it's 5:00 a.m. here at cnbc global headquarters. welcome to "worldwide exchange." here's your "five@5."

stocks kicking off a new week with the all-time high. and the s&p 500 may be at all-time highs, but one sector of the market that's been left behind and looking to keep small-cap bets. and boeing goes into a crisis mode with no end in sight with the strike announcing job cuts and delivery delays and what will surely be another hit to the beaten down stock. day one for nike's new ceo. we will layout the rough road and turn around. and keeping an eye on the story with the retaliatory strike on iran. it is monday, october 14th, 2024. you are watching "worldwide exchange" here on cnbc. good morning.

thanks for being with us. i'm frank holland. let's get you ready for the trading day ahead. a look at the stock futures with the dow and s&p 500 trading at the all-time highs. the dow looks like it would open 40 points lower, but close to the flat line, with the s&p fractionally higher. bond markets are closed for the columbus day holiday. the benchmark at 4.09. the two-year back below 4%. we have seen the 30-year move up a few basis points since the fed rate cut. right now, 4.4 on the long bond. a number of key stocks to watch in the day and week ahead with the bank stocks after wells fargo and jpmorgan. we have morgan stanley and many others out with results there week. we are watching tesla after friday's robotaxi wreck that saw the stock close down more than 8%. take a look. tesla shares are bouncing back

in the pre-market. for the week, down 8%. that is the money set up. let's see how europe looks with dan murphy in abu dhabi. >> good morning, frank. european markets mixed today despite the positive lead from asia and the tailwind from the strong friday close on wall street as well. the concerns of the health and strength of the chinese economy with the beijing stimulus pledge long on intent and short on detail and underwhelming global investors. a few things have played out here as a result. shares of the europe's top luxury stocks pulling back including lvmh and hermes. the chinese consumer critical for these companies. china is a key source of external demand. we are seeing investors hit the sell button on that news. in terms of what else to expect in the week ahead, frank, of

course it is a monday kicking off trade today. we are counting down to the ecb meeting on thursday. anothe another 25-basis point is expected. that's the state of play. frank, back to you. >> thank you, dan. dan murphy in abu dhabi. we check on the big money movers. we start off with boeing tritr surprising it will cut 10% of the global work force and delay first deliveries of the 777 jet by one year and log $5 billion of losses for the third quarter. shares right now are down 1.5% in the pre-market. all three of those announcements tied to the month-long labor strike. the ceo says the downsizing is necessary to align. buffett buying 3.6 million shares of sirius xm. he holds 109 million shares of

sirius, a 32% interest in the company. shares up 7%. today is day one for new nike ceo elliot hill. shares are up 9% since that switch, but down 8% with the report with guidance. we will have much more on the story throughout the hour. shares of nike are just about flat. fractionally higher. we turn to the middle east and developing story as we watch the price of crude oil this morning. we see a lot of fluctuation. wti is down 2%. basically trading at $74 a barrel. brent crude at $77.35. down 2% as well. nbc is reporting that u.s. officials believe israel will target what they will attack as

the response from two weeks ago. the record adds there is no indication that israel will target nuclear facilities or carry out assassinations in iran. u.s. officials are stressing iran has not followed how to act or when to act. we will bring you more as this story develops. turning attention back to the markets. they rounded off with the high andthe dow and s&p 500 closing at record levels. the 45th new high for the s&p. strong earnings from jpmorgan and wells fargo. earnings season this week with 40 companies reporting. earnings growth is expected to be 5% for the third quarter according to lseg data. joining me now is kelly. good morning, kelly. kelly, we were just showing the earnings estimates for q2. that was the actual for q2.

the estimates for q3 at 5% and it pops back up for q4. reading your notes for q3, is that a concerning sign or raising the possibility for beats that lead to stock gains for investors? >> the positive side for the market, frank, even though cutting estimates is theoretically a bad sign for the economy. i think wall street has gotten it wrong here. we have seen earnings estimates come down as we have gotten a few bad jobs reports and a growth scare. at the same time, you know, these -- corporate america has consistently proven wall street wrong. earnings estimates have been about four percentage points lower than what actual earnings have been over the past few quarters. i expect wall street to hurdle this bar easily. i think analysts are kind of giving companies an easy ride

