this point, and less on the inn innovative stuff. is that something that's fixable quickly? >> the latter is not fixable quickly. it is fixable over time. they have to reinvest back into r&d and demand creation. to your prior question about whether they're going to kitchen sink it, they just kitchen sinked it. however, they kitchen sinked it under the previous management john donahoe strategy. >> okay. adrienne, thank you for joining us this morning as we try to make sense of nike. that does it for us today. make sure you join us tomorrow. "squawk on the street" begins right now. ♪ good monday morning. welcome to "squawk on the street," i'm carl quintanilla

with jim cramer, david faber at post nine of the new york stock exchange. the bull market enters its third year. futures are mixed. bond market closed for the holiday. big week ahead with earnings from goldman, morgan stanley, netflix, procter. our road map begins with investors celebrating two years of this bull market following another record-setting week for the dow and s&p. plus, we're keeping an eye on shares of southwest airlines. activist investor elliott calling for a special meeting. we're going to go over that and give you all the details. boeing is one of the biggest laggards on the s&p in the premarket. it announced plans to cut about 10% of its global workforce. that was late friday. this as the company's losses mount and the machinist's strike enters the fifth week. let's begin with the markets. celebrating this two-year bull run goes back to october 12 of 2022. s&p is up more than 60% in that time period, jim. record highs for cap weighted, the equal weight, industrials, financials. >> not supposed to happen, obviously. we've got a lot of worry.

it doesn't seem to matter. we can place the -- a new worry would be mideast, and yet the oil is down. we had a lot of people who felt that the -- that powell handled it badly, but what keeps coming back, we have a remarkable semiconductor rally. and it is at the heart of this market, and i would tell you that one of the reasons why it's so great is the dynamism of american capitalism, david, is in semiconductors. it is the idea, not only are we -- >> it's in the design of semiconductors, not the fabrication. >> i don't like to see the chinese doing a blockade. we didn't talk about this one. chinese doing a blockade of t taiwan, a mock blockade. >> it's always worth mentioning. we design -- nvidia designs all those chips but they are all -- all of the highest end chips are manufactured by taiwan semi in taiwan. now, that may change. >> right. >> as they open up plants, i

believe, in arizona. >> yes. >> but to your point, i don't want to divert here. dynamism certainly in the design of chips. >> right. and i think that, look, there's things that happen. you'll see nvidia is up today. what nvidia demonstrated, and ben reitzes was on this morning from medicalius. nvidia did a road show, went to new york, boston, baltimore. this is the ceo who, if you listen to rene haas's excellent podcast, says, i'm not an actor. i'm out there doing things. what is he doing? i think that most important thing is that the new blackwell chip is designed, carl, for video. now, video ingested is what you need if you're going to have a self-driving car. now, there are a lot of people who didn't like what tesla showed on friday, but i've got to tell you, they have the technology for the self-driving car that doesn't need lidar.

you don't have that 24thing spinning up at the top. i know things were muted with nvidia -- i mean, with the -- with tesla, but if they had talked more about nvidia, i think you would realize they're ahead of waymo. waymo's got all three, the brain in the car, the super brain and a training brain, but if you have nvidia and tesla, what you have is a car that knows everything. so, that's why i was disappointed in the way musk presented tesla. i wasn't disappointed in tesla. >> of course, tesla shares trying to recover some of friday's losses. we do have these reports that some of the robots serving drinks were operating with human assistance, not completely on their own. but you're right. as for nvidia, ben's at $165 and he takes pains today to say this is not cisco circa 2000. >> i thought that was amazing because it's literally in the first paragraph.

listen, it's not cisco. the fact that he has to keep saying it's not cisco, this is what i'm talking about, david, in the dynamism versus 2000. you have companies that are dominant. now, you also have companies that are challenged. for instance, waymo is alphabet. alphabet is challenged by the justice department. right? >> yes. >> but have you noticed the free-flowing nature because of nvidia chips, what's happening with meta? i mean, meta is meta a.i. plus reels where you can give money to zuckerberg and he designs your campaign. and then, one of the great comeback stories is amazon. amazon has a so-called weak quarter, stock goes down to $161. amazon is the company that jensen kept referencing to me as being a great friend. jassy. >> well, aws is certainly a huge buyer of nvidia chips. >> right. >> along with so many others. >> i know that to be so --

>> and they are still the largest cloud provider. >> but to be the nvidia centric is not wrong. i'm going back full circle to the two-year anniversary. >> right. >> it's nvidia. then, second is super micron >> you're right. nvidia is up over 1,000%. it is the top performers who say super micro is second, and meta, by the way, which you just mentioned, is up 360% over a two-year period helping provide the fuel for this rally. >> on a day where goldman goes to $636 meta. >> meta is -- if they can get meta a.i. right, and jensen has -- is saying, listen, don't worry. they'll get it right. i mean, you know, this was a -- a goodwill tour by jensen, and i just keep thinking about the fact that he said to me, it's so easy. it's so easy to be what he's doing, because he's so excited. life is good. he comes in peace.

look at the companies that are begging -- not begging, he says, don't worry, we'll get them and then -- the next generation, the ruben. >> the what? the ruben? >> not the reuben like you get at zingerman's in michigan. i'm talking about the ruben. the ruben like a scholar and star. but it just -- it's more of a halcyon time than people realize for our technology, and i think that ben reitzes is kind of the leader right now, and i know ben -- ben's father is a friend of mine. he's a great, great hedge fund manager. he was a fabulous chemical analyst, so it runs in the family. but i think you see so much good there. and then you have this weird two-year anniversary, palantir, which is a loved stock by the -- >> you call it a meme stock. >> yes, i do. >> and that really upset some people. >> it upset some people?

i don't care about them. i can be like -- i can be like coach nick siriani and say, screw the fans. the fans aren't what this is about. it's about my kids, so why don't you focus? >> tell people why you characterize it as such. >> because there was an amazing article in "the wall street journal" that talked about how alex karp caters to the individual, not unlike what adam aron does, except for unlike adam aron -- >> caters to the individual investor, you mean. >> yeah. palantir -- >> palantir has real businesses that are growing in a significant way. >> our cfo conference, he gave me the heisman. he said, hey, how you doing? when i asked to sit down with palantir, you gave me the guy who covers kellogg and general mills. come on. >> when you say something like that it, it means the 439% gain for the stock over the last two years, you think, is what, ephemeral? >> i think it's about defense

department and special stuff we don't know about. black box. >> that is certainly where the company was focused for its earlier years, but they have commercialized a lot of the applications as well. >> i'm just saying, like, alex is a hard guy to -- i'm friends with max levchin, for heaven's sake. if i'm friends with levchin, i could be friends with karp, but it's not working out, so i want to focus on royal caribbean. >> what comes first, is it because you call them meme, they don't like you? >> i don't know why they don't like me. not unlike marshal sam gerard, i don't care. >> or another guy we know well, elon musk. >> lot of guys just don't care these days. >> i like larry culp from ge. >> and by the way, look at that. number six on the list here. >> created a huge amount of wealth. i'm going over, trying to be

fair isaac. that is fico. by the way, all of these companies that are, like, fintech, they're fico, and what do we come down to? we've got broadcom, which is nvidia. what am i going to say? nvidia is the backbone of this two-year anniversary. and unlike karp, jensen's a good guy. karp might be a good guy. >> vistra, related to nvidia as well. >> well, really, because they need the power. yes. so, it's nvidia is in a datacenter, which needs vistra. so look, unless royal caribbean, though -- >> that one, not that's not. >> doesn't seem like he's a cruise guy. he's a lot of things. he's a chef. he's an architect. >> we're going to talk more about how this leads to goldman upgrading equities and in a falling rate environment, what that means for some of the results we've gotten so far. we do want to touch on china, though. investors digesting the

country's weekend press conference regarding more stimulus. eunice yoon is live in beijing with the latest. good morning, eunice >> carl, the government is attempting to send a small to the market that it does indeed want to support the struggling economy. however, it's left investors guessing exactly what the scale and the specifics of that plan is going to be. over the weekend, the finance minister held a very anticipated press briefing or briefing, i should say, and he focused on the need to address the local government debt, saying that these would be the most powerful steps in years to tackle these problems, including, like, a one-time debt swap program. also mentioned the effort to address the problems in the property sector, saying that they would expand funding for unsold homes through special bonds that would go to the local government, and then finally, the authorities had hinted that there would be ample room for deficit expansion, so greater government borrowing.

