filing that dy has resigned as its registered public accounting firm. ey, not dy, said that it had questions about the company's commitment to integrity and ethical values in connection with an accounting review. that stock is now down by almost 23%. >> that's never great. >> keep an eye on it closely. that does it for us today. join us tomorrow. right now, it's time for "squawk on the street." ♪ good wednesday morning, welcome to "squawk on the street," i'm carl quintanilla, jim cramer, david dade at post nine of the new york stock exchange. q3 gdp and adp employment come in strong, actually now red. it's caterpillar's miss that's going to way on the dow. we'll get to more on the way tonight. our road map begins with this disappointing drug sale weighing at lilly. plus, caterpillar cutting its annual sales forecast on

slowing demand. and google parent alphabet, it sees double-digit growth as a.i. bets boost that cloud business in a big way, and speaking of the a.i. boom, lisa su is going to be joining us exclusively. that's just a few minutes from now. let's start with lilly, down sharply in the premarket. the company does post a quarterly miss, lowers the high end of the full-year guidance. sales of a popular diabetes and obesity drugs, which of course have powered the company into the top ten list of u.s. mega cap, coming in below consensus, jim. we had ricks on "squawk" in the last hour. >> look, i'm a big fan of lilly. i own it. sold a lot at $960 on this thing. that was just being lucky rather than good, just discipline. here's what i'm thinking. the explanations were not sufficient. but not in a negative way. the actual estimate cut is not very big. you talk about a half billion. i know it sounds like a lot of money, but the stock is going to be down gigantically. >> yeah. >> david, here's what happened,

i think. they could not meet the demand, so they didn't want to stoke demand, because then they'd run up against the fda shortage rule, let the hims and hers in there to take, you know, take a lot of share. they are building -- unless you think david ricks just fell off a turnip truck, let's remember that they are building $1.8 billion manufacturing in ireland, $4.5 billion lilly medicine foundry. they're opening -- just plants all over the world. now, maybe they mistook demand or maybe they didn't get the correct amount into the system, and that you could not get lilly, so they drove you to wegovy. regardless, what he said today was not sufficient to make a decision on whether you should buy it or not. >> why? >> why? because he said it -- in one breath, he said, listen, we can't meet the demand. in the other, he said, we have a lot of supply.

i've never seen a company have too much supply and yet somehow that's okay? it's a high multiple, high-momentum stock that is not allowed to miss in this environment. >> right. it's hard to imagine that there isn't demand for their product. >> there's massive demand. >> without a doubt. it's not as though this is somehow suddenly falling off. >> no, no. >> in fact, there's this long report, i think, from citi today on glp-1s and it's very positive about their long-term implications. >> it's like "war and peace" and came out on the wrong day. >> just chatgpt it. >> look at the hot shot. >> i'm paying 20 bucks a month for this thing, it might as well do something for me. >> i'm going to give you the most critical read you're going to get. there is a person who is the cfo of a company called alphabet who left a company called lilly, and at alphabet, annette gave you one of the best narratives ever.

ruth porat, sorry, i don't mean to slight you, i think you're the greatest, but this was one of the tour de force conference calls at alphabet. >> we're done with lilly? >> no, because annette ashkenazi was the cfo of lilly and she knew how to tell a story. david, as much as i like him, did not know how to tell a story. >> so, this is a failure of storytelling? >> what we have here is a failure to communicate. honestly. i'm so baffled. i have been -- it was a big position for my travel trust. it just ran too high. i said, we'll get back in which it goes down. but i think that david misspoke. i think either -- >> david ricks, let's be -- >> david ricks. i think he should have said, we misjudged the demand level, and when we did, we did not overwhelm with supply, so you know what? you got wegovy. and he did not say that, because people are very reluctant.

>> maybe they'll have an opportunity to get more -- you're talking about his communication on the interview he did earlier. >> i think annette is a person who was integral to what david would say is how i feel. >> the former cfo of lilly. >> i don't want to gotoo fast. annette ashkenazi leaves lilly, which is in indianapolis, they're not doing that great there. >> first football reference if you're keeping track, five minutes in. >> so, she leaves -- i always thought she was unbelievable. i met her through the cfo council. extraordinary person. i thought she told the person better than anyone understood the story better than anyone. she then goes to alphabet. in that conference call from alphabet, you heard a person that organized the alphabet story like it's never been organized, so maybe it's possible to belief that annette was integral to telling the story at lilly, and we forget how important cfos are, but i think she might have advised david ricks differently from

what david ricks said today because as far as i'm concerned, david ricks said, boy, we are overwhelmed with demand and overwhelmed with supply, and all people heard about was, overwhelmed with supply. >> they have spent 10, $15 billion in manufacturing capacity this year alone, and at these levels, jim, this would be the worst session for lilly since march of 2020. >> deservedly so. march 2020, of course, covid. deservedly so, because i am a close observer of this company, and i watched the interview twice. and i came away, and i said, can i watch it a third time? but no, i had to come here and do the show. and i find that situation a situation that is beyond description, because you could not make sense, heads or tails, of what mr. ricks has been on my show many times. and i couldn't make sense of it. so, that's why i default to the fact that they are spending billions to meet demand and that that's the way you view it, and you, heaven forbid, buy the

stock. >> well, jim watched the interview twice. for those who missed it, let's give them a chance to watch a piece of it once. this is ricks on "squawk" earlier this morning. >> we want to make sure people, when they get a prescription, can fill it. we understand that's a frustration for our customers. we relaxed that constraint a bit, so there's a little lighter demand in the year, now projected, but overall, i think we're in pretty healthy shape and underlying demand is extremely strong. >> where did this supply go? if you go to cvs or walgreens, they're going to drive you toward wegovy. they didn't have enough mounjaro, and yet mounjaro sales were soft. that tells me that there is a critical problem in managing what they had to sell to the stores. if they were really worried about the so-called fda shortage, they botched it. so, what i'm willing to say is, because this is really good, so good that they got it wrong, but you take a long-term view, and he did not even discuss -- he was so caught up -- he didn't

discuss all the things that are going to be right for lilly. so, this was a game that he did not play well. >> right. and we haven't even gotten to some of the comments from, say, rfk jr. this week about diabetes drugs and policy risk, but maybe later. let's get to alphabet really quick. google's parent, up sharply this morning on that report last night. quarterly beat. strength in the cloud business. sundar pichai did say the company's investments in a.i. are paying off. here's what he said about search and a.i. on the call last night. >> i expect search to continue to evolve significantly in 2025. both in the search product and in gemini. and so, you know, i think -- i think that's the opportunity ahead. i think we are in early days of what is a powerful new technology, and with it, i think we can do a lot more for our users, but at the same time,

underpin it on the foundational bedrock of quality and trust and user experience, which we've always done, so we are at one billion people. i don't necessarily see a constraint there. >> so, there's that, jim, and of course, we'll get some azure numbers tonight. >> this was a fabulous call. there's a cfo there, by the way, annette ashkenazi. i'll tell you why it's a fabulous call. you had accelerating revenue growth in google cloud. the gross margins there are immense. they're in the conversation. at one time, i thought, when thomas came there in 2019, and made a series of bold, bold asse assertions which i completely doubted and therefore i was revealed as someone who was pantsed by him when i talked. that's a technical term, pantsed. i thought youtube was amazing. i mentioned the nfl, david, but i'll spare you. i thought that cloud was incredible. i thought that the costs, dramatic decline in costs, was amazing, and the amount of money these guys are making, carl, is

so big that i understand if you were a government official, you say they're making too much money, which happens to be the ethos, i believe, of the biden administration. this was one of the best quarters i've ever seen from the company that people thought was going to be the weakest mag seven. >> that's true. and then the worst performer, mag seven on the quarter. although, you did say this morning you thought reddit was an even better story. >> reddit is unbelievable. i had steve huffman on last night, and reddit wasn't supposed to make money. they had 100 million people, but you had -- can we play -- do we have time to play? maybe we save that. >> we can circle back to reddit. i do want to ask you, though, some argue that the capex coming in just basically in line is directionally negative for chips, and we're going to talk to lisa in a few minutes. >> i remember, annette talked about $13 billion spend the quarter and have to spend much more next year. that said to me, all systems go.