to, you know, better earnings and better perception here. >> you are saying it's a possible opportunity if you are an investor because you gave us this stat. 96% of quarters of the s&p 500 seeing eps growth and the u.s. economy has been expanding. although the estimate is lower than q2 and q4. >> earnings are still growing. we saw a slide in profits last year. that slide seems to be over with analysts expecting earnings to growth in the quarters ahead. i think all is good on the earnings front right now. i think investors will be skeptical to the commentary we get. of course, there is still obvious worries of the recession going forward. i think investors will look to the c-suite for color on that. >> concerns of recession going forward. we are hearing more and more people mention that as a

possibility. with that in mind, you are saying it is time to reallocate tech holdings. when you say reallocate, what do you mean? is that outside the mag seven? >> frank, we are in the business of helping investors reach their long-term goals. obviously, tech is a sector, especially bigger and profitable tech has had a really strong year so far or the first half of the year. we see this gap forming in markets where tech is strong, but the bar is high for tech. i think that's the theme to watch in earnings season with the tech earnings growing 10% to 15% year over year. we think that is strong. obviously, there is a strong story behind tech, but it is a point in the market especially with high rates and slowing growth that you should be reallocating out of your winners and look for more value based opportunities. >> you should look for opportunities in the bond market with the idea that yields will

go down. we heard a lot of people talk about money coming out of the money market funds. you are one of the people that believes that yield in money markets will go down. what part of the bond curve will you put money into or tell your clients to put money into? >> the ten-year is up 4% right now. that's quite a bit high especially if we get another huge jobs report that suggests that the job market is weakening and there's not as much hiring going on. i look toward the middle to long end of the curve, frank. a lot of clients are looking there as well, especially if that is the classic recession hedge. you see that recession happen on the long end. you see cash and money markets. i'm not sure that cash will move any time soon especially if the fed does keep the keconomy aflot and rate cuts are gradual. there is still a good reason to keep your money in cash. i'm not so sure the obsession

with cash is worth it right now. at the same time, cash is sticky when growth worries are the worry de jour at the moment. >> thank you, callie. for more, go to cnbc.com/pro. we have bob pisani with the small cap struggles. >> since then, it has risen 63%. it's at an historic high. that is not the case with the small cap russell 2,000. it did not bottom until october of last year. it is still almost 10% from the historic high back in november of 2021. if you include 2024 year to date, the s&p has out performed the small cap russell 2000 12 of the last 15 years. ouch. in frustration, investors who

believe in difficulversifying a small caps have been attracting followers around the idea. it does make sense if you think about it. about 40% of the russell 2000 companies are unprofitable. if stocks are a play on the future stream of cash flow, then includes a profitability tilt may make some sense. several small cap etfs that exclude the unprofitable companies have attracted strong inflows recently. the spdr small cap. the dimensional small cap and the avantis small cap. global investors runs this small cap etf and they say it out performed the russell 2000 by 2% on the annualized basis on the past three years. the russell 2000 does not have

the profitability overlay and attracting followers on that. back to you, frank. we have more to come here on "worldwide exchange," including the one word that investors have to know today, but first, volatile moves in asia as beijing opens more stimulus measures to keep the stock market surging. is it different for the u.s. investors waiting to jump into china? we are tracking the connect and disconnect with crude prices and stock performance and rbc's energy names you should buy. and the bull versus bear case as nike's ceo takes the helm. stay with us. welcome to ameriprise. i'm sam morrison. my brother max recommended you. so, my best friend sophie says you've been a huge help. at ameriprise financial, more than 9 out of 10 of our clients are likely to recommend us. our neighbors, the garcía's, love working with you.

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welcome back to "worldwide exchange." a string of worrying economic data and new promises from beijing for more stimulus. our eunice yoon is in beijing with the latest. eunice. >> reporter: frank, chinese poll say as i makers vowed to give more on the economy, but failed to give headline numbers. eac even so, the finance minister said they would tackle debt and address unsold homes. in other words, addressing the property sector and hinted at

greater government borrowing. all of the commentary was the right thing, except for the one thing that investors were hoping for and that was that hard headline number. the expectation is there could be some commentary or unveiling of the number in the coming weeks for legislative meeting. the stock markets, though, liked what they heard tentatively. the property sector saw a lot of money into that sector in the stock prices. shanghai also generally did better than hong kong. the issue, of course, with the fiscal spending, is that a lot of people here believe that that is what is needed to address the defl deflationary pressure and overall demand picture. the core inflation hit a new low since 2021. export and import numbers just released earlier today show that they were worse than expected in september. so, a lot of economic issues the government is going to have to