now, some investors were expecting to hear more. most people wanted to see a firm headline figure when it came to fiscal spending. however, others saw the briefing more positively. for example, bank of america called it a policy pivoting point, and of course, there's still anticipation that we could see some specifics down the road in the coming weeks, so when there's going to be a committee meeting at the end of this month. now, the divergent views, as you could expect, played out in the markets, both in shanghai, as well as in hong kong and the u.s. now, of the need, though, for this effort became more apparent. we had a series of bad market numbers. for example, the core inflation figure was out over the weekend. it hit a new low since 2021. exporting and imports figures came in, saying they're going to grow far less than expected for september, and then the credit and bank loan growth numbers hit fresh lows. so, a lot of reasons for the

government to take some -- a stronger action, guys. >> eunice, we got these possibilities of further stimulus. at the same time, we've gotten reports about government officials detaining taiwanese manufacturing personnel at a foxconn plant. today, jim mentioned these military exercises which taiwan says is a record number of military aircraft, 125. >> yeah, absolutely. and that's led to a lot of confusion about whether or not companies would want to do business here. you mentioned taiwan. one of the founders of umc, big chip company, was sanctioned as well. so, you have all of this kind of mixed messaging, and in fact, the authorities here, just today, said that they wanted to help support private business and to try to get rid of, they said, these efforts that sometimes are illegally either detaining people or confiscating goods. they want to try to get rid of all of that and so, they said

this is going to help support private business but it's, you know, still need to do a whole lot to get the confidence back up here. >> eunice, back to sort of the question about stimulus and the specifics, as you mentioned. what is going to be a sign or when are we going to know, you know, it seems, obviously, people -- it's different there than it is here, so what are we really looking for when it comes to specifics? do you have to wait and see the actions take place? >> well, that's the big question. a lot of people have been wondering what it's really going to take for the government to come in with bigger action. we know that the authorities here are very concerned about the risks. they have the memory of the stimulus that they had in place in 2008/2009. after that crisis, they don't want to have to deal again with those big risks, so they have that on their mind, and also, there's a lot of discussions here about whether or not the authorities here, especially xi

jinping, has an ideological bent that he's talked about. he doesn't like welfarism, what he has described as welfarism, doesn't want to give handouts. so, there's a lot of discussion as to -- that perhaps that's another reason why it appears that the authorities here have been slow walking a bigger stimulus. >> but eunice, i'm confused. to follow up with what david's saying, look, you can buy back all the stock you want. i don't know how much stock people have there. but it's the apartments that go down, makes it so it's deflationary. unless your apartment goes up, why would you buy an apartment? isn't the stock market too small to impact china? >> well, the stock market impacts china in the way that people look at the sentiment, right? so, the authorities here have been jumping in, kind of trying to prop up the -- talk up the market here, and that helps to

boost sentiment, which is kind of what they're trying to do, which is to boost confidence here. but as we said, most people don't have their money in the stock market. very, very few people, actually, and more people would be putting their money into the property sector, but that continues to decline. >> eunice, busy weekend for you guys. appreciate you bringing us up to date. eunice yoon in beijing tonight. let's look at the premarket here. we'll get to this downgrade of ka caterpillar, which i'm sure jim has thoughts on. ne obongndouwe awsn ei a sthstnd starbucks in a moment.

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elliott is requesting a special meeting for shareholders of southwest airlines to vote on what are now eight nominations it's making to that board of directors, a board that will have 12 seats, so that just gives you some sense here. we have been following this fight for quite some time. to rewind a bit, remember,

elliott owns 11% of southwest airlines. it's been pushing for any number of changes related, basically, to oversight, governance, and to its current ceo being sent away, essentially. and now, it is moving forward with the threatened so-called proxy fight. it would be the first one it's undertaken in quite some time. i believe it's 2017 when it last actually went to a fight. elliott is the most active of activists, but it often ends in settlement. in fact, almost always, as i point out, given it's been some seven-plus years since its last time of actually soliciting pro proxies from shareholders but that's going to happen here. they're asking for december 10th as a special meeting. they're going to get the meeting because it only takes 10% of shareholders to vote in favor of the meeting. they own 11% of the stock. that's an automatic. the question is, though, when will the meeting take place? let's assume in the next couple of months and then they're going to be seeking, again, as i said,

eight directors sitting on the company's board. they will go back and keep saying, over and over again, even after the meeting, the investor meeting in which there was a positive response to many of the plans that were put out there, their point at elliott is, yeah, look at that. the longer the meeting went on, the less the stock was up. in fact, since that time, certainly, delta has outperformed southwest, and when you go back five years, you can also see the lack of performance versus its peers. i thought we had some of those stocks for you as well to sort of show you. >> i'm ready to talk about it. >> and they continue to want -- there it is. that's five years. we also had since the meeting itself. but they failed to deliver, they say, on their previous promises. it comes as simple as that. you're going to get a lot more details from that. when you have a fight like this, expect to see a big fight deck, as we like to call it, and a lot of specifics. they don't have that out yet.

>> david, when i look at who they want -- >> these eight directors? >> they've got air canada, former ceo, west jet, ryanair, virgin air. they're attacking southwestern governance. if you look at the actual board of directors, you do come up and say, you know what, they may have made a lot of changes, including changes that elliott liked. >> remember, their board itself, six directors stepping down very soon, and then mr. kelly stepping down at the annual meeting next may. that's seven directors. they shrunk the board. hence, elliott has shrunk its slate from ten to eight. >> i come back and say, you know what? if you get rid of the board members who you didn't think were that impressive, because it was -- i'm going to say this. kind of a cronyist board. >> they said there were zero directors with outside airline experience. >> and i like who elliott wants. i think you're dead right. i think they get three. they already have a lot that was

good. by the way, there was a board member who bought $100 million worth of stock. get together. solve this. stop the acrimony. i come in peace, not unlike ten bears. >> be interesting to follow the fight, of course. they don't happen that often, carl. that's what's interesting. >> get together. make peace. come on. >> we'll get cramer's "mad dash" and countdown to the opening bell. take another look at the premarket as the s&p takes aim at the 46th all-time high of the year. stay with us. when you're looking for answers, it's good to have help. because the right information, at the right time, may make all the difference. at humana, we know that's especially true when you're looking for a medicare supplement insurance plan. that's why

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take a look at s&p laggards premarket. we brought you up to speed on southwest. boeing, we'll get to as well, after their announcement of job cuts on friday, and then you see freeport as well. copper down 2%-plus on some of these overnight concerns on china. sturinesngp is comi uin ju f mut.