amd is another convoluted one we're going to get to. convoluted, meaning, down really badly because who can tell, when you have a momentum stock, it's beat and raise or else die. and google had beat and raise galore and a really well-told story by both sundar, but reall annette made me feel fantastic. >> you think youtube and search could have beat by more? >> no, these were amazing. i think if you work at youtube, like say you're working at linear tv, and let's say i taught sales, i would say, would you please make 50 more calls? we're not making the numbers. here at alphabet, it's like, look, i know you can't handle all the calls. i know that there's too much business. just prioritize. that is one of the most unusual situations i've ever seen. >> the numbers continue to be stunning for alphabet. >> stunning. >> just the numbers themselves.

i go over this every time, whether it's amazon or alphabet or certainly apple and microsoft, and meta, $13 billion in capex in a quarter. in a quarter. >> and they need to spend more, they didn't spend enough. >> they say they're going to keep that where it is roughly, similar levels to what the third quarter is where the capex will be on the call is what they said. by the way, even with that, they're still able to buy back, what was it, 15. -- >> can you believe that? >> another $2.5 billion in dividend payments. >> can you believe that? >> the numbers are stunning. >> these are countries. >> yeah. >> these are countries with a balanced budget. >> yes, they are -- it is incredible. >> i have to tell you, i was just -- i was in awe. what can i say? >> there was a time, jim, when not that long ago, when the telecommunications industry was by far the largest spender on capex. one of these companies now -- i think microsoft will equal all the money spent in telecom for capex this year. >> these are companies that are unusual in the sense that i've never seen it. there's too much demand, but

they are doing a good job trying to meet it. >> a lot of it, carl, is being spent on building new datacenters, as we know. >> and now energy. >> and finding nuclear power sources for them that you need in six or seven years. >> yeah. i mean, these guys would activate chernobyl if they could. >> we have our own ssmrs. >> space is the answer. datacenters in space. >> i used to sleep next to rancho seco in sacramento, because that's the only place they wouldn't roust me. >> this explains so much of your everyday behavior. >> i lost all my hair sleeping next to rancho seco. >> is that where it happened? >> yeah. >> okay. >> let's -- holy cow. let's go to amd. amd shares ware, yes -- let's sy obliterated. i don't like to read copy. i'm not a copy reader. and we got to find out what the hell went on here. it was a better than expected third quarter but people are saying the forecast was light.

i question that, but that's okay because we've got lisa su here who knows a heck of a lot more about the company than i do. first of all, welcome. fantastic. you're great. >> good morning, how are you guys? >> i'm good. let's get right to it because people are concerned. i'm not using the word frightened, because we'll save that for halloween. at the beginning of the year, you said you'd do $2 billion in a.i. and you did $5 billion. at the beginning of the year, your stock was at $154. now your stock is at $153. how is it possible that you could be offering $2 billion as your forecast and then do $5 billion and your stock is unchanged? would you please explain to me that? you're better at math. you went to bronx science. >> good to see you guys this morning. we had a very strong third quarter. if you look at the overall growth, we grew 18% year over year. we had a very strong datacenter quarter. we had very strong server quarter. we had a very strong a.i. quarter. and we actually, as you said, we raised our guidance from

$4.5 billion of a.i. revenue to greater than $5 billion of a.i. revenue for 2024. so, overall, lots of positives, and you know, look, this is a long-term growth story. you know that. when we think about the massive demand that there is in the datacenter for both a.i. and traditional compute, we are one of the very, very few players that can offer all of the different compute capabilities that are required, so from that standpoint, i think we feel very good about where we are. going into the end of the year, we're going to grow in the fourth quarter at our guidance, 22% year over year, and that's all about growth in datacenters, growth in servers, growth in a.i., and also growth in pcs, so these are all positives that we see in the business. >> now, pc and server, incredibly strong. i see you taking incredible share, thankfully, from another company that at one time, i met you when your stock was at four and they were at 50, you told me

to get out at 4. you're taking share from that company. >> we are having a very strong cpu cycle, i can say that. we just watched our zen 5 processors. strongest portfolio we have had overall. we are firing on all cylinders. when you look at the traditional server market, we're seeing refresh cycles in both cloud and enterprise, and that's showing through in the overall demand, and we also have very strong portfolio when you look at the a.i. market as it relates to pcs so that's another nice growth vector for us, and we're at the very, very beginning of that cycle as well. >> one of the reasons that we own your stock for the travel trust and have for some time is we are firm believers that a.i. is so big that it's not just a -- it has room for two players. it's not just jensen huang and then nobody. could you make the case that, actually, you are a strong number two and getting stronger? >> yeah. absolutely. look, i am a huge believer in a.i. this is really the beginning of what i like to call an a.i. super cycle. we believe a.i. is going to be

in every aspect of computing, whether you're talking about the large clouds, enterprises, you're talking about the edge or you're talking about pc clients, and you need all different sizes of compute for that, and that's exactly what we have. we're at the beginning of the cycle, and as we said at the top of the program, we started with our mi-300 a.i. gpu just about ten months ago. we announced it in december of last year. we said, hey, we think revenue will be about $2 billion, and we knew that this is at the very beginning, but we have had just incredible partnerships across all of the cloud, the largest hyperscalers. we made great progress with meta, with microsoft, with oracle, with a number of a.i. players, and we're going to continue to do that going forward. so, i think a.i. is really at the beginning, and our goal is to be a very, very strong overall compute provider into that space, and really partnering with the largest vendors in the industry.

>> lisa, i know it's not that large a part of your business, but the gaming sector seems to be giving some people issues this morning in terms of at least what appears to have been a sizable miss in terms of what analysts who follow the company anticipated. what can you tell us about what you're seeing there? >> yeah, absolutely, david. so, it is true. if you look at the third quarter, we saw a strength higher than expected revenue in at that time, higher than expected in client. actually, a good recovery in our embedded business, which is one of the ones that serves the broader markets, and in gaming, we were a little bit lower than expected. it is really just where we are in the cycle. the gaming business is a good business for us. we are very dependent on game console sales, and i think we're in the latter part of the game console cycle, which is as expected, but overall, i think when you look at the growth drivers around datacenter, around a.i., around pcs, and a recovery and embedded, we're actually seeing lots of

positives and that's the beauty of our model, frankly, is that we have such a broad product portfolio that covers such strong markets. >> lisa, david mentioned a moment ago how some of these hyperscalers are rethinking energy supply for the long-term, and i wonder if you have the sense of whether or not they're on case or they're really, truly, will be a crunch when it comes to energy, say, in the next five, ten years? >> well, carl, i think the main thing that we see is nobody really predicted just how fast this a.i. market was going to grow. if you think about just a year ago where we were and the fact that there is such strong capex spending, it is placing a premium on datacenter space and power. we see that as we talk to customers, but as an industry, we're really good at attacking problems once we see that they're there. there's a lot of focus in ensuring that there's enough power and datacenter space to really have room for all of this a.i. compute that's necessary,

