Squawk on the Street : CNBC : October 7, 2024 9:00am-11:00am EDT : Free Borrow & Streaming : Internet Archive (2024)

times, bank earnings, and i think -- and i didn't realize it was coming that soon. so, as i always say, we got that going for us, which is nice. keep it somewhat short this morning, but good to have you on. see you next time. make sure -- we got three seconds. join us tomorrow. "squawk on the street," 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. coming off an all-time high weekly close for the s&p, futures are mostly red here as we set the table for q3 earnings, beginning this week. twos, tens, reinvert. our road map begins with stocks. goldman upping its target for the third time this year and treasury yields do top 4% for the first time since august. plus, oil prices are rising again as middle east tensions

continue to weigh heavily on that market. and pfizer shares, they're rallying ahead of the open. activist starboard value taking a roughly $50 billion stake in the drug maker. we'll have more on that. let's begin with the markets, though, as we watch yields here, jim, a couple calls over the weekend for maybe no more fed cuts this year. >> yeah, i mean, i was reading ed yardeni, i love him, and he was talking about, look, may not need it but what is very interesting is the may not need it because we don't have a crisis, and ed has been true north the whole way. carl, i've got to tell you, oil, with the major move up, and we had some good stuff this morning on "squawk box" talking about, if it gets wider and also on frank's show, there was a lot of good commentary, thoughtful, so i understand that people could be worried about interest rates but david, when you have a rate cut cycle, it doesn't stop after one. it never does. >> right. >> just extend it and the more extended this is, frankly, the better for the market.

>> you mean the longer period of time it goes on? >> yeah. >> as opposed to it happening in fairly shorter time frame? >> yeah. >> why is that? >> it means, one, there's no crisis, and two, any time you have the -- you're not fighting the fed is a halcyon time. so, the number of downgrades today, i found, actually somewhat of an irritant. i saw so many. i don't think you can get in and get out and in of apple, get out and in, amazon. i mean, the market doesn't like it. >> you cite both of those for a reason because there were two downgrades of one of each of those names. i think it was jeffries, and then wells fargo on apple. jeffries on amazon, or maybe i have them reversed but yeah, they both got downgraded. >> jeffries had apple and it was quite a blow, but let's use the same analysis for jeffries. i just think you have an extended apple scenario here. you do okay this quarter, the next quarter, better, so how do you get out and get back in? is anybody really that good,

david? anybody? >> you typically said, don't trade it, just own it when it comes to apple. so, you're, i guess i'll answer for you. no. few are good enough to do that. >> thank you. that's really my feeling. i'm not trying to be -- look, carl, i'm not trying to be vindictive. i'm just saying for most of the people at home, these calls are too hard unless they're algorithm traders or guys with a huge amount of money at stake. just chill. chill on these. >> it's a great point, jim. lot of people making the point that given all the things we have had to worry about this year, wars, elections, inflation, the fed, we're up 34% over 12 months. >> yeah, that's really the story. and it comes a lot from, i mean, just a rotation of goods. last week, kostin was talking about -- he says, listen, large cap, and it's david from goldman, and i kind of agree with that. but look at amazon. amazon -- i just don't want to get too micro, but amazon reports a quarter that was allegedly bad, right?

and the stock goes from, you know, just pure -- 186 down to $161 pirouette and the next thing you know, it's right back. what are you a supposed to do? did you get out and get back in? no one's that good. >> interesting piece in "the journal" about google's search dominance starting to erode, in part because of amazon and tiktok, a.i. firms. >> we did trim some alphabet for the trust. i gust just feel like that the antitrust case -- the second one's not that strong. the first one that they lost, not great. and then, you know, david, i like waymo, but on october 10th, i'm not going to be celebrating waymo, am i? >> no, you're going to be talking about tesla. >> right. >> but back to this search thing -- question that was just raised because i remember when microsoft, when chatgpt just was getting -- well, not really just getting started, but earlier this year, late last year, there was a lot of questions about

alphabet's dominance in search and whether it would be really challenged. interestingly, we were focused much more so on what microsoft would mean, both in the enterprise and be able to do through its, you know -- its search product, so to speak. i think they still have the same name, i guess. >> i use gemini. >> but now we're talking about amazon. in the sense of that is threatening alphabet's dominance, but it's just people going to amazon and searching instead of going to google. >> right. but i -- look, i'm not saying i regretted selling, and i'm thrilled it's the smallest of the mags that we have, but i will say that to sell amazon is quite different from the selloff, but amazon, you have to think thattheir whole prime video strategy is not working. you have to think that the economy is not strong enough.