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>> announcer: the opening bell is brought to you by nuveen, a leader in income, alternatives, and responsible investing. let's get to a quick "mad dash." we'll get an opening bell in about a minute. we got a downgrade of caterpillar that you want to hit. >> yeah. i was just looking at this sofi coming back up. that's finally -- they got a deal. >> don't get distracted. >> i'm sorry. cat is down in the premarket.

morgan stanley downgrades it to underweight. i will say this. where was he during the biggest run that i've seen of a major now? it's been weaker of late, but i will tell you that jim umpelbee has reinvented caterpillar. this guy is just -- like cat's the old cat. some levered company. and by the way, if it is the old cat, you think what stock do you want to buy on rate cuts? caterpillar. not only do i want to emphatically disagree with this downgrade. i say to myself, angel castillo. >> we'll see. morgan stanley's about 10% below consensus. let's get the opening bell. at the big board, markets media group women in finance celebrating the tenth anniversary of its women in finance awards and at the nasdaq, it is micron. new logo and 15 years.

jim, you're going to be talk to them very soon. >> sanjay mehrotra, there are people in the business that are so loved and you want -- when you ask them, what do people think of sanjay mehrotra? finest. if you look at what he's done with the company, it's been amazing. it has a little cyclicality versus some of the others, but i think micron is having an unbelievable period. they had an amazing last quarter. the stock went up very big, but it is still not given its due. they have some incredible stuff when it comes to the datacenter. it's not just the old pc business and server. it's a buy. and i can't wait to speak to sanjay tonight. he's also one of the finest guys, and carl, you may remember, he had a -- took over the white house correspondents dinner, had an unbelievable meeting down there with a television station, but i will tell you that he's one of the most thoughtful executives i've ever met. >> looking forward to that quarter. speaking of quarters, jim, b of a says, look, we've gotten not

that many yet but we've got about 30 so far, beating by five versus beat big three at this point last quarter. >> well, we didn't really discuss exactly what happened. for the rest of the day, on friday, which i regard as being the charlie scharf day. charlie scharf. wells fargo. >> ceo of wells fargo. stock of which is up a bit this morning in the early going. >> what an amazing quarter. >> and to b of a's point, they argue that you're starting to see signs of a tailwind from lower rates. and that got reflected in some financials. >> look, if you -- one of the reasons why wells did well is that they do better in a lower for longer but it doesn't matter. you're in a rate cut cycle and the crazy -- one of the great moments -- oh my god. there was a moment on a call on friday where jamie dimon, i mean, all these companies claim to be -- they're all hostage to net interest income, which is this obscure thing that only four hedge funds care about, and at one point, he said, to hell with it.

to hell with the nii. he was at his queens best. >> we did use that clip of him getting frustrated with the analyst community and just, like, enough. everybody's trying to hone in on a number they can put in as an estimate. >> he obliterated the analyst community. he took a steam shovel. >> my god, do you know how many earnings calls that guy has been on? that's one thing he won't miss when the day comes, if it ever does, that he actually steps aside. >> it's like when ruth porat retired from alphabet. she had done so many conference calls, it was like just the greet relief of her life. no more conference calls. >> i remember bob iger also similarly saying, i'm so glad i don't have to do those conference calls anymore. and then he came back. >> true. >> yeah. >> and -- >> guess they weren't that much of an -- yeah -- so onerous. >> can you imagine the pressure on annette from lilly where you're in indiana. they're playing this weekend.

indiana's, like, against nebraska. and indiana, it's like this. how are you? it's good? any good? how's your family? >> i have no idea what you're talking about. >> okay, she was the cfo -- >> neither does anybody else. >> annette was the unbelievably good ceo of eli lilly. she's now the unbelievably good cfo of alphabet. >> okay, right. >> so, she's going to be doing the conference call. >> that connects it back to ruth porat. >> so, you go from indiana, congratulations, you're the best, to, like, substantive questions that -- >> it's so much better when you explain what goes through that head instead of just shortcutting. >> i just don't have the time. >> this took longer. >> david, you look at a calendar, i look at my watch. >> i know. i've heard that one before. >> that's a george-ism. george kurtz. >> i look at the performance of the banks that come back to that and almost all the big cap banks, other than morgan stanley, are outperforming the s&p for the year. it has been a good year to own these financials.

morgan stanley -- excuse me, jpmorgan, up over 30% now, year to date. but followed closely by citi, b of a, wells fargo now moving up substantially. again, much of that off of that move on friday. >> so, david, i did a little quiz here for mr. jet, mr. met, i didn't call you that. i should have. what do you think the multiple is for wells fargo? >> it's probably in the low, low -- not even the teens. the low double digits. >> geez, he's good. 11 times earnings. the stock is still not back to where it was on february 8th of 2018 when it got that -- that was when it got the consent decree, and the market has, you know, the s&p's, like, tripled during that period. so, i think that charlie's had to replace everything. >> back in the control room, that shows it, jim. you see what happened after that consent decree. it was a steady and slow significant decline. it also was -- financials also were down in general as a result. >> he had to replace everybody. he had to replace the whole

board. he has the consent decree. he has some senators who keep trying to harp on something that he didn't do. he's funny. he's very funny. very dry. and you have to get into his humor, because i was in, like, one moment, i thought he was alex karp. no. he just turned out to be like a really good guy, good husband, good dad, good guy, you know? >> none of that means anything. all people want is performance. they don't care if you're a bad guy or not. >> he would tell you that he can also deliver that. besides just being a good guy. name me some good guys who don't deliver. >> oh, i could give you a pretty long list of ceos that i thought were nice people and ultimately didn't deliver. >> look what -- >> by the way -- >> here it goes. >> i happen to think john donahoe is a really good guy. i know you don't like him. >> we have a new ceo. >> he's -- he starts today. >> i got to know john donahoe years ago at ebay. he's a genuinely good guy, did a

good job there. i thought he did a decent job at servicenow, and you, obviously, have not been happy with his performance at nike. he's no longer -- >> he's the new ceo at nike. >> he's no longer the ceo. >> there's a new guy. he's a reversion to the old. he knows who jordan is. that matters. remember, jordan, the conservatives -- the republicans have to wear shoes too. one of the greatest lines ever. and look, maybe he did do well. he took -- he gave up the servicenow job. >> but you tend to go the other way when the performance is not good, you then attribute negative feelings towards people who are genuinely decent people. >> i just feel like -- >> and i know that guy is. >> there are coaches in the nfl, carl, who are, i guess, they're nice, but you're -- you know, your record is -- >> your point is it's all about winning. it doesn't matter if you're a nice guy or not. back to my point. >> it doesn't matter. >> charlie scharf may be funny and a great family guy . if he doesn't deliver, you don't like him. >> can i just stop being

frustrated for a second and talk about how donahoe had a strategy, but an amazing thing happened. when you have $200 sneakers, carl, people like to try them on. >> we've talked a lot about how the distribution model has shifted over time at nike. speaking of new ceos, "journal" has a piece on brian niccol going -- reversing some of this promotional push at starbucks. >> i read that, and i said, i didn't think that was going to go. i thought they were going to have a cheaper -- maybe a cheaper version, but you know what? if you disagree with brian niccol, you better have been a damn great barista, and i'm not going there. i'm not disagreeing with that guy. uh-uh. no way. he's too good. >> "journal" mentions leadership changes and then this internal meeting where he said something like, a couple of powerful changes and then execute like crazy. >> well, i tell you what he really needs to do, and david's really going to love this. if he can get a barista that is

a robot, a musk robot, tie it into an nvidia super computer, do you know that they're able to pour eight cups at once? >> i'm sure that we'll get to that point. >> yes, we will. >> our waymo or perhaps even tesla robo taxi and/or autonomous will pick us up, and we'll stop by the starbucks, and the robot will make our coffee. >> yes, why not? >> and that will be the world we live in. >> triple venti cappuccino with skim wet. no problem, jim cramer. >> not sure where we'll be going given we can do everything virtually. 12 >> i was talking to a robot about the southwest board and who they would pick and they had it 100% right, and i said, geez, they had all the guys that -- this is a joke. admittedly. one of the things that carl pointed out was that it was a mock robot with tesla, but i