address, frank. >> eunice, thank you very much. eunice yoon reporting live from beijing. for more on china, let's bring in crane shares investor. brendan, great to have you here. >> thanks for the opportunity, frank. >> i want to hit on the disconnect. goldman sachs raised the guidance on the back of the stimulus announcement for the ministry of finance. we are seeing mixed results with the equities. how are you interpreting this and also the lack of actual details of the stimulus would be? >> frank, to eunice's point is the one thing we are lacking from is the exact stimulus for domestic consumption. something we think is going to happen. they potentially teased that. they did speak to issuing more special government bonds of 2 trillion rmb. they didn't specify what that

would be used for. very strong support for the housing sector or injecting capital in the banks. i think this is a super tanker that is slowly shifting, frank. we are seeing a clear indication and acknowledgment that the economy is not doing great, but to move that super tanker does take some time. i think it's very strong incentive or strong issuance almost profit warning to investors that, you know, something is changing as we speak. >> you are saying it is a step in the right direction, but we need more details. let's get into it. the economists say the stimulus needs to be somewhere in the range of 2 trillion yuan to 10 trillion yuan. in your mind, is there a new that would excite the equity markets and meet the needs of what's going on in china with the deflationary pressure and weakness in the property sector

and lack of consumer confidence? >> we know they cut interest rates broadly in terms of the deposit ratio and loan primary rate. there are some beneficiaries that take time to make that are way into the economy. i think investors are focused on the domestic consumption. we expect 1.5% to 3% of the gdp geared to the domestic consumption. certainly, a big effort to get housing prices up to at least be stab stabilized. if we get the real estate sector up, it should help on domestic consumption. >> in your mind, is there a number when it comes to stimulus that makes sense to hat would excite everybody? what's the fix?

>> the fix ultimately, you have to jar the economy out of the inflationary spiral. that is acknowledged by the highest level of the chinese government. there is a procedure at the end of the month with the government meeting and that would actually approve the actual potential stimulus measure. there's a little bit of government procedure that has to take place. that can happen as soon as the end of this month. >> brendan, bottom line it for me. is there anything different for chinese investors from a week ago before the stimulus announcements started? >> 100%. you are seeing the acknowledgment at the highest level that the chinese goveeconomy is not doing well and they are invigorating policies. china should be on the radar of every investor. every investor has exposure

through apple and starbucks. it should be beneficiary. >> brendan, thank you very much. >> thank you, frank. coming up on "worldwide exchge w pva eitan,"hyritequy is setting sights on one particular area of the market and possibly getting $2.6 billion of dry powder to work. stay with us.

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exchange." gxo is considering a sale. it hired goldman sachs to look at unsoli lilicited offers. the stock decline in 2021 came at the freight levels hit records. forward air is looking for a takeover. they are more than 70% off the all-time high back in 2021. the acquisition of another logistics company contested by investors was one factor there for that decline. now two investors that represent ownership are pushing for another. the transports overall have seen a number of high profile activist investor lead to changes in 2024. that can signal a wave of pe interest in the sector. >> i think activists is a great

idea generator for pe firms. the activist are economic animals and if a pe firm sees an under valued stock, it comes in and makes an offer. the activist is generally going to, to advocate to sell if they think that is the best value for shareholders. i think these companies that you see activists in, you will tend to see pe in as well. >> according to s&p dplglobal, interest has moved to $4 billion of deals this year. with those declining along with the valuation of transport companies, that is expected to spike a cycle. rates expected to make a slow upward climb in 2025 and one pe firm telling me manufacturing pmi and contraction is a level

they expect to reverse. coming up here on "worldwide exchange," oil and energy stocks. we're tracking the connect and disconnects with the crude prices and stock prices. ll oif you haven't already, foowur podcast. if you miss "worldwide exchange," check us out on spotify or apple or other podcast apps. more "worldwide exchange" after this. stay with us. were you worried the wedding would be too much? nahhhh... (inner monologue) another destination wedding?? we just got back from her sister's in napa. who gets married in napa? my daughter.