so we're working on all aspects of that, and i do believe that we'll continue to make significant progress in those areas. >> lisa, longer-term question. we're all struggling or at least i do, to try and understand what this future is going to hold in terms of a.i. and understand various projections. there are some i've spoken to who believe, as you move more to inference, away from just running the large language models and all the data and taking it all in, that you may not need quite as much compute power, that inference will be more efficient or perhaps require less. how do you see that as generative a.i. evolves here? >> yeah, absolutely, david. look, we see the generative a.i. arc as really going through multiple steps. i mean, these large language models are amazing. we've made excellent progress when you think about where we are today with some of the openai models, or some of the llama models, they're great, but they can get better. we really do believe that a.i. compute will enable the models

to get even better, smarter, allow you to do fine-tuning, as well as inference, and one of the things that i firmly believe is that there is no one-size-fits-all with compute, so as inference comes along and we expect inference to continue to grow, there will be other types of devices as well. but the beauty of it is, we have a broad portfolio to really address it, so from an overall standpoint, i think we're forecasting strong growth for a.i. compute. we recently updated our numbers to say that we believe the t.a.m. for datacenter a.i. will be up to $500 billion in 2028, and that will be a combination of both training and inference and all different types of compute in there. >> lisa, we put you on the spot here in the sense that right now, nvidia, qualcomm, arm are all down big. and it's not necessarily in conjunction with you on the idea that there's no demand or slacking demand. i'm not taking that right now. you did mention the word supply at one point in the conference

call. therefore, people believing taiwan semi cannot supply you what you want. and because you can't be supplied with what you want, you're going to miss the numbers, maybe from here to eternity. could you please explain what happened with the discussion, the narrative of supply, and whether that was correct in relation to taiwan semi and correct in relation to supply that you will have for 2025? >> look, jim, the one thing i would like to say is we feel extremely good about the a.i. market overall. this is one of the most exciting markets, the most exciting market that i have been a part of. it's natural for there to be tight supply. it's natural. this is the way the semiconductor business works, which is as demand goes up, you need to build more capacity to do that. i think our supply chain partners have done an excellent job. i think we have done an excellent job. our supply chain team has really ramped up capacity as we've gone through this year, and we are going to ramp up capacity again as we go into next year, so these are the types of things that we manage on a daily,

weekly basis, and from that standpoint, we work very closely with tsmc as well as all of our supply chain partners to ensure that we are there to meet the demand. >> well, okay. i mean, i think you've explained as much as we can. obviously, people feel that the company is not doing as well as the beginning of the year as the stock is now below that, which seems fatuous, given the fact you'll do $5 billion and not $2 billion. let the chips fall as they may. amd ceo lisa su, thank you so much. >> thank you. when we come back, so many movers to get to. we'll get to caterpillar. it's going to ding the dow. we'll get to reddit and snap and cmg and shack and eat and visa in a minute. jen b asks, "how can i get fast download speeds

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>> announcer: the opening bell is brought to you by nuveen, a leader in income, alternatives, and responsible investing. 30 to 60% of our users are not on other social media platforms, and so reddit has a unique audience, and we also have communities and places for

people to gather around pretty much every topic imaginable, which means every company's customers are probably on reddit somewhere, so reddit is a place that advertisers need to be. >> time now for a "mad dash." that was, of course, the ceo of reddit, a guest last night on "mad money." this is the "mad dash." >> yes. we talk about companies that beat and raise and companies that didn't beat and raise or that cut. eli lilly cut. amd, you could argue -- eh. this company was even stronger than alphabet, why? because of that comment. they have become a must-buy for almost every cpg company, david, all the consumer packaged goods companies. that are in -- there are seven verticals that are up 50% on this thing. i think that literally, there are people, david, who start their day and keep their day on this. daily average users, 97 million.

david, they made money and not in that gap -- nonsense -- i almost used a word that would be censored. they made it the old-fashioned way. >> you know, it is a stunning move here for this stock price since the company went public, and there were certainly no shortage of questions, given it was, what, almost 20 years from inception to going public. they had rarely, if ever, really been profitable. and yet, boom. and it's not just because they allow the large language models to run over their data. >> which this is raw user power. there are these verticals that you can reach that nobody else has. look, my daughter beat melanoma, so there's a -- there's like a family of people that tell you how to deal with it. then, you can go on, and you can do something that steve mentioned, which is no drink.

>> right. >> how to cut back on drink. these are verticals you can't reach, and i don't want to be too specific, but what i'm trying to do, anecdotally, is explain empirically why this thing is exploding. this was a charity. i had some meetings with huffman before this came public, and the meetings were not fun. i said, make money or die, man. this guy chose, make money, and this is a money-maker that is now going to be one of the -- you're going to do ads, give it to meta. you're going to give it to amazon. you're going to give it to alphabet. and you're going to give it to reddit. >> you were positive at the ipo. >> yeah, no -- >> you were. >> i like huffman very much. >> and you were right. >> oh, there you go. >> i'll tell you what, in this climate, jim, when you can tailor your content to the exact topic you want to discuss, that's why daus are up 47. >> let's say you're one of these companies, a drug company, and you're trying to reach people who have crohn's disease. well, you can go put out some ad

that has -- that 8% of the people have crohn's and 92% don't, or you can go to the crohn's disease vertical. i mean, holy cow. this is the holy grail. if i were meta, if i were zuckerberg, who's jealous of no one, i'd turn to the person next to me and say, wow, huffman is better than i thought. highest compliment imaginable. better than i thought. >> that is going to be an all-time high for reddit at the open. here's the opening bell. at the big board today, it's the cast and crew of "kwwater for elephants" on broadway. at the nasdaq, celebrating an ipo. >> i know you're going to be critical of "water for ele elephants. >> i haven't seen it. have you seen it? >> not yet. >> i try to get to the theater as often as possible. >> what's the beat and raise for you, theater?

>> i don't know. i don't know. death of a salesman. >> not a dime a dozen. >> i'm a musical guy. "august: osage county" was a great play many years ago. >> all right. i was going to go with "fiddler." what do i know? >> wonderful documentary. >> great documentary on "fiddler." >> i could talk musicals and theater all day long. >> let's talk super micro. >> let's, because this is somewhat stunning. we've been trying to put together what was said in there. i don't know if we're going to have it in time for you. i may just read it for you. essentially -- i got it to read. i want to make sure the viewers might be able to read it along with us. their auditor said, we're out of here. ey -- let me read their quote. "we're resigning due to information that has recently come to our attention which has led us to no longer be able to

rely on management's and the audit committee's representations and to be unwilling to be associated with the financial statements prepared by management. and after concluding we can no longer provide the audit services in accordance with applicable law or professional obligations." that is super micro's former auditor, e & y and that is why the stock is down 28%. >> have you ever seen such a horrible letter attached? >> no. that's really bad. >> can i just thank -- >> i don't know what's going on there. >> it's not good. >> that is not good. >> why would you ever deal with them if you could deal with dell or hp? why? would you ever deal with a company that's completely not trustworthy? >> dell and hp are both up in sympathy, in part, because there's been a fear that smci has been undercutting them in price, right? they're all going in the datacenter. they're all putting together

these racks or however you want to call, putting all the stuff together, and a lot of questions here, obviously, very few answers. but to jim's point, it is extremely rare -- first of all, rare to see an auditor resign, but to do so with a statement like this is even more so, jim, i think. >> that's a -- the company has to totally revamp. the company -- look, if you were the ceo of that company, you resign, but the ceo is the company. i want to point out that people don't like short-sellers. you hear that nonsense. on august 27th, nate anderson, hindenburg, wrote, "super micro, fresh evidence of accounting and sanctions evasion." everything that happened is right there. congratulations, hindenburg. right? >> no, without a doubt. >> lake hurst, right? just down. >> and e&y informed the special