think the video ingestion -- remember, they're now able to ingest video, the super computers. and that means they don't need lidar. they don't need that thing over your head. >> do you have -- i talked to chatgpt a bit this weekend. do you have a chosen voice for chatgpt? which one do you go with? >> i go with everything. when i want it to be more social, like i'm watching a new show, disclaimer, i go to meta a.i. because i know it's going to have a social stuff. sasha baron cohen, i want to look up him. >> i chose this female voice, and my wife said, she's flirting with you. i said, no, she's not flirting with me. >> the generation -- jensen huang told me the new generation, when you put something in, they're able to go back and forth with you. so, david, i wouldn't rule it out. >> they want to continue the conversation, carl, which i find a little annoying. like, they want -- >> it's no different than social media companies who want to continue engagement. >> i just had a question. we're done. do you like -- yeah, okay, you

want more from me so you can put back into your model. >> well, if you want to go into, what, gronk? what is it that he's got? >> i haven't. gronk? >> gronk just tackles you. >> he's amazing, gronkowski. he gives amazing answers because he's known as an intellectual powerhouse. >> can i say that hernandez a.i. was never any good? >> oh god. >> speaking of extending engagement time, jim, we are going to get netflix this week. i don't know if you saw last week, morgan stanley put a $10.50 bull case. >> they better know that "squid games 2" is fantastic. they have this commercial tier. they said, we haven't worked it out. it's going to be perfect. they're, like, orson wells. no ad tier before its time. i do think that they're brilliant. i would not bet against them. their slates are what matter. the slates are what people talk about, and you end up watching some film from uruguay, which is a killer that costs them like $5. >> what? >> we should talk boeing a

little bit, guys. we mentioned at the top of the show, the stock is down. the news was out on friday, but of course, the market -- this is the first opportunity for the market to process the news. couple of different things. layoffs, as much as 10%, and also they gave us the preliminary third quarter results, including $1.3 billion of operating cash flow burn, cash balance, $10.5 billion. there's the headlines on jobs. you can see the response. looking at barclay's note here, they say the cash burn was a bit smaller than anticipated. $5 billion in charges at bca, mainly the 777-x. defense-based and security not going particularly well but did benefit from timing of advances from the company, offsetting initial strike impacts. but that said, i'm looking at another note here from an analyst saying we spent all morning looking for something to be constructive on, on boeing, doesn't look like they came up with much to be constructive on.

jim, is there anything you can come up with, constructively, on the company at this point? as it -- it's not even at the negotiating table any longer. the union made it very difficult from what i understand. they basically have been very hard to sort of get anything done with at this point. >> look, first of all, there are some people that feel that cash isn't nearly as bad, but when wells fargo -- they have a sale on it because the cash was outsize. but david, the only thing they have going for it is that airbus can't make enough planes. if they can ever get it together -- but i hope this doesn't come to a -- i'm going to say it. i hope it's a national treasure, boeing. not unlike intel, where i stopped bashing it at 21. we need intel in this country, and we need boeing. so, what happens when you need a great company? people come to its rescue in washington. >> well, i mean, they're going to be able to sell stock. they're at least going to sell $10 billion, maybe more. >> they should have gotten this -- >> they can. >> what is ortberg doing?

he could have issued stock initially. and he -- he just should have an issued stock. that was disappointing. >> well, they're going to. timing of which is still uncertain. >> $120? the dumbest thing -- do they understand? i understand stocks. they understand planes. what you do is you issue stock now rather than issuing it at $110. we have a $110 price target. >> it does have a smaller dilutive effect. >> i'm a little depressed about it because they knew -- they knew they needed cash. and what did they do? they frittered. they just frittered. >> we still have not seen any announcement. we just have discussion about it. >> yeah. >> b of a's targeting 10 to 15. >> of new equity. billion dollars. >> this pushback to 2026. >> i think there's a great reason to own ge on that. ge services engines. the engines are going to have to be used longer. and just another reason to get behind larry culp and ge

aerospace. i think it's a terrific stock, and i think it goes much higher. >> b of a points out ge might be a big buyer of new equity. >> that would be brilliant. can you imagine if larry culp did that? >> that's interesting. >> that's so smart. >> where was that, carl? i didn't see that. >> that's in the b of a desk note today. >> thank you. there had been some discussion of -- is there some sort of a, you know, could they have some sort of a strategic buyer of the stock? and that would fit, if that's true. i actually did try and run that down. didn't get an answer in the affirmative that that was actually a possibility. they feel as though they are able to issue what they need to into the market without that. but that's interesting to note. i didn't see that. guys, apple's up. nvidia's up a lot. >> well, it's breakout. >> ge, by the way, also one of the best performers of the last two years. but nvidia, number one, and up another 2%. >> well, you know, look,

nvidia -- jensen huang, the ceo, was very funny about the last quarter, called it the biggest miss ever, making a joke, because obviously, there were a lot of people who felt the last quarter was a miss. there was a yield problem. it was hard to make blackwell. well, now, blackwell is scaling, and blackwell ingests video, not just words. that's going to be the breakout, the next frontier. and i think the people who sold it were actually people who didn't know what nvidia was. as i call them, the -- they're like the hand cream. i got stopped this weekend at an eagles game. people said, what do i do with nivea? i said, i would use it on my hands, not miy legs. >> much easier to make. >> it is. i mean, really. come on. >> they're not selling chips. and nvidia's selling them to basically everybody, including elon musk. in a podcast, my friend brad

does -- >> altimeter capital? >> the bg-2 podcast. he had jensen huang. that guy is everywhere. >> he had rene haas. he was on rene haas's podcast. was he on your podcast? >> this got some headlines because he talked about musk, and remember the money that xai took in, some $6 billion i think it was, something like that. i got to go back in the notes, but for his xai effort and then he immediately went to building a datacenter in tennessee. i mean, take a listen. jensen's, like, you got that thing up in 19 days. >> let's listen to this. >> take a listen. >> building a massive factory, energized, permitted, in the short time that was done, i mean, that is -- that is like super human. >> right. >> there's -- and as far as i know, there's only one person in the world who could do that, you know? i mean, elon is singular in this

understanding of engineering and construction and large systems and marshaling resources. >> incredible. >> it's unbelievable. >> interesting comments about mr. musk. there's so many podcasts, and there also are video podcasts. >> rene haas -- >> what are we? are we like a video podcast? >> we need the mics. >> yeah. >> and rene haas, the ceo of arm holdings, came and visited on "tech unheard." it's only 20 minutes. >> definitely got to listen -- rene has his podcast as well. >> he has a series of people coming up who are terrific. >> that's a nice move there. >> that's a real company doing some really amazing things. especially, you know, obviously -- oh. >> was that just the other day? >> yesterday. >> i was with rene. >> congratulations, by the way. nice to have a.j. and davante back.

>> and we have a coach that the whole stadium loves and he speaks to the fans and it's really the city of brotherly hate again. always love that brotherly hate stuff. but rene, that's worth listening to, and you'll come back and say, jensen's so far ahead of us. it's very difficult to be, everyone on his plane. i'm not on his plane, and i -- i'm not talking about -- >> you mean the plane, not the plane. >> the spain plane, not the rain plane. >> mainly on the plane. the plane. not the plane. >> let's get out of here. all-time highs, 5,846 s&p. the 46th all-time high intraday of the year so far. don't go anywhere. it's time to grow your business. create a website. how?

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. market trying to undo some opening losses on the dow. it's mostly about tech, mag 7 and semis. you'll see that reflected in the gainers list. tom research, adobe as well.

"sp trading" is jim is next.