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big brand name companies have aging consumers and as those consumers age out, you will see nike play out. they will look cheap and you will buy them saying they will return to their glory and you will say what happened. my interest in nike is more part of the broader question over what is happening to brand names across the board. >> that was professor and what he sees is a rough road ahead for nike and he's not alone as elliot hill takes over the brand. welcome back to "worldwide exchange." i'm frank holland. we start with the check of the

futures. take a look here. not a lot of movement since we ch checked earlier. the nasdaq is moving higher a bit, on the fractional side there. bond markets are closed for the columbus day holiday. we closed at 4.09. the two-year back above 4%. we are watching pre-market action. shares of boeing right now. the second biggest laggard on the dow. it will cut 17,000 jobs for 10% of the work force and delay the deliveries of 777 by one year and file losses for the third quarter tied to the month-long labor strike. shares down 1.75%. for the week, 5%. we are watching tesla's robotaxi wreck. look right now. shares up 1.75%.

for the last week, down 8%. that is the money set up. let's turn to energy. time for this month's sectornomics and the stocks. dom chu is here to break it down. >> frank, energy is the worst performing sector in the s&p 500 this year. if you look why, it is because of the decline in oil prices during the year. if you look at the overall picture with that versus the s&p 500, the s&p sector etf is up 34%. the energy sector xle is up 3.5% during this year. that is the thing to look for in oil prices. with the trading relationship, how much are the stocks in the energy sector effected by the price of west texas intermediate? the folks at data and analytics looked at the trade be

relationship or correlation of the stocks and price of crude. if you look at the trading relationship here, the ones most levered to oil prices include names like eog, objeccidental a conocophillips. it makes sense they are tied more to crude oil prices. now as for the stocks in the sector that are the least correlated to those energy prices, look toward nat gas and nat gas companies. look at pipeline operators like kinder morgan. they are closer to the zero level. uqt on the nat gas side. when it comes to the energy sector, not every single stock trades as closely with underlining crude prices, but the production companies more to crude production.

that is the sectornomics for the month. >> dom chu with our sectornomics. let's bring in the head of rbc and european research baraj. bara baraj, great to have you here. >> good morning, frank. >> we have seen a lot of price action in crude recently. what is your take on the stocks and exploration space with the idea we are seeing middle east tensions right now? >> yes, i think you've got a real push/pull in the market. on the one hand, the fundamentals are sloppy. you have soft demand and the risk that opec may turn on the taps as we go into 2025. paper balances do not look great. at the same time, the demand in china has been quite weak.

offsetting that is the geopolitical tension. what we is haven't seen so far is the geopolitical tension. that's the risk for the upside for the oil price. we think investors are thinking about a midpoint case of $70 to $75 brent. we get more and more questions of what do these companies look like at $60 or $50. the down side risk. >> we are following reports that israel is considering what areas to strike in iran. we are looking they are looking to avoid nuclear facilities and oil producing fafacilities. i want to talk about earnings season. for q3, the s&p is supposed to see a 5% gain year over year. energy is 25% lower with gas and oil and gas stocks hit harder. oil and gas refining 77% lower.

production is 17% lower. what's going on here when we look at the volatility? why are the estimates so much lower for this particular area? >> on the one hand, you have oil prices down quite a bit as you and dominic highlighted. the other is the global gas market is healing from a very extraordinary shock in 2022. it took a lot of time post-russian invasion of ukraine to get prices closer to normalization. year over year, that is driving headwinds to earnings. the real aspect of the downgrade is in refining. that largely relates to oil product demand. gasoline and diesel demand, i mentioned in china, and elsewhere has been relatively weak. that weighed on the remfining margins. >> all right. i want to talk about the stocks you are following.