committee -- they put a special committee together as a result of things raised there, and i think they had some incoming from -- jim, did they, from federal authorities? i don't want to get -- >> they have to -- well, they claim -- remember that? they issued that fatuous ak. >> when e&y received this information, it raised questions about whether the company has ethical values consistent with principle one of the coso framework and the willingness of the board to act as an oversight body that is independent of the ceo and other members of management. >> devastating. just devastating. >> by the way -- >> charles lang is liked. he's a well-liked figure. >> stock still up for the year and for the last 12 months. >> david -- >> because of the heights it hit -- >> i question whether that is going to be able to be sustained. if eli lilly could miss that much money because they

mismatched the daemand, i think the company could by down 15. >> this could be the worst session in about six years. >> they've got some explaining to do. >> the other word that i would activate. >> suboptimal. >> yes. >> a pastiche of suboptimal. >> the not a mosaic. ill-advised. >> not to be fanciful about it. >> but it does raise eyebrows. these are all the things i learned to say because i had to be a diplomat. i can't say what i used to say. >> i notice you are throwing in some epithets lately and you're just -- in your normal conversation. >> you know? david, maybe i'm in a bad mood. >> maybe. >> right. >> maybe. >> or maybe things -- people are doing things that are not good. this -- carl, this one, i read it and read it. i've been reading over and over. i mean, you know, this is the kind of thing -- i've dealt with auditors when i was at the street, and the auditor would come and say, listen, jim, we're not happy with this or that. i say, let's change it. never once did i ever got -- ever get, you know what, you're

a total scoundrel and i'm not going to deal with you. you know why? because nobody gets that. >> integrity. that's just brutal. >> you think integrity's on the line here? >> unwilling to be associated with the financial statements. >> this is the worst one i've ever heard. to be fair, the stock wasn't $122 in march. it's a $19 billion company. >> it is. it's still a large company. it was a high flyer. >> if you're michael dell -- >> "hhappy days? >> michael dell says, i'm so jammed up, go try hpe. i had hp on this week. >> i know you did. >> michael dell can handle all the business. jensen huang's event, michael dell was in the front row. >> lilly is down over 12% right now. >> caterpillar could be the story. >> you want to do caterpillar? we haven't hit cat at all. >> a hundred points. >> caterpillar's actual

weakness, and jifm umpleby is fabulous but things have gotten weak. this is more what you expect when the fed is -- fed hurt the economy. dr horton, pause. there's a lot of -- it's not p-a-w-s, that's just my philadelphia accent. there's a pause in a lot of business because they raised rates so much, and then we had a huge back-up in rates after they cuts rates, not unlike 1995. it is true that we have been at 4.2%, thank you to frank holland this morning for the last two years in the bull market, but i would point out if rates hadn't backed up, i think there would be more business being done. i'm surprised that jim did miss. look at that chart. holy cow. >> sequential declines across all basis segments at cat and to your point about the rate and the backup in rates impacting mortgage apps, down five weeks where you had refis down 6%. >> look, and horton, $400,000

homes, it was really bad. look, it was really bad from a basis of everyone thought it was going to be good. caterpillar, everybody has been -- drunk the kool-aid or realized it's a big infrastructure play. lilly, i want david ricks to come on "mad money" tonight and reexplain what happened. >> you want him to come on cnbc for his second appearance of the day. >> not unlike -- >> doug mcmillon. >> he's such a close watcher of mine. what'd i wear yesterday? >> i have no idea. >> just say brioni. you're always going to be right. >> brioni. >> when you look at what doug mcmillon did, he felt that he didn't do a good job on "squawk." >> many years ago, doug mcmillon went on, and walmart stock was down sharply. >> that was because he decided to change his compensation, which he said would then boost things, make it a better store. >> compensation overall. >> i've been going to the store ever since it happened. >> he came on "mad money" that night, so maybe david ricks will. >> it's okay. >> by the way, on lilly, jim,

this idea -- and you raised it but very quickly and of course as usual didn't explain it at all, so most people had no understanding of what you were speaking about. they seem to be protecting price to a certain extent, i think, is what you were trying to say. >> i'm trying to deal with your insult first. >> they pushed the compounders out of the market. >> him and hers. >> because they were -- >> the fda shortage rule says you can flood the channel if you're another supplier, and you can cut price. thank you, david. you know how to explain things. >> the first inventory to get those guys out of the market to maintain price, but by pushing inventory, they may have dampened future demand or at least this quarter's demand. >> i wish i had said it that well. that was very well said. >> thank you, jim. >> maybe dave ricks will come on and say it that way after listening to you, because that's what happened. >> maybe he will. >> look at that stock. >> they got to protect price. >> i've hit three 7s at the casino. >> mounjaro is a hundred bucks in israel but a lot more here. >> they misjudged. >> $1,600 is the list price.

>> david, insurance. amd, we really talked that up. it's down another four since we saw lisa su. >> we got some big losers today. >> we haven't even gotten to chipotle. >> how about the quietest $580 billion company, though? >> visa. >> you knew right away. it's up. >> visa never misses, and visa has a model which doesn't have any credit risk, and who -- look, i'm running visa next. i'm the ceo, because it may not even matter. >> your buddy, charlie, ran it. didn't he do a good job? >> opex up 10 but sales up 12. as for executive changes, great list out of b of a today where they looked at boot, nike, chipotle, starbucks, e.l., wolf, pizza, cvs, signet, all with management changes in the last year. >> the only one i'm not worried about is pizza, and the reason why i'm not that worried about pizza is another company that you mentioned, or teased in the business, shake shack.

there, rob lynch has come in and done a job, has made shake shack the stock that we all thought it could happen when we waited in line at that citi field for a really darn good burger. and what i'm saying is that rob lynch, who, of course, will be on tomorrow night, because that's what i do for a living -- >> yes, it is. >> i don't have jeff bezos, and i don't have jay powell. >> no, you don't. >> but when you see what he's doing at shake shack, carl, he has got -- he's talking about things like throughput. i mean, throughput was -- by the way, it was brian niccol's middle name, brian "throughput" niccol. >> what did we make of chipotle, me meantime, in his absence? >> they have this great honey chicken that's selling really well in sacramento. next time what we're going to hear is a limited time offer for ho honey chicken, the stock is going to be back to $58. >> alphabet shares continue to have a good morning, at least 11 minutes into trading. i think, first of all, it came in as the lowest multiple of any of the big seven of the magnificent seven. below the market multiple.

so, we did have analysts on yesterday that admitted, listen -- anything halfway decent, you conceivably see the stock up. there's questions about their monopoly in search over time as various entrants into the generative a.i. wars potentially take share. and then you've -- then you've got the doj. >> that really was like, oh yeah, the doj. it was like the doj. it was like the -- oh, yeah, the mlba. it was really -- it was -- carl, the idea that we sent that stock -- the market sent that stock down so big of the justice department and it merited maybe 90 seconds on the call. really incredible. >> do you think it augers well for microsoft tonight, at least on the cloud? >> the cloud. >> if you listen to marc benioff, which you may not, he thinks that copilot is weak. that's their device that a lot of us have. it does auger well, but what it really augers well for is zuckerberg. >> also tonight.

>> meta. don't forget what he said in that last conference call. you write me a check, i'll give you the single best ad campaign ever. i do, by the way, ask steve huffman at reddit whether he thinks they could do that. he said, maybe that's a good idea. i like a guy who thinks big. mark zuckerberg is thinking really big. he's going to -- he wants procter procter & gamble to say, listen, i'm firing everybody, here's a check, sell tide to everybody, and he'll say, sure. he's a confident fella. >> snap, not bad, speaking of advertising. it's a $20 billion market cap company. >> snap? i knew you would get to that. >> you knew i would? you both just reacted like i -- >> you know how i said i don't explain anyone? >> let's just move on then. we don't even have to look at it. you guys seemed so disappointed. >> you got a couple target hikes. you got buyback in there. >> it was good and i have not been a big fan of that company at all. by the way, david, how much money are they making? >> not any.