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making a forecast for apple. today jpmorgan says things a little more in line. evercore with a tactical buy saying expectations are so good enough it may work causing the stock to jump. basically saying, it ain't that bad so buy the stock. i would like more than that. i would say apple, own it, trade it. i'm for the elongated cycle. they don't have to have the 16 be perfect. they have to have demand over time, when you get the a.i., people will want to upgrade. there are other stuff they have planned that i've been working on as a reporter that i think is incredibly impressive. i think stay long. >> one thing we diplomat get to was crude. back below $75. opec cutting their demand forecast for the third time. >> china just doesn't -- they just don't have it. meanwhile, saudis are pumping. who knows what the russians are doing. the russians, david, not our friend. >> russians lost 1200 men a day

in september in ukraine. that's what the journal reported. 1,200 men a day. >> germans were losing 5,500 a month in june of '44. >> you mentioned micron earlier. >> and adobe. i think these are two amazing companies. i'm a huge believer in what shantanu is doing when it comes to a.i. those who doubt him haven't used the product, carl. the product's amazing. >> look forward to tonight, jim. busy week ahead. 6:00 p.m. eastern time. 'l50 official. wel take a quick break and be back in a moment. ch other rock . 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. you people are (guitar noises). hand over the air guitar.

i've got another one.

good monday morning. welcome to another hour of "squawk on the street." i'm sara eisen with carl quintanilla and david faber from the new york stock exchange.

stocks kicking off the week in the green. the dow is lagging. down 50 points. the nasdaq is up 1%. so, clearly, the picture is technology in the winning spot to win the week. information technology, communication services, utilities, consumer discretionary and financials all positive right now. energy is the worst performing sector. if you look at where the strength is, nvidia is strong, some chip names, arm, for instance, applied materials, they're all helping the nags dak in particular. energy is trading. the bond market is closed today for columbus day. wti down 0.9%. here are three big movers we're watching. caterpillar, one of the biggest laggard. morgan stanley downgraded the name to sell on what they call mounting risk to cat's construction related business. the stock is down 2.5%. boeing is under pressure after announcing plans to cut 10% of its workforce. that's about 17,000 people. remember, the plane maker also

warning it's looking at much bigger third quarter losses, weaker sales than what wall street is expecting and pushing back the launch of the wide-body airplane, the 777x until 2026 as the machinists are on strike, now entering the fifth week. nvidia, it's higher today, about 3% from also 3% from another all-time high and up more than 3%. two firms on the street reiterating buy ratings on that stock. shares have rallied more than 170% so far this year. as for the overall macro picture this morning, we did just get in the last hour some comments from minneapolis fed president neel kashkari. not a voter this year but did say that more cuts are justified as we enter the week wondering if, i don't know, maybe they're going to pause. as of right now it appears likely the furthest moderate reductions in our policy rate will be appropriate in the

coming quarters. ultimately, the path ahead for policy will be driven by the actual economic and labor market data, which is why we pay such close attention to it every single day. as for what we'll watch on that front this week, it will be about earnings, which will give us a good snapshot on what's happening in the economy. commentary from banks. comments from procter & gamble later in the week, johnson & johnson. we'll get more diversified views of the economy, and china continues to be front and center. the chinese stock market went up overnight, guys. there was this highly anticipated announcement from the finance ministry over the weekend. most of the notes i'm reading this morning say it was disappointing in that it didn't point to direct fiscal stimulus to stimulate the consumer and didn't give a number on it. however, david, it was enough to get markets rallying and some folks excited because there were

some measures announced, for instance, when it comes to eliminating some property sector and local government issues, for instance. they hinted at room for more sovereign bonds, so the deleveraging that is necessary, people like that and -- >> not enough to get to the key bellwethers we keep an eye on, which is alibaba and pinduoduo, down, not sharply. this follows losses later last week. obviously, huge gains for a couple of weeks there. we had eunice yoon join us earlier on the program, our reporter in beijing. it's all about specifics, sara. they are still lacking in specifics. >> specifics and stimulus aimed directly at consumption. >> right. >> which could be why alibaba is not loving the news. it was enough to get goldman sachs to upgrade forecasts for

2024 and 2525 on china from a lower base. >> not a lot. 4.9 for this year is not a huge gdp number for their historical targets. we'll see what we get on friday. >> that's the china story. in the u.s., you know, we got the cpi numbers and the ppi, it was all okay. the next will be pce, the fed's preferred inflation. that's not until next week. increasingly i'm reading about the election and how investors think -- the bottom line is that it seems it will induce a lot of volatility and uncertainty as we get closer here. we haven't so enthat yet. here's jpmorgan, given the tight race the presidential election will be the largest source of uncertainty remaining this month and we may see some choppiness into election. overall, given the support of macro setup, we're inclined to buy the dip. one strategy there as predicted odds show a much tighter race. trump has -- trump's prospects,

according to the prediction markets, have gone up. it's something we're watching. david, you made fun of me for citing pepsi ceo last week about -- >> sara, i would never make fun of you. let me correct the record. i think i appropriately -- i'm still struggling to understand what it is about elections that brings uncertainty in people's purchase decisions when it comes to things like snacking and beverages. >> yeah, so this is him telling me last week that after the elections, there will be less uncertainty and the consumer should rebound. the fundamentals of the consumer are good. because he thinks a lot of the media noise. but we also interestingly heard it from ed bastian from delta speaking on "squawk on the street" last week. >> we can see the discreet period a week or two ahead of the election, a week or two after the election as being somewhat of a -- a little bit of a pause, which makes sense.

people are not -- by the way, i don't think this will be an industry story. i think you'll see it across consumer discretionary purchases as a whole, people will take a little caution. they want to find out what happens. they don't like uncertainty when it comes to investing dollars whether buying homes or airplane tickets. >> which is all to say that uncertainty could factor into people's decision-making and into the data we'll get in the coming weeks, even if it is something that ultimately the fed and the market can look through as being temporary as long as we get some sort of certainty and resolution on the election. >> we'll see about that. meantime, the bull market entering its third year. the nasdaq leading the charge, thanks to huge gains in tech with names like nvidia, but with the s&p up eight of the last nine weeks and coming off the 45th record high, 46 today, some wonder, can the gains continue? our senior markets commentator mike santoli is here to break things down. >> most bullish thing the market can do is keep going up, especially when there are many

obvious things to worry about and built up caution. that's what's happening. i completely agree with the idea that on paper a coin toss, plus or minus election, which is the main thing to fixate on, holds the possibility for at least having people having to step back on whatever they assume was going to happen. i think the idea is the people who were right about the election outcome and implications already positioned for it. the people who didn't will be disappointed or have to do something different and maybe you get a little bump along the way. i think the bigger picture is that we have the fundamentals of the economy with the fed easing into an earnings upswing is a rare and positive combination for stocks. the market's expensive, but valuation reckoning usually doesn't happen when the fed is easing and earnings are rising. it usually takes something along the way. the volatility index, it's unusual to be above 20 when the market is clicking to new highs in a calm way. that is, to me, what people are

doing. buying a little insurance policy against 30 days' worth of volatility, not really selling anything. i think people are well exposed to this market. there is healthy positioning in stocks. they're wary of the potential for short-term bombs. credit markets are not showing any unease. usually when credit markets don't have -- struggle when the vix is higher, it usually mutes the signal of the vix as predicted. meanwhile, mega caps took three months to reset and kind of cool off a little bit. now the entire game today is nvidia looking for its old intraday high. that is, to me, the game. it's gunning for it. the call option players are in it. >> the equal weighted nasdaq has performed better, correct? >> yes. actually, the equal weighted index in general over the last three months have kind of dominated. they're doing better than the market weight. it's rebalanced, if you will.

two-thirds of all stocks outperform the s&p in the last three months. so, it shows you that finally it became a little stock picker's tailwind. >> when it comes to leadership right now, it is once again mega cap tech. nvidia is up another 3 plus percent. soon to approach apple cap battles. they're closing in. >> yes. and apple keeps eating its own market cap with the buyback. there's always a moving target. by the way, you guys mentioned the bond market closed but the treasury etfs are trading and trading down. yields have continued upward pressure is implied with what's going on with the treasury etf. it's almost like a higher metabolism economy than we thought we would have. more cyclical leadership -- >> which means the fed won't -- >> they won't have to do as much or they're in a spot where -- and it's true. there's no doubt. what's definitely changed is the destination, right?