you have to believe that walmart's taking them on. for alphabet, there's genuine legal issues and i like waymo, but they haven't been able to monetize it. the only thing they've monofetid really fabulously is youtube. i usually look at david at this point, but i'm not going to, because i don't want to get down. i'm down enough here. >> you're down enough? we saw amazon shares again down on this wells fargo, downgrade, where they're just simply talking about a positive revision story being on pause. they caution margin expansion could be capped in the first half of next year, everyone though they say the market already anticipates pressure on the fourth quarter, and as such, they move to an equal weight until visibility into margin expansion resumes, so that's the thesis from wells on their downgrade to an equal weight of amazon. >> well, at least they didn't do it at $161. got to hand it to them. they could have done it at $161 after the so-called missed

quarter. i just think that these are stocks that you can football, so to speak, get in, get out, get in, get out, or you can just look at what you said about the s&p and look the how well you've done if you haven't gotten in and got out. i was doing some work on amazon, nvidia, apple, how much it's cost you to be able to get out and then usually not get back in and i'm not saying it's criminal, but these downgrades are hedge fund downgrades. >> yeah, although jeffries is just adding its name to the chorus, to a certain extent, of those who are saying that near-term expectations for iphone 16 and 17 are too high. >> so, lower your price target. don't -- >> that demand is not there. this one, i think, you had a potentially new analyst coming in and then downgrading the stock. >> maybe he's right. maybe at $207, you get back in and that's fantastic. how many of our people at home are going to pull the trigger at $207? how many? the answer is none. >> thank you, jim. >> it was supposed to be

rhetorical, but i didn't hear you say anything. >> i was just listening. >> speaking of hedge funds, thanks to the goldman desk, information technology, hedge fund, net buying, last week, fastest pace since may. >> isn't that something? i like that. and i know that keybanc has a very -- jackson talking about how enterprise software has come back down to valuations that are interesting. servicenow is not that expensive, and salesforce, the single best launch they've ever had is agent force, so i get that story. i don't mind that story. >> one last thing. b of a desk today does point out that given the jobs number on friday, implied volatility for cpi this week is now above the last three months actual volatility. are you worried? >> i am, because the chorus of people who shout, instantly, on every single number, is so loud that i think a bad number and people are going to panic. a hot number. and david, i know i'm sounding

p pangloss, i don't mean to, but i'm saying this should be a week that you should sell and get back in. but that is, i regard, as malpractice for many of the people watching us. malpractice. >> okay. i think they've gotten that message. >> castellano sent you a message yesterday. i thought of you the moment i saw it. >> yes. >> hold it just a second. just a second. oh my god! it just came up as if by magic. >> it's just 1-1. we're heading back to citi field tomorrow. and it's going to be a hard-fought series. no doubt about it. there's no doubt about that. it's going to be a hard-fought series. you guys do have a -- you guys have a murderer's row there, man. getting past schwarber and then harper and turner and this guy, not easy. >> no. baseball's probably drawing a renaissance right now that's

extraordinary. >> i don't even know if i'm going to make it through the series, let alone if we actually do advance, which, of course, i expect we will. i don't know if i can take it. >> that's too bad. >> yeah. >> i'll give you some heart medicine at the break. >> yeah. i might even need some drugs from pfizer. >> oh, my god. mr. segmenue. that's what they call him. >> that's what they call me. mr. segue. the stock is moving a bit higher. we can confirm the activist investor, starboard, has taken a large position, perhaps as high as a billion dollars until the drug maker, and i'll give you some sense, at least, in terms of where the focus may be. of course, those shares have slumped. you've got weaker demand for covid vaccines, not to mention the treatment, such as paxlovid, and a lot of this does go back to that huge bump that we talked about for that period of time where revenues went from, what, $60 billion to as much as $100 billion? you're talking about $30 billion