>> wow, that's -- >> i mean, it's adjusted. adjusted. >> adjusted. >> you got to adjust. >> go adjust your jacket. >> a lot of adjustments need to be made. >> super micro is right up there with eli lilly, but david ricks does not deserve that comment i just made. >> there was a big announcement from kkr and industry capital partners, they actually own cal pine, too, gets to the bigger issue we've been talking about, growth of the datacenter, power to supply it. it's just a press release. they're not announcing that they're doing any big purchases at this point or buying the turbines or anything else. it's just words on a paper. that said, they are talking about a partnership between kkr and energy capital partners to spend $50 billion over the next number of years on basically power generation and renewables for, as you might imagine, powering datacenters. just signkind of interesting. everybody getting involved, as you might expect. you have to be there. >> i'm trying to get jonathan

gray on the phone. >> you're trying to get jonathan gray on the phone? >> blackstone has even more datacenter capacity than they do. >> they do, but this is more about the equity and debt side of the equation to fuel the creation of the power supply. >> right. well -- >> not necessarily buying the datacenters. >> but i'm saying that i need -- i mean, a la what google said, the datacenter is still the untold story. the datacenter, there were no flies in the datacenter today. >> no. >> there were flies in glp-1. no flies on a.i. chips. >> amd's quarter was not concerning at all for the datacenter. >> 52% of their business is now a.i., and people want to -- their long knives are out for lisa su and i'm willing to take some of them knives. >> power infrastructure on an accelerated basis, they're talking there. the numbers are staggering. datacenter power demand expected to grow by 160% by 2030. >> unbelievable. >> that's only about five years away if you're keeping track.

that's according to goldman-sachs. >> why not buy oracle? they're putting them up left and right. >> yeah, why not? >> buy oracle. buy larry ellison. we haven't talked about the other ellison. >> david ellison? >> then we started talking about larry ellison. >> that continues to move forward, the purchase of paramount by skydance and redbird. >> by selling nvidia off amd is like selling the dodgers off one yankee win. >> that was a -- that was -- he crushed it. that was an amazing moment. >> they call me freeman at the office. >> freddie freeman is incredible. he's just a hall of famer. they got three hall of famers in a row on that lineup. right? i mean, mookie betts, freeman and ohtani. they're all going to the hall of fame. >> they're good. that's a good company. i'm taking that. >> it's not bad. >> look, even after last night, i'm still taking numbers. >> they got kershaw, who's obviously going, but isn't pitching. >> don't reach over and grab the ball like that. >> no. no. and i got to tell you something,

david. every single person that watched that game is on glp-1, then the numbers would have been raised, not lowered. >> if every single person -- >> who watched that game. it was a very watched game. fox has a lineup. they would have lost, what, $150 million? now we got a real series. >> some of the numbers in japan have been crushing it. >> i wish i were in that jersey business. >> they're all watching in japan. >> i told you, remember, i told you last night, they're going to come back? >> they won one game. >> it would be historic. >> when it's 3-3, you can tell me they came back. >> remember the red sox? >> that was not the world series. >> we'll see what happens tonight. >> i can't tell people to go watch another channel, but i liked it. series is pretty good. >> dow has gone positive. watch bonds today. gdp was very encouraging, 2.8%, basically in line with atlanta fed. consumption, 3.7%. pce, 1.5%. nice growth with moderate inflation. and then adp, best since july of

'23 at 233,000. yields still a little bit lower here, 4.21% ten-year. don't go away.

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a reminder four trading days left before the election and on election night we will have the results as they come in. we invite you to join us for the reaction right here from the new york stock exchange and continuing overnig ihtnto "squawk box," which will begin early at 5:00 a.m. eastern time. dow is up 32, and stop trading with jim is up next. a life insurance policy of $100,000 or more she can sell all or part of it to coventry for cash. even a term policy. even a term policy? even a term policy! find out if you're

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it's time for jim and stop trading. >> there's so much going on, maybe dave has that national anthem -- maybe dave has that nate anderson thing. i wish i didn't have to go. i want to talk about qorvo. next to google, apple is the one people think is going to miss.

management expects apple revenue to decline in low single digits, fiscal year 2025. what that says basically well, apple is going to miss. i think people are going to give you a read through. nate anderson's read through is that nvidia is going to do poorly because they have a client with lack of integrity. i'm not buying that. >> he's not saying that. >> nate is great. >> he's saying on the x platform saying similar things to what you and i did about the resignation letter. i don't need him to tell me because we have more experience but that is one sharply worded letter unlike anything i had read in a long time. >> if you want to read through nvidia i would tell you hpe, which is a beneficiary here, and

dell will take everything that nvidia has and cut out charles lang. people want to sell nvidia, be my guest. you will be wrong. apple is tougher. i say own it, don't trade it but the qorvo news is not reassuring. >> the drop tonight? can you get rick to do a double. >> i have shake shack, ulta under fire and then bracken darrell leading the vf corp. i think he comes in from logitech and the thing after a year, this is bracken at his best. amazing turn. and then i might have david ricks. although i have not called him or anything. he needs to come on. >> a 72 minute show. >> why not. what are you doing, 48 hours

straight? >> we have a big team. >> the team is you and other people. >> no, we got a big team. >> i know. that's the way i like to look at it. i'm going to pop in. >> you are going to pop in? >> yeah. >> i'm not. as long as he's here that's all that matters. >> did you go to bronx science? >> i did not go to bronx science. why bring that up? queens to bronx science that's a long trip every day. >> dow up 120. and sarah's exclusive with ray dalio from saudi arabia in a minute.

good wednesday morning welcome to another hour of "squawk on the street" i'm carl quintanilla with david faber live at post nine of the new york stock exchange alongside sara eisen in saudi arabia at the fii institute's eighth

annual summit where in a few moments she's going to sit down with ray dalio for a cnbc exclusive. busy day of corporate earnings dow up 140 or so, s&p up about 5, ten year 421. lilly is tumbling after missing estimates and cutting the profit outlook. alphabet rallying on the back of its results but amd is dropping on its outlook. shares of reddit soaring the company reporting the first ever profit. and super micro shares tanking after disclosing its auditor has resigned. let's get pending home sales. diana olick has them. >> pending home sales in september jumped 7.4% compared with august. the street was looking for less than 1% gain and it's the highest level since march. sales up 2.6% year over year. these pendings are based on signed contracts so it's people

out shopping and making their decisions in september. the 30 year was coming down touching 6.11% the second week of september. it stayed around there for the rest of the month before shooting higher in october. we're now just over 7%. this is likely a reaction to the drop in rates or more inventory on the market for sales. regionally pending sales were higher month to month year over year higher in the northeast and southwest. interesting though that the biggest gains were seen in the west where home prices were the highest. probably where lower rates have the biggest impact. >> diana, thank you. diana olick with the latest housing numbers. let's get to one of the big movers this morning and it is on the negative side we're talking eli lilly, earnings were a miss, a lot to understand here including the demand for the glp