bp came out with the trading statement last week. they said up stream production for q3 is expected to be flat quarter over quarter. they also hit on the fact that brent is trading at a much lower level in q2 than q3. you know, with average 80 or $34 a barrel in q2 at 85. what is your take on shell or other oil companies with the forecast and saying they are not expecting a big boost despite everything we're seeing geopolitically? >> those are two themes coming across. one is the weaker refining margins and that's impacting everyone to a different degree. bp has more refining exposure to shell. they are hit harder. exxon has exposure to those and that will impact there. the second theme is actually that of a number of companies are talking about more normalized trading. you are seeing 2022 and 2023 and early part of '24 super normal

tr trading in the businesses with the exceptional volatility and the companies have been able to take advantage of that. that is going back to more normal levels, pre-conflict or pre-covid. we are starting to see that come through in the numbers. bp highlighted on the oil side in particular and that trading was weaker. shell was more resilient. it depends quarter to quarter. >> biraj, thank you very much for your time and insight. >> thank you. coming up, stuck in its cocoon. taking the axe on the rating of caterpillar. we will have all of the downgrade details when "worldwide exchange" returns. shares of caterpillar down 2.5%. >> announcer: sectornomics is

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welcome back. time for the call sheet. goldman sachs cuts applovin to neutral. buraird is downgrading key neutral. morgan stanley is

downgrading caterpillar to underweight. time for the global briefing. u.s. officials believe israel has narrowed down a strike on iran to military infrastructure in response to the tehran missile attack earlier this month. no response that israel will carry out assassinations. the u.s. officials stress israel has not made a final decision. china consumer prices cooled in september as beijing rolls out stimulus measures to revive the economy. producer prices fell at the fastest pace in six months down 2.8% in september that was below estimates. goldman sachs is upgrading gdp to 4.9%.

goldman saidi stimulus measures are looking for the greater spending. taiwan semiconductor is looking for an increase in profit. customers like apple and nvidia have ben fefitted to the surge artificial intelligence. coming up, the one word wl so nvestor needs to know toy. weilal have the challenging for elliot hill and he maintains the buy rating on the stock. we'll be right back.

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we are moving aggressively to shift our product portfolio and create better balance in the business and reenergize brand momentum through sport. that said, a comeback at this scale takes time. while there are some early wins, we have yet to turn the corner. >> that was nike cfo on the company's earnings call two weeks ago laying out a rough road for the company and ceo el elliott hill. already, the company pulls guidance and postponed investor day. the street still holding out hope as hill takes the reins. joining me now is oppenheimer

managing director brian nagel. >> good morning, frank. how are you? >> since the announcement about elliott hill has come out, the stock is up over 4%. i want to ask now he has taken the top job, will investors have confidence in his ability to complete what seems to be a turn around plan? >> look, like matt said in the comment you played, this will take time. but i very much believe the appointment of elliott hill to the ceo role is the step in the right direction for nike. i have written that a lot and told our clients a lot. this is the back to basics strategy or signaling a back to the basics strategy for nike where the company refocuses on product innovation and focuses on rebuilding relationships with key wholesale partners. >> brian, it is interesting you say that. elliott hill, his resume went viral on linkedin. he only ever worked at nike as

an intern up. why are you bullish of bringing somebody in who is an insider who has seemed to run its course for nike? maybe they need a disfferent strategy? >> it's a good question. time will tell. i don't think nike needs a shakeup. i don't think the brand is broken. i think the brand has gotten stale and tired. as i talk to the companies that sell nike like dick's or academy, they want more from nike. i don't think the shakeup is needed. i think a revitalization is needed. the choice to bring back a proven executive, someone at the company and grew up in the company and enjoyed a lot of success there, that's the right move. >> you are saying they get back to innovation. what areas are you looking for innovation? the basketball franchise? is it in running? we just had the olympics. did you think there was a lack

of innovation they were promoting during that time? >> look, i think the answer to that question is all of the above. another big positive here and this is, you know, under former management. nike really started to admit nike had a problem a few quarters ago. i agree. they got too reliant on a key number of franchises within the lifestyle category. what you are starting to see now and there had been some early wins here in some of the new shoes in the running category. we are seeing better sales results. to answer your question, frank, it is all of the above. i think what you're yogoing to e is the newness and drive the customers to buy more. >> we talk about the rising companies of on running and hoka. as elliott takes the reins, they are in the running shoe area,

but other lifestyle brands. are any of the rising competitors a threat to neike? >> i don't think they are a threat. they have taken share. look at the data. what i think is happening here is twofold. one, the lacking innovation at nike given the sheer size of nike of a $50 billion company has allowed the other com competitors to come in and take market position. i make this point all the time when i talk to our clients. as a society, we are dressing more casual now. these athletic or lifestyle shoes are our dress shoe. that is making for a better sales environment over nike. >> brian nagel, your price target of 120. thanks for your time and insight. >> thank you.

