education. coursera has been focused on a.i., offering a.i. study assistance and course translations. >> because the big fear in classrooms is kids would just be able to cheat and have chatgpt write their papers and do their homework and get cliff notes and all these things counterintuitive to learning. so it's great to see the positive impact. >> those are the risks. on the other side you have a.i. education companies saying, we're going to make sure kids aren't cheating and use our technology to make sure kids aren't just copying and pastingy

somewhere else and by offering more customized lessons, more customized questions for a homework assignment, the idea is it will be harder to cheat and kids will actually get challenges that are more appropriate for them. so, the teachers say this is going to be able to counteract some of those risks, but they certainly seem enthusiastic. the educators seem enthusiastic in terms of saving time with the busy work. >> if you can't beat them, join them. julia, thanks. >> thanks. our live market coverage right here continues after this. at pgim, finding opportunity in fixed income today, helps secure tomorrow. our time-tested fixed income suite, backed by over 145 years of risk experience, helps investors meet their goals. pgim investments. shaping tomorrow today. (♪♪) in life, i'm reminded that it's not about the destination. it is truly about the journey. (cheering) (♪♪)

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record levels. how china's stimulus measures and a surge in the luxury sector are powering that move. ist not just stocks. gold also hitting a record high this week. it's hit a number this year, too. th