1-angelica pebbles has more. >> you hit it on the head, glp 1 the story today. they're both coming up short of estimates in the quarter and the bigger fear it's not clear why. >> this is not a function of supply. it's a function of, you know, these wholesalers and retailers having capacity and wanting to stock every dose which they often don't. so yeah we're just balancing all these parts and there is an excess supply but we haven't been stimulating demand the way we had originally planned so we're pausing that a bit, we did pause that. but we're restarting here. >> and, you know, one of the answers that lilly gave to this is that part of the dynamic they're seeing is that the wholesalers are selling what they have in stock and not

ordering more. something that they call inventory de stocking. but barclays saying that probably only counts for 20% of the results. so you want to hear more on what's driving the move, is it demand, supply, and what is lilly going to do about it? that call just getting under way. but look at the stock, down about 12% today, guys. >> angelica, a lot of investors are trying to understand it. one case saying they're trying to protect price they wanted to get the compounders out of the market because there's not a shortage they can't do what they do at a lower pry yoieps price. you push inventory into the market and stressing demand to those buying. does that make sense? >> yes. we asked about how much is

making sure it's in supply so it stays off the shortage list, and he said that's a factor and ultimately what the fda decides to do is a by-product of the supply they had. so we want to talk about where supply lands last quarter if you remember, they raised their full year sales guidance by $3 billion because in part better visibility into supply for the rest of the year. now they're saying that they have supply at lilly but at the same time, you know, the wholesalers aren't buying more but there's still plenty of demand. so it just isn't clear to me exactly what is happening here. and why we're not seeing sales continue to go up and so i think you're going to hear a lot of questions about that today and, of course, the compounders being one big piece of that. >> the whole story getting a second look this morning. no question angelica thank you. shares of cat lowering this

summer after cutting its forecast. seema mody is here with more. big miss today. >> big one. this is the first time caterpillar's operating profit and earnings share declined year over year since 2020, here's why. inventory levels are too high. that's raising concerns that cat won't be able to increase the price of equipment. barclay says that the inventory increase is a red flag for the bears cutting price target on the stock from 387 to $335 a share. melius says the slow down is due to higher interest rates, yes they're benefitting from the infrastructure act and spending but businesses are having slow downs. they're calling out the weakness on the semiconductors, texas instruments to name a couple.

pointing to figures below 50 meaning the industry is still in contraction. shares are down around 4% from the recent high. a good run here. this is a stock that we'll be watching going into the election. the prospect of trade conflict that has in the past weighed on this sector. >> jim's point this morning that declining rates should be helping an area where your equipment is financed. >> that's the surprise, why lower the guide if they're on the way lower. for now, it's standing still, though. >> thank you. let's get to the earnings from google's parent alphabet shared up about 6% after results driven by gains in the cloud business. search also good. here to help us break down the

numbers youssef. give me a take on on the quarter, a bit of a surprise how well cloud did year over year in growth and profitability. but search wasn't bad either was it? >> no, it wasn't. thank you for having me again on. the good news is the outperformance was broad based and search. the way we think about it the quarter of the beat was from cloud and quarter was half other like youtube subscription and some of the new hardware sales et cetera. so, you know, this is at a time where we're -- where we're continuing to see greater engagement, some of these new search platforms like chatgpt and complexity, et cetera. what needs to be noted here is google even in the environment continues to gain we believe in

search -- monetizable searches. and two they're fighting a good fight and actually changing their narrative a little bit. they're becoming a lot more aggressive. they're becoming -- the way i think about it the gloves are off. in november of 2022 they were thought of having been caught flat-footed and now they're leaning in aggressively. >> on generative a.i. you say it's still early to properly engage the return on investment from various investments but green shoots you've seen in search. what does that mean? >> a number of things. one, the fear was that a.i. driven searches were going to be cannibalistic to traditional search. the numbers don't support that. that's number one. number two, they're actually -- this is something that the cfo shared last night and that is the monetization or the cpcs on

these a.i. driven searches are actually similar to the pricing they've been getting from their traditional search. and lastly, this is a nugget they shared with us which was really impressive, and that is roughly 25% of all code created, written at google is now a.i. driven which kind of tells you that not only is there a revenue opportunity, but there's also a dramatic cost advantage that could be had over time as a.i. permeates all of their products. >> i think, if i heard you correctly, maybe it was ancillary to that was a quarter of the code was generated by a.i. i wonder how high you think the number gets? >> that's what i'm talking about. can it get to 50% the next year or two? i think it can. and the cost advantages of that

will be material considering the tens of thousands of programmers and coders they have. >> finally, you know, cap x i think 13 billion last quarter, keep it roughly where it is. was that expected? a bit of a surprise? what do your numbers look like for next year? >> it was expected. they said 12 to 13 billion coming in to q3, in line with q1 and and 2. they said the same for q4 they qualitatively said in 2025 it's going to be up a little bit but not as much as 2024 which is an easy one because 2024 cap x was up 60%, 6-0. so our base case was capex was going to grow in the mid teens. 58 billion i think consensus at 54. there could be a surprise there but i would say on the back of the results they just put up last night i think they have ap longer leash right now with investors. in other words, they can spend more and investors won't be as

unhappy about it. >> the numbers continue to be stunning. thank you. >> thank you. as we go to break, a road map for the rest of the hour. blow out um numbers on jobs growth today what it may signal for friday. and the fed's meeting next week. >> shares of super micro down about 26% right now. what's behind that drop. and a key interview later this hour for that we turn to sara eisen. >> a big show still ahead live from saudi arabia here for the fii financial conference. we'll speak with one of the most famous investors in the world, ray dalio, a regular at the conference, getting his views on everything, from the u.s. election to the geopolitical situation when "squawk on the street" comes right back.

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welcome back to "squawk on the street." i'm sara eisen. welcome to swquawk on the stree i'm sara eisen. i'm in zasaudi arabia.

all the biggest asset managers are here. and there's a lot of news and deals happening here. money flowing in and out. for instance, this afternoon it was just announced that the public investment fund of saudi arabia, which is nearly a trillion dollars, controls the economy here is investing in brookfield asset management and going to anchor its new and middle eastern fund. that's a big vote of confidence for the brookfield fund for investments and deals in the region and specifically saudi arabia. it's emblematic of the real transactions happening around a conference like this which i think separates it from a number of other conferences we go to where business leaders attend. today i had a chance to moderate a fireside conversation with the finance minister of saudi arabia. and he made news in the conversation talking about some of the milestones that saudi is

making when it comes to achieving vision 2030. this is the plan laid out by the crown prince to transition into growth outside of oil. transform the economy. according to the finance minister they're making good progress, 52% of the economy is now non-oil. also interesting milestones i wanted to share about women in the work place. this is a relatively new phenomenon here in saudi it wasn't until 2018 where women were allowed to drive in this country, there's a lot of traffic now because of it and allowed to really participate in the workforce. the goal at the time was to get 30% female participation in the economy by 2030, the finance minister told me today they're above 30% right now. so on target. and it's really unleashed an entire new wave and new younger and well educated generation of workers in this country. also small and medium size

businesses 45% led and founded by women. so interesting milestones there. you know who else is there and taking meetings? the mega projects also under pining the entire plan by the kingdom. you may have heard of neon, the giga product that has the line in the desert, these are trillion dollar projects trying to invest american and foreign money and taking a lot of meetings with not just investors but a lot of ceos of hotel firms are here because this region is one of the fastest growing as well. so it's interesting to see a lot of money going back and forth and some of the conversations and relationships that are happening. and i'm happy to be part of it all. it's been very exciting, guys. >> sara we look forward to it. thank you. sara eisen of course continuing her coverage from the fii

conference in riyadh. still to come tracking shares of djt. quite volatile. down today after a gain yesterday and the days prior as well. still a market cap i believe it's over 10 bill where are we? nine and a half or so. and visa, top and line beats, visa planning to lay off 1,400 employees and contractors by the end of the year. we'll be right back. your record label is taking off. but so is your sound engineer.