nobody's now pricing it for eventually getting to 2% fed funds, right? it's going to settle much higher. from here to there, you might not have to change the pace. you could still do quarters along the way and still go toward neutral. >> kashkari uses the word modest in terms of further rate reductions. meanwhile, in europe, they say, we need to step on gas on cuts because the job market is falling apart. >> totally different setup. yeah, it's an interesting spot because i think everyone was kind of at least braced for slowdown possibility. it looks like a six-week, two-month growth scare and we emerged out of it. >> ecb meeting this week. >> mike, thank you. mike santoli. let's get over to dom chu with a look at key names that have powered or missed out on the recent rally. >> you guys have talked about a number of the stocks that have really kind of participated in this whole two-year bull market, as we've seen it develop here. so, let's kind of take a step back and take a look at the sectors overall. you mentioned the equal weight

doing well over the last several months. that's been that broadening out trade, if you will. for the s&p 500 over that two-year span, a healthy and respectable 63% gain in that span. again, it's been the leadership that has been muscle memory for years now at this point. and the reason why i say that is if you look in that two-year span we've seen, the sector gainers, the biggest performing contributors and whatnot, have been the ones we've always seen kind of play out since the wake of great financial crisis back in 2008 to 2010. we're talking about technology. we're talking about communication services. and we're talking about industrials this time around. those three sectors on a two-year basis have been the ones that have really seen that real momentum. what we have seen a little more of is industrials trade be a little more consistent. on a two-year basis with regard to the biggest lagging side of things, it has been consumer staples. it's been health care and it's been energy. that energy trade is interesting because it is, by far, the worst performing sector in that

two-year bull run. a lot of it has to do with the near-term volatility we've seen in downside oil prices. i will point out the one thing some traders are keeping a close eye on right now is the more near-term relative strength or momentum we've seen in energy prices to the point where just in the last couple of weeks we've now floated for this energy sector spdr above 50-day and 200-day moving averages, medium and longer term trend line. the question becomes whether or not that broadening out trade still has legs and whether or not energy as one of the smaller sectors in the s&p could see some more upside volatility. that's going to be that whole key as to whether or not the value trade continues, sara. i'll send it back over to you guys. >> not today. as we head to break, here's our road map for the rest of the hour. nike starts a new era. day one for new ceo elliott hill. more on the road ahead with one analyst who calls the stock a buy here. back-to-back hurricanes

battering florida and its insurance industry. how it is changing the sector and its profits. >> a look at one new way hedge funds are getting an edge on the competition. a big show still ahead with the dow down2. ayitus.2

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they think is realistic. canada goose and amer sport downgraded due to china. >> that brings us to nike, which also has to deal with china. today marks the official return of a long-term nike veteran elliott hill as the company's president and ceo. former ceo john donahoe will remain an adviser until january 31, 2025. bmo retail analyst joins us for the road ahead. he has a buy rating, price target of 92. what i hear is he's holding a company-wide meeting today. the question investors have is how long would a turn-around take? what do you think? >> sara, great to see you. i think it's an interesting dichotomy where everyone in that company knows and loves this person and everyone on wall street has a very little idea of who he is. it's this interesting divergence that doesn't normally exist. i think there's three things nike has to deal with. the internal morale needs to be

fixed, external relationship with partners needs to be fixed and i think the relationship with consumers needs to be fixed. your question about how long? the first two are going to be really quick. we are talking about this. >> i've heard morale changed overnight. >> yeah. it's like people are having parties on campus. number one is good and now he has time there. number two will happen pretty quickly, too, because the -- this is where he grew up. he knows this business and they know him. number three, there's lead time to get product out there. then they can sync up the story. >> that's the problem, getting the right product. hill has come up through the sales organization so he knows what makes a hit and what doesn't. where did nike go wrong under donahoe on the innovation and hit front? and how do you think they have to pivot? >> what's really interesting, you and i talked to a lot of these people.

i didn't know elliott. looking forward to spending -- >> i didn't either. >> it's always so important in this organization, and we didn't know who he was. i think that's because what was special about nike up until the past few years were, it wasn't a one-person show. we all know phil knight. not a lot of people knew mark. this was a story that you get to $50 billion in revenue by empowering the other teams to do what they do really well and there are teams that do storytelling and teams that do product. i think over the last few years we abandoned that. we became focused on disruption, focused on channel. people knew the new management team or the one that was just there. i think this idea of nike forgetting what they did so well was storytelling and getting product to their consumer. what they sold was all that mattered. over the past few years where they sold became all that mattered. that's a very different story. that loses what made them really special. i think bringing elliott back, going back to someone who has been instrumental, obviously, in this business because he has the

best linkened profile from intern to ceo. it seems why the reason people are popping bottles is because he'll empower them. this is not going to be a single person show. >> and he's very well liked. 92 is your price target, which is higher but not aggressive from where we are right now. how do you think this is all impacted the valuation and where it goes? >> i think we're in an interesting market right now. i don't cover starbucks so i shouldn't be commenting on starbucks but you look at the gap they had and the gains they maintained since bringing in their new management and numbers haven't gotten better. i think it's interesting where we're in a market people have scarcity of what they're comfortable owning. you pay a lot, the premium and multiples have gone up. djx company i love is trading at multiples. this is true across the market. i think what i would expect to happen with nike is last quarter they pulled guidance.

i think that's really healthy. i think that what they did was allowed us to say, okay, here's your concern about the fundamentals right now. understand we just changed management, which means by definition we're not happy with our number. but what you should look to is the hope of what we can do in the future. and so that's what a multiple means. a multiple in valuation is what's the hope? what am i looking for in the future as opposed to, what are the numbers i see today? historically, so this number will normally trade on really impressive -- 30 times earnings was not a scary number. depending on what you think that multiple will be, that's higher than where my price target is right now. i think right now we need to see, how long will it take them to really reset those numbers but why isn't nike getting this multiple lift that others are hoping for? i think once people meet elliott, spend time and hear the plan, i would expect that multiple to go up. >> really quickly, do you have a sense of how much share they've lost? they're obviously still dominant, it's nike, but we have seen hoka and on, on the apparel

side, the vuori made headway. what do those numbers look like, do you know? >> up until last quarter it was probably losing mind share instead of market share. this past quarter revenue dropped 10%. now we can see the market share walking away. we can see hoka and on doing well. that's going to happen for the next year. that's what the reset means. and so we think about market share as being, okay, where do people want to go? the reality is revenue tells us where people are spending. revenues will be down for this year. they are telling us they should be. they overstretched and they want to sell healthier rather than just more. that's finally starting. that market share decline is starting but reality, if you believe you want -- if you believe in nike's ability, you want to see them donate that share and then come grab it back. i think this year is the year they work through handing off that volume to companies doing a nice job at stealing it. the question becomes after they rebase, after we're willing to

pay full price for a sneaker, do they grab it back? that's the question. >> thank you for talking it through. >> good to see you. >> the only analyst who gets into philosophy when i ask about valuation and price targets. when we come back, nvidia getting closer to new all-time highs. less than a dollar away. stock is up more than 1,000 percent since the bear market lows of '22. fresh comments out of jensen hu huang. etfs designed to outperform the index. that's the power of curiosity. better questions can lead to better solutions. t. rowe price. invest with confidence. when you're looking for answers, it's good to have help. because the right

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shares of nvidia up over 3%. you see it there. just inches from another record high. seema mody has been tracking the stock and the industry. she joins us now with some of the latest. seema? >> david, over the weekend nvidia ceo jensen huang spoke with brad gersner on his podcast. the takeaway nvidia's software is an underappreciated asset by wall street. also discussed the role it's allowing applications to run better and the constant update to its architecture, it's becoming easier to curate data.