coming up on "worldwide exchange," cleared for a landing. a much-needed win for elon musk reeling from the robotaxi wreck and moving on to the spacex success. we'll be right back after this break.

welcome back to "worldwide

exchange." as we close in on the 6:00 hour, here are the stories we're following. boeing announced it will cut 0% of the work force. the company warning of the bigger third quarter loss and weaker sales. the fda will recover a decision to bar drug compounders to sell eli lilly's weight lost and diabetes drugs. berkshire hathaway is increasing its stake in sirius xm. it bought more than 3 million shares last week and holds a 32% share in the satellite radio provider. and spacex made a dramatic first catch of the more than 20-story tall booster. a major milestone to the company's goal of making starship a fully reusable system. it is all about earnings season and four remaining big banks and citi and bank of

america and goldman with regionals and super regionals as well as united health and johnson & johnson reporting. risk assets putting in a good performance with the s&p with a fifth straight week of gains. banks powering higher. the kbw index jumping 3% on friday. let's bring in matt orton at raymond james asset management. matt, good morning. >> good morning, frank. great to see you. >> matt, what's your word of the day? >> my word of the day is dispersion. we have a big week for earnings and it will only pick up from here. i think the trend we have seen over the past couple earnings season where rising tide hasn't lifted all boats whill play out this week. i see no reason why we can't get post 6000 or beyond on the s&p

500 heading into year end. i don't think the path to get there is going to be linear. i think some companies are going to continue to out perform with respect to the guidance the eps numbers and some won't. that dispersion we will see sets up a really good opportunity for investors who are selective to be successful in this market going forward. >> we're talking about dispersion or earnings season. i want to talk about q3. 5% year over year. it pops to 12% in q4. our guest earlier believes this estimate is a bit low. >> frank, i agree. i wrote a note to our clients this week saying the same thing. i think the bar is quite low. i think we will see 7% plus eps for the quarter. with expectations rising over the next quarter and 2025 as we get back to the double digit earnings growth we want. in particular, the numbers for energy are a little too low. we are a bit pessimistic there.

i am leaning into the financials and industrials. companies that are more fundamentally tied to the solid economic back drop that we have, but where you see them under perform relative to expenses. beating that 4% or 5% hurdle should be pretty easy and opportunities for investors to get in. >> we talk about the cyclical names and we have to talk about materials and industrials. does that change some of your view with industrials and materials with the cyclicals getting additional boost from china? >> it does. i like to set my views on china relative to the sectors. while i'm skeptical on what china might actually deliver, but what i am excited about is

the stimulus puts a floor on how well the economic growth will fall. that can breathe fresh light into the global cyclical companies like the diversified miners or the industrial companies in the u.s. and europe that might have more of the revenues being derived from china. i also encourage investors to ride the wave of optimism like aerospace and defense and electrical equipment company. names where we see good cash flow or earnings reaccelerate higher. that can ride the optimism, but i like the fact they are domestically dtied with the fundamentals of the business. >> i like the pick you have for us. the russell 2000. also seasonality coming up over 2% in november on average. what is your case for the small caps? we haven't seen the rally that a

lot of people thought we would see. >> you know, frank, i sense that is from frustration from clients because everyone was excited about the potential with small caps with the first rate cut and that hasn't played out to date. what i would encourage is it all comes back to fundamentals. small cap earnings pick up later in the season. pay attention to what is happening with respect to earnings estimate revisions. small caps are under performed the last few years for a reason. they haven't delivered the earnings growth or the top line growth we expect, but i would expect the free cash flow to be better and earnings to accelerate. own the small caps and play the long game. >> matt orton, thank you very much. that does it for "worldwide exchange." "squawk box" starts right now. good morning. we've got some stock futures

that are, eh, quiet this morning. relatively unchanged. china rallied overnight despite the finance ministry briefing that was light on the details on the size of the government stimulus. boeing cutting 17,000 -- thousand jobs -- as a strike by the machinists enters its fifth week. and spacex successfully returned the booster to the launch pad. it's monday, october 14th, 2024 and "squawk box" begins right now. ♪ good morning, everybody. welcome to "squawk box" here on cnbc. we are live from the nasdaq market site in times square. i'm becky quick along with joe kernen and andrew ross sorkin.