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take a look at shares of super micro we talked about this in the last hour, carl, jim and myself. down 27.5% it has been down more than that. this after the company put out an 8k and in it were very harsh words from what is now the company's former auditor ey. ey saying it has significant questions about the company's commitment to integrity and ethical values in connection to a review of accounting they did. let me read it to you.

we are resigning due to information that has recently come to our attention which has led us to no longer be able to rely on management's and the audit committee's representations and to be unwilling to be associated with the financial statements prepared by management and after concluding we can no longer provide audit services in accordance with applicable law and professional obligations. strong words. you see strong words but not with the verbiage, so to speak, describing what was behind said resignation. here it appears it had to do with, again, whether the company demonstrates a commitment to integrity and ethical values. super micro has responded and, of course, disagrees with ey's decision writing the company does not expect that a resolution of the matters raised by ey or those under

consideration by the previously announced special committee of the board will result in areinstams of its quarterly financial results for the fis year year ended in 2024 or for prior fiscal years. it's ceo nate anderson, as far as auditor statements go. e&y's statement letter as strongly worded as i've seen. then goes on to question what nvidia is going to do about a client who may suggest it has a lack of commitment to integrity. should point out, by the way, shares of dell and hpe both up or at least they were. i want to look right now. you can see both gaining in part because of the belief that perhaps smci has been successful in gaining market share by cutting price, what was the real cost of that? and carl, both of those, which

they all obviously are focused on the data center and putting together the various chips and the racks so to speak to compute what's needed for generative a.i. as well. >> between google and amd and microsoft and meta, tons of inputs on those stories. >> without a doubt. that's why i come back to the google numbers on cap x be they tell the stories as well but that money ends up at companies like smci who says we're not going to have a restatement but to say it one more time, you don't see resignations quite like that. >> right. keep an eye on that. bcr time after the break, majo cn exclusive you don't want to miss. sara eisen with ray dalio live in saudi arabia in three minutes.

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welcome back. here's your cnbc news update. israel is providing the first response today to a deadly strike on a residential building that killed nearly 100 people yesterday. the israeli military said it was targeting a hamas spotter on the roof when it hit the apartment building causing it to collapse. at least 64 people were killed by flash flooding in southern and eastern spain yesterday. the fast rising water swept away cars, canceled trains and left roads and towns under water. and jaywalking is now legal in new york city. the city council member who introduced the legislation said more than 90% of jaywalking tickets last year went to black and latino people. it does worn that pedestrians who skip the crosswalk do not have the right of away and need to yield to traffic. >> thank you. markets an hour into trading

here, dow is turned around from opening losses up 160. s&p down around 45 or so. sectors nice gains from communication services up almost 3% on the back of google and a busy day for corporate earnings and the time beings yields remain retained. we are in a black out window so not getting buffeted by fed speak today. let's get to sara in saudi arabia. >> hi, joining me special guest. he can't walk around here without getting stopped. ray dalio is with me, founder of bridgewater. thank you for taking the time. >> glad to be here. >> you've been coming here for a long time. i want to frame the conversation with you in the way you look at the world right now through history focused on the big themes like debt and the internal order changes. we'll talk about the election. >> five big things. >> internal order -- >> so credit, debt, and drives

the economy. and how that works. so number one. and then it goes through a big cycle. number two is internal order and disorder. >> yes. >> so number three, which we're experiencing in the united states -- >> for sure. >> -- some other countries. experiencing at an extreme. number three is the world order. >> yes. >> the rise of a great power and then the competition. >> this is china v. the u.s. >> china and then those and then, yes, what is the order? what is the rules? >> yes, trying to figure that out. >> so it changes. it used to be dominance. it's no longer dominance. >> number four is -- >> pandemics. >> yes. acts of nature, droughts, floods and pandemics have killed more people than wars and toppled more orders. like climate for example and pandemics are a bigger part of our lives. and then number five is technology, people's invent

i'veness and they come up with technology. and they go in cycles. the first three are big cycles, they evolved. the others are disruptive. the four of those are concerning. the debt is concerning, the internal conflict is concerning. the external conflict is concerning and certainly the climate and the cost of the climate is concerning. and then technology is a two-edge sword. >> right. >> so everything that we'll ever talk about and you'll interview. >> fits into that theme. >> fitts into that. >> you're right. >> and relationships is key. so seeing the cycle way and the relationships is key. >> everything we talk about on cnbc relates to these themes. how about here, how does that fit? i was talking about the numbers and growth in terms of the economy. you've been coming here for years. how dramatically different is it?

>> dramatically different. i think we go back to the elements of what makes a play successful. so we take this, okay, financially are you successful. do you earn more money than you spend? do you have a good income statement and a balance sheet? okay. that's number one. number two, do you have internal order where the people work together in a favorable way. number three is very important. are you going to be involved in a big international conflict that's going to be damaging or not? these are really the first three. and then, of course, climate and technology. so when i come here, and i -- whatever country you pick, you ask yourself things like do they educate their children well to become talented and then also civil with each other, and do you come out to an environment which lends itself to being productive? these are the standards. >> just check the boxes. >> here it changed radically

when his excellency mbs took power. >> yeah. so investment destination -- >> people don't see this. >> yeah. >> every country there's pros and cons and controversial things. but if you're talking about now seeing this and how the changes are taking place, it's a remarkable place. he is a lee kwan you of the area. >> certainly that's how it feels here from the investors and that's the message. i do wonder about -- i was hearing you tick off the boxes of what investors should be aware of and whether destinations are stable for capital. what about the u.s.? where do we fit in right now? we're going into this election -- >> well, we have a real debt problem. that is going to -- >> you're still not touching treasuries? >> i think one man's debts is another man's assets.

and the question is, do you want to have it as an asset, it's increasing in supply a lot, the supply/demand is a problem ordinarily and i think you have to pay back the debt in hard dollars or depreciated dollars because they're going to print. at the end of the day i don't want those things. that's not going to be, i think, a good investment for the whole supply/demand. okay. and that treasury market that is the basis of all capital formation. so it's -- you know, it's a bigger thing and also at some point when you combine it with the internal conflict issue if you have a downturn and we always have a downturn when the downturn comes i'm worried about the internal political conflict and the social political conflict because we have irreconcilable differences now in other words compromising which is essential in democracy is considered a sign of weakness. so now we have more of the hard

left, hard right kind of conflict. >> you do not back candidates, right? you're pretty apolitical. >> i'd be clear, both of the candidates worry me in their own ways. >> they both worry you. what worries you about vice president harris? >> i think this left/right and fighting each other is a problem as it becomes more of the extremes. i think that there needs to be a bringing of americans together. that middle of that. and making great reforms. in other words there needs to be a strong leader of the middle, i believe, that makes great reforms because there needs to be reforms. if we're looking at the composition of this, you know. it needs to have great reforms. so neither of the candidates does that for me. >> what about president trump, do you have concerns related, for instance, to tariffs or any

of the economic policies? i'm wondering if you see a big difference in maybe the near term outlook depending on who wins? >> >> there's of course a very big difference in policies. one is more capitalist, trump is a lot more capitalist and she's a lot more left. the question is how left is that? it would be great if she clarified things. but we have that. and then we have this irreconcilable differences. so big differences. there's going to be a -- the big differences in let's say tax policy. he will get -- tariff revenue will be like tax revenue and the reality is, he's going to collect a lot of tariff revenue. i estimate half a trillion dollars a year, could be larger from a tax revenue point of view.