>> there's a trail of free gear. there's a trail of free infrastructure. we're very disciplined making sure we're compatible throughout so that everything that we leave behind will continue to be excellent. now, we also put a lot of energy into continuously reinventing new algorithms so that when the time comes, the hopper architecture is two, three, four times better than when they bought it. so that infrastructure continues to be really effective. >> analyst on wall street making the point that once the hyperscalers locked in, it's much harder to switch and pivot to a cheaper alternative. a strong reaction this morning. goldman upping price target to $135. melius reiterating buy rating, $165 price target. huang also praised elon musk's xai and the speed at which he's

building super computer and touted the inference opportunity which he says over time will make up a larger percentage of sales. watching the stock, less than 1% from the all-time high. >> we will look for $140.76. thanks, seema. let's get a news update with julia boorstin. >> israel's military said it struck a hamas command center embedded in a hospital compound in central gaza. the escalation came as israel said it hit 200 targets linked to iran-backed militant group hezbollah in southern lebanon over the past 24 hours. the murder trial of a tech consultant in the stabbing death of bob lee begins today. prosecutors say the man attacked lee in downtown san francisco in april 2023following a dispute about his younger sister. defense lawyers argue lee actually attacked him and that he responded in self-defense.

and south korea says it has detected signs that north korea plans to blow up roads that cross the heavily militarized border between the countries. it comes after they accused them of sending drones over pyongyang. they believe north korea may carry out other provocations, including a space rocket launch. the u.n. said that could be a disguised test of long-range missile technology. back over to you. >> julia, thank you. s&p 500 trading at record highs as this bull market now enters its third year. how much more room does it have to run? we'll discuss that and how to position from here. and do not forget, you can watch -- or catch the entire 10:00 a.m. hour of "squawk on the street" any time, anywhere by listening and following on the "squawk on the street" podcast. it's available on spotify, apple music and more. we're back in a moment.

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big banks resume their earnings tomorrow. we'll hear from bank of america, citigroup, goldman sachs. the ceo of bank of america brian moynihan will join us first on cnbc right here during this hour of "squawk on the street," talk through earnings and also the performance, carl, which is better than all the big banks. bank of america up 45.5% this year, which is an outperform on wells fargo, jpmorgan, goldman sachs and some of the others. >> even with the buffett selling in the mix. >> i have b of a up 24.4% year-to-date. >> oh, sorry. i'm looking at bank of new york mellon. good correction. thank you for checking that. >> i knew had -- it's doing fine. it's outperformed the s&p, as are many of the big cap names in finance, led by jpmorgan. >> yes, here's bank of america. >> wells fargo has surged. you had the cfo on "money movers" on friday. that stock -- >> excited about the asset.

so, bank of america up 25%, yes. year-to-date up about 56 in the last 12 months. meantime, saturday was the two-year anniversary of the bull market, as you may know. stock prices have risen at the second fastest pace of any bull market since 1950. our next guest says while markets are maybe expensive, it's no reason to get super bearish. piper sandler chief investment strategist michael cantor joins us. i love this line, markets are expensive but unless a risk arises, it will stay expensive. can you talk a bit about that? >> sure. i'm sure you guys have people coming on and talking about whether they're bullish or bearish due to valuations. for sure, pretty much all valuation models have pointed to the market being expensive for quite some time. we always approach this from a catalyst perspective. in other words, trying to understand what's driving multiples, why have they gone up so much in the last two years, and are those trends still in

place forfurther multiple expansion? this case i think it's the pricing out of the risks of two years ago. inflation, higher interest rates, fed tightening, that have largely been priced out of equities, which is why the market is largely where it is today. so going forward, an expensive market is not on its own a reason to get bearish. if we had another spike in interest rates, another resurgence of inflation, or we saw the narrative turn back to recession fears, from any multiple, that would be a reason to get worried. currently, you know, that's not the back drop. i think it's okay for equity markets to remain expensive, but i think investors really want to focus on stocks that have continued earnings momentum because those names will likely see the best outperformance and can hold those expensive multiples for longer. >> and is that going to lead you to any sector in particular? >> it's not so much about sectors as it is about individual stocks.

so, you know, from a sector perspective, things like tech are expensive. again, given the compositional issues and stock overweight it doesn't represent the entire group. the way we would think about it, dig into each sector, find the names, even expensive, that still have earnings momentum. earnings revision is a factor that we've really been pounding the table on over the last two months as a way to start your stock selection screen and build your portfolio from there. >> what about higher bond yields? does that act as a problem at some point? >> yeah, i think so. and, you know, things typically act as a problem. first they show up in leadership before they show up in the broader market. this reminds me of the beginning of this year where we started this year, rates were at 380 on the ten-year and we went up until april really with no -- really no apparent problem for the equity market until we got to about 430. but underneath the surface, like

you're seeing today, those rate sensitive stocks and economically sensitive stocks are starting to feel the brunt of that. in the third quarter the best performing groups were utilities and real estate and small regional banks, all that benefitted a lot from lower rates. they're all underperforming and even some cases down month-to-date. you're seeing it in leadership. it's probably going to take rates going at least to 4.25% in our opinion to show up in the broader market. >> meanwhile, there seems to be buck shot of bullish metrics. for example, rail, freight car loads, corporate misery indices, mentions of weak demand. do you think revisions coming down have overdone it? >> not necessarily. you know, what we often see in a given calendar year is that estimates from the sell side always start out high and then they trickle down throughout the year. what we see consistently is in the fourth quarter, so where we

are now in the calendar year, is where you tend to see the biggest acceleration in those downward earnings estimates. perhaps companies start to talk about the next year and kind of catch up to where earnings are really going to be for the given year. i would expect to see more downward earnings revisions, but -- and that's been the case all year. again, it's mainly you're seeing it in small and midcaps. large cap stocks have held up far better in terms of earnings, which is why i think they continue to outperform. >> all right. we'll collect more information, obviously, in the coming days. that will be good to get more commentary. michael, good to get your take. appreciate it as always. meantime, tech more than doubling off those 2022 bear market lows. our next guest has a warning, though, pointing to two big issues for big tech. when we're back in a moment. >> announcer: trend tracker is sponsored by cme group.

the market is starting the week in record territory. where do we go from here? one trader is looking at sector rotation and positioning herself for a technology breakout. nento our market navigator segment on "power lunch," 2:00 p.m. eastern.

we've been talking about that two-year anniversary of the bull market. technology remains the fastest growing sector since bear market lows in 2022. up nearly 120%. our next guest says the sector does face two key issues ahead. antitrust scrutiny as well as generative a.i. elevation partners founder robert joins us now. let's start off on generative a.i., continue a conversation we've had a couple of times now. you know, you have at least questioned some use cases and

whether or not it's really making -- i don't want to put words in your mouth, but making any real progress in the enterprise. on what do you base sort of that lack of confidence in generative a.i.? >> david, the context for this is really simple, which is that fundamentally the market has the best dynamics, economic dynamics behind it of anything we've had in memory. so, i'm very much with the last guest on the notion that, you know, we'll climb a wall of worry and that stocks in general look very, very good here. but i do think there are two issues. with the tech sector is so dominant in indexes i think the tech sector is the thing everybody has to watch out for. within tech there are two fundamental issues. one is generative a.i., as you say. the issue is really simple. that the industry decided to commercialize technology before it understood exactly what the value was. and they're commercializing it at an unprecedented rate.