but at the same time that tax revenue is protectionism. prices are going to two up but it depends on how much he converts that to internal productivity and being competitive and efficiency and all of those things. but either case, you have a totally different picture of how the rev sfwenue, and -- so he's better for the capital markets he's a capitalist. these are the case wi-- either case it's going to be big deficit. so it's really more left right question and it's a shame because we need to bring the country together in a smart way and make great reforms. we need to do that. and that's my concern. >> yeah, i don't see anyone doing that. >> so that happens and we take the election. let's take the election. the first question is, can we make an orderly transition of

power. >> i know you've been worried about this. >> if donald trump loses by a small margin, that becomes, i think, a question. it's not a probability. you know, i think we will. >> you're worried about a repeat of january 6th? >> but you can have -- you have irreconcilable differences when you go beyond the election how will decision making be made? will they accept each other? i think they're going to win the senate. there's a decent chance of the house and then the possibility of the presidency. >> yeah. >> so how that works and then the playing by the rules, this is all going to be key to watch. >> right. i guess the question for investors in the long run -- you root for the middle, the compromise that doesn't seem to exist. >> there's a lot of great, sensible middle on smart people

to make the reforms. we need to make reforms. >> right. until then, though, treasuries, you consider risk investment. >> yes. look at it this way. the way i look at it is, let's say you take the inflation rate, and whatever the estimate on the inflation rate, let's assume it was 2.5% by way of example and what's the real interest rate that is going to balance the debtors and the creditors? interest rates cannot be so high they're bad for the debtors nor so low they're bad for the creditors. and roughly a 2% real rate on that is what matters. so under normal circumstances you say take a 2 1/2 add a 2 to that, look at the bond yield, making it simple, and then you see variations around that but the supply/demand issue is

really the big issue. the quantity of new offerings and if you look at how -- who holds them, about a third of treasuries are -- of our debt is held by foreigners. >> yes. >> and so that they have -- >> and china has been decreasing. >> they have an issue with that debt. >> and then that -- so we'll produce more so it's not going to be -- so the supply demand issue. if you get selling of the debt, we think of supply/demand as new debt being issued but there are a lot of holders of that if they don't have an adequate real return or they're worried about it, they could sell it. that's the cycle. so there's more upside risk on that number -- >> you've been worried about that for a while and worried about the supply/demand mismatch. i wonder if you think we're near a breaking point. >> it's becoming more of an issue but we'll see it when it

comes. i don't know when i go down and say who are the big owners and what are they likely to do? the central banks bought. banks bought. commercial banks bought. foreigners, japanese bought. >> now they've been tightening. >> they have more than enough. they're being hurt by it. the central bank is losing money on it. the foreigners are losing money on it. and then there's this issue of the conflict and sanctions. so on the margin you have a problem but you're also threatening those who have demand, you know, it's an issue. >> is this why you're a fan of having gold in the portfolio? >> yeah. gold is -- >> gold has done very well. >> don't look at -- you have to look at having diversification. my mantra is i want 15 good uncorrelated return streams, that's my mantra. start off with diversification. and what you look at when you look at gold, which would be

part of that, is as an overlay on a portfolio it reduces the risk of the portfolio doesn't increase the risk of a portfolio it's it's part of a diversification. people would have more if they said what is a portfolio. but put in the dynamics i'm talking about sly and demand and what the world is looking like in terms of what it becomes confidence in holding and that's a risk for the treasury market. >> i want to ask you about china. you've been in that country for a long time. you have great relationships there. investors have been sour about china in recent years. there's been a little bit of excitement lately because they've been trying to stimulate. i wonder if you think -- first of all what you think they should be doing to really get their economy back on track and in growth mode.

>> there are a number of challenges. let's take the debt challenge, economic challenge. they have a large debt issue. and a lot of that debt went into real estate. 70% of all savings in china were in real estate. and then you think the other things they're saving in, stocks, and other things have gone down a lot. so there's been a big negative wealth effect. if i was to take you through who owes the money to who, local governments were raising money by selling off land, that can't happen. and then they also borrowed money from companies and so on and that can't happen. you have a financial classic issue in terms of debt. and there needs to be a debt restructuring. in other words, how do you deal with these things. there are many of them through history. you need to do two things. you need to restructure the debt and clean it off the balance sheet and so on, very difficult process, very politically

sensitive. >> it's painful. >> the person making the decisions has an effect on the wealth. and then you need to have a monetary policy which makes negative real rates so it's not desirable to hold cash and savings in a deposit. that's what we call pushing on a string and you think about that for an individual something when you have deflation, cash is good. when you have credit problems and other markets not doing well, cash is good. so you have to make that. now it's a challenging formula. how they approach that will be very important and they're in the process of trying to figure that out. so there's that problem. in addition of course we have the world economic problem. the problem with the united states in terms of a conflict, the problem with foreign money, the worries about a lot of

things in china. is it still glorious to be reach? >> do they still feel that way. >> entrepreneurial environment in which there was, you know, a lot of buzz happening and entrepreneurship and it's more difficult now. so it's a very, very challenging environment that could end up being is china like a japan situation in which that lingers and becomes a problem or is it -- are they going to do the reforms and make that move? it's been too long and then we have that internal conflict thing. so it's it's a different situation. >> yeah. some longer term, bigger structural factors to consider. ray we appreciate it. thank you for some of your insights there. >> always a pleasure. >> that was ray dalio, trip around the world a little bit and a look at how he sees the world and how he sees investors.

back to you guys. >> sara thank you. thank you for bringing that to us. quick note as we head to break here. join the cnbc delivering alpha summit. i'll be there moderating a panel with ben affleck and gerry cardinale. other speakers include david einhorn and nelson peltz. scan the qr code you see on your screen to register.

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when we think about the massive demand there is in the data center for ai and traditional compute, we are one of the players that can offer all of the capabilities that are required. from that standpoint, i think we feel very good about where we are. >> she joined us last hour discussing what she calls the ai supercycle. shares, as you see, down sharply, despite what was an expected third quarter. but it really is the fourth quarter outlook that came in a bit lighter than many analysts will been anticipating. she was quite bullish in her comments to us. >> we'll get nvidia on the 21st. try to get her on this energy supply story. her general take was, look, we've got smart engineers around the world and country and the problem is so clearly defined that maybe we have the runway to start tackling it in advance. >> yeah, although the numbers are quite staggering in terms of

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we keep an eye on shares of djt, trump media, and technology. pulling back today, still up more than 180% since the beginning of the month, of course, as we get very close to the presidential election. robert frank is tracking the moves as well. of course, a lot of it having to do with the former president's negl net worth, robert. >> despite the pullback, donald trump heads into this election nearly twice as wealthy as he was in the last two elections. the big reason is trump media. shares of djt doubling over the past month. he owns about 57% of the

company, about 114 million shares. that now worth over $5.5 billion. they now account for nearly three-quarters of trump's total net worth of about $7.5 to $8 billion. if elected, he would not only be the richest president ever, but the first to hold office while controlling a publicly-traded company. the president and vice president are largely exempt from government conflict of interest rules. during his first term you might remember he put the trump organization into a blind trust. a lawsuit involving his d.c. hotel and potential foreign interests was dismissed by the supreme court in 2021 on the grounds that he had already left office. but with djt, wealthy investors and even governments now have a direct path to add to trump's wealth, and they can remain anonymous. trump saying in september he has no plans to sell these shares. the trump campaign saying in a statement, quote, unlike most politicians, president trump didn't get into politics for

profit. he's fighting because he loves the people of this country and wants to make america great again, guys. >> robert, real quickly, the stock, if he wins, is going to go up, most likely, from here as well. so he can just keep owning it and doesn't have to put any of those shares in a blind trust or anything? >> correct. the conflict of interest rules apply to just about everyone else in his cabinet. most members of congress. but not to the president or vice president. so, he can keep them and he can keep his ownership. >> and conceivably the bulls would say would use it as a communication channel that everybody will have to use, because, of course, he's the president. robert, thank you. robert frank. our coverage of a very lldo esting market here with liy wn sharply, amd down sharply, alphabet up sharply. it continues in the next hour. stay with us. tim, you are a rock star. using responsible ai doesn't make you a rock star. it kinda does. you are not rock stars.

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good wednesday morning. i'm carl quintanilla, here with morgan brennan on the floor of the new york stock exchange. busy day. snap shares surging on the back of their results. what do the numbers say about the state of the a