microsoft is committed to, i think, $100 billion worth of investment in facilities to support generative a.i. that would make a ton of sense if we already knew that in corporate settings this increased productivity dramatically. the problem is that the evidence is exactly at best in neutral. and i think at worst that generative a.i. actually destroys productivity. we see this in some very conspicuous places. specifically at microsoft relative to the co-pilot apps they were attaching to every part of their office suite. to me this is one of those things that may resolve itself favorably. but it should cause us all to have a moment of concern because tech is such a huge overweight within all the indexes. >> but there's -- you know, there's an idea that ultimately, if you build it, they will come. we've had various senior executives on those conference calls, for example, simply say, there's no question, we have to be there, and we will spend the

money necessary. why do you think it destroys productivity? what evidence do you have to support that contention? >> so, here's a simple way i think you need to look at this problem. so, for about 40 or 50 years, people in artificial intelligence have talked about this notion that if you get a large enough data set to train on, that will eventually take you to agi. you know, some kind of artificial general intelligence. the problem with that logic is we have past the threshold at which that was supposed to happen numerous times over the last decades. and we're running the same expeerment over and over again, expecting a different result. i think the fundamental problem with generative a.i. is that it was designed to convince people it's human, to pass a touring test. it has done that magnificently. the problem is that the best way to do that is with bs, so they created a technology that doesn't, in fact, give you

answers that are reliable. it gives you what they call hallucinations, which are basically things the system makes up. and when you look at that, the point here is not that there are no use cases of generative a.i. it's that they're spending money that they assume every use case is useful. that's not how it's turning out. again, it's a speculative bet. i don't think the burden of proof is actually on me to suggest that it's not going to work, but rather on the people promoting it to demonstrate that it is going to work. and you see people stepping back. you saw marc benioff just yesterday, i believe it was, talking about moving the goalposts again. well, you know, we're not really going to have the same level of productivity we promised you six months ago. we're going to try to do this a little different way. we're going to change the architecture. a lot of these guys are looking at their p&l and realizing they're going to get hit with

huge depreciation numbers. if the value isn't there right away, it's going to be a ball and chain around people's necks. given how overweight tech is in the indexes, that's going to be a problem. again, i don't know that's going to happen, david. i just think that's what the risk is. whenever you are having a great bull market like this, you're supposed to be asking questions like that. >> yeah, i get it. >> separately i wanted to ask you about the regulatory back and forth now between google and the doj. i know you spent so much time looking at this. so, doj put out some of the potential remedies and recommendations and one would be to break up the company. and google responded, leanne mulholland, vice president of regulatory affairs put out a blog post. they'll have a chance to do more formal response. in that i thought it was interesting that she used a.i. as a central part of the argument that, a, there's a lot more competition when it comes to search and also that the stakes are so high and it's so vital, they say, for the government not to put their hand on the scale here at a moment

where global competition is so fierce. i just wonder if it shows, you know, first of all, how google might use and alphabet and the stakes here in its defense to the government and whether that's valid. >> so, i think the way i look at this problem is to just recognize that the second issue investors need to focus on is politics. we are three weeks away from the presidential election. and the choices are binary. on the one hand, you have somebody who is part of the administration that helped to create this incredible economic environment that we're in right now, which has been so great for investors. and on the other side, you have somebody talking about imposing tariffs on all imported goods. talking about forced expatriation of millions who have come from other countries, including citizens of the united states. that is a scenario in which i

think the economy suffers really badly. and we're faced with that in three weeks. and relative to google, they're looking at this. and i think the whole tech sector is looking at this and going, wow. if harris gets elected, she's probably going to continue the antitrust policies of the biden administration, which personally, i favor because i do think that the tech industry has been wasting its energy on a lot of industries like generative a.i. that are not, in fact, going to put america in a strong position. they don't address climate change, they don't address public health, they don't address education, any of the real issues america faces today. and i do believe that the tech industry has lined up behind trump, either very visibly in the case of elon musk and mark zuckerberg, or less visibly in the case of people like google. and they're very much of the view that their economic self-interest, you know, it's like the french king used to

say, you know, the country is me. and, you know, their perception is that if anything happens to harm them, that's going to be bad for america. my view is exactly the opposite is true. i think there's so much value inside google that if you broke it up, you would unlock massive opportunity. it would be really good for the economy and great for investors. >> roger, as so often, there are so many things you raised for a larger conversation. let me end on this, back to generative a.i. if you are right and these investments being made ultimately, at least in any time frame investors care about are not going to show any sort of a payoff, when do we start to see the impact from that? do investors start to push back on these companies' spending plans? >> david, i have no idea when that is going to happen because the evidence has been piling up for a year. you know, essentially the goalposts keep getting moved. and the specifically openai, you know, initially was talking about agi being right around the corner. now they're talking about it being some place in the distant future. you know, you saw that

ridiculous demo of the robots from elon musk the other day. and it's just like, this whole thing is a show. it's not real. and, you know, as an investor, i think at the end of the day we need stuff to be real. there is so much opportunity in this market more broadly, and i think, candidly, in our economy. if the tech industry were to focus on real problems, i think the opportunities there would just be explosively great. so, you know, i look at this and i go, i don't know when we're going to see the change, but i do know that eventually people are going to ask the question, what are the earnings? i think when microsoft has put out $100 billion, people will expect a good rate of return on that. if it's not there, that's not going to be good for the stock. >> understood. we made the point previously. we'll continue the conversation. got to end -- >> david, let me throw -- >> very little. you hear the music. go ahead. >> yeah, my favorite follow on

all of twitter is carl. i think he has the market penned. i just love the stuff he shares on it. >> well, i'm very glad we took the time for that. so is carl. roger, thank you. roger mcnamee. a reminder tomorrow a big interview on "squawk on the street," brian moynihan, bank of america ceo joins us on cnbc on the back of the company's latest earnings. new hedge funds are trying to get an edge otrinn adg. details after a quick break. 's b? boring. think about it. boring is the unsung catalyst for bold. what straps bold to a rocket and hurtles it into space? boring does. boring makes vacations happen, early retirements possible, and startups start up. because it's smart, dependable, and steady. all words you want from your bank. for nearly 160 years, pnc bank has been brilliantly boring so you can be happily fulfilled... which is pretty un-boring if you think about it.

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the so-called smart moeb is looking to get an edge in trading. kate rooney joins us with more. >> good morning. generative a.i. is starting a new arms race for hedge funds. portfolio managers have been using a.i. and machine learning for decades but this is a new world. the modern versions can learn from their mistakes. they get smarter along the way. they require a lot less human intervention and with the rise of openai, anthropic and others there are more off the shelf models cheaper to implement. a.i. has certain advantages over human traders. one, it can measure sentiment, can comb through thousands of

documents or spreadsheets. doug clinton is using a.i. for a active managed etf. he says the ledge is really the lack of emotion. >> i think that is actually a.i.'s superpower right now. when you compare a.i. to humans, it's just that a.i. has no emotion. and i think emotion is what tends to trip up human investors more often than not. if marks are down, we sell when we shouldn't. when markets are rallying, we feel fomo. and there's so much beyond just simply looking at stocks, understanding quantitative and qualitatively, is this a good investment. >> there are some risks. some have pointed to the quant quake when they crowded into the same position. that brought a lot of volatility. as a.i. becomes more common, the this raises the bar for everyday investors and makes it harder to compete. guys? >> right now obviously there are a lot of rocket scientists who

work for the algorithmically focused funds, kate. and i guess their algorithms are different. you know, when everybody has access to the same technology, what's going to differentiate their ability to get differentiated returns? >> it's the data, david, and the inputs. what you're putting into the model, what you're solving for. you can tailor these models in a different way that makes them act a different way. it's cheaper. you talked about rocket scientists. if you're one of these funds you don't necessarily need to hire the smartest of the smartest. it's a little more accessible, easier to use and lowers the bar in that sense a little bit. >> yeah. interesting new world coming. kate, thank you. kate rooney. >> thanks, david. taking a look at the s&p. 5852. the bull market continues and our live market coverage also continues right after this. ♪♪ well would you look at that? jerry, you've got to see this.

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

humana is making healthcare simpler. and when you call, a knowledgeable, licensed agent-producer can answer any questions you have and help you choose the plan that's right for you. the call is free. and there's no obligation. you know medicare won't cover all your medical costs. so, call now and see why a medicare supplement plan from a company like humana just might be the answer. good monday morning. welcome to "money movers." i'm carl quintanilla with sara eisen. today