in additional cash flow the company had, and they spent it. did they ever, right? acquisitions galore. the main one being, of course, se seagen. >> which hasn't paid off yet but could. >> some argue they paid too high a price for seagen, but few have argued there are no things to come to the fore. >> totally right. >> that said, there seems to be frustration, certainly one would expect on the part of investors, such as starboard, with where the company's still kind of running itself right now in terms of a cost perspective. i think their sense is, you should be assuming you're a $50 billion revenue company, you're certainly no longer a $100 billion revenue company. >> they forecast badly. >> you need to be -- you need to be massively tactical. you need to, you know -- yeah, you're raising an interesting point, i want to get to that, i'm just trying to think of some of -- just trying to go through

some of the things that may come up here in terms of the conversations. my understanding is they have yet to take place. pfizer was aware, perhaps made aware very recently, of starboard's presence in the shares. that said, i don't believe any actual conversations between the hedge fund and management have taken place, guys. but -- and it's trading at 11 pe. you got a dividend yield that's obviously far above that, of much of the market as well. but there does seem to be frustration with both mr. borla and just how much they're spending. >> dr. borla. >> excuse me. even though they have cut that spending to a certain extent, i think they want them to refocus on a handful of initiatives and not be what they would say is all over the place. you raise this point, ian reid, the former ceo, and frank, the former cfo, being potentially aligned in some way with mr. -- with mr. smith. >> can i say how extraordinary

that is? you know frank is one of the great cfos of all time. >> that is unusual. that has got to be something that brings pain to pfizer and its management to a certain extent. >> he can be a very tough guy. you know he was the best at cost. >> tough guy. i do remember that. >> i was scared of him. >> i know, he was kind of -- yeah. >> remember when i said the lyrica comment and he wouldn't have it? >> you go into a meeting with him, he was humorless. >> he said, what do you care? i said, no, i'm just saying it was a good drug. >> tough helps in terms of costs, and i think the sense is here you need somebody tougher than the very kind, very nice dr. bourla. >> he's the greatest. >> but you know what? it's not just him. i've gone 20 years on this, and i have shown you. the stock's done nothing in 20 years. i mean, i can go back to the days when joe and i were sitting there on "squawk box" and were talking about warner lambert and talking about lipitor and viagra.

this was a growth stock. hank mckinnal, remember him? yoo, ther yeah, there have been moments. >> it could beabout to take off. frank was helpful for me. everywhere he's ever worked, he is just a titan cfo. if starboard has ian reid and frank, they may have the horses. >> the man who's going to be dealing with on the pfizer side to a certain extent is lee director, and you know who that is? nar narayan, the well-known ceo of adobe, the lead director here. we're going to start to hear more activist campaigns, in part because the window for nominating directors comes up usually early in the year in many cases. certainly if you have an annual meeting in the spring, and that is the case here. you want to start your

conversations, get what you want with management. if you don't, then you are in a position to obviously nominate. >> they got to global blood therapeutic. >> they also had that setback with the -- wasn't it with the -- >> yes, with the glp and they were also not able to get as much money from the biohaven drug. $11 billion for that. against that is, you're talking one of the great humanitarian guys of all time. >> without a doubt, but $30 billion in cash flow, they spent $60 billion on acquisitions. you've got to get a return. it's all on the come and maybe it will. >> how about buy pfizer? how about that? how about, buy pfizer? >> when we come back, this morning, elon musk is in the spotlight from this week's tesla robo taxi event to stumping on the campaign trail with former president trump. we'll get to tesla. there's news on boeing, m&a in mining, aerospace, oil and gas, milton now a cat 4. stay witus h . i can't believe ye types are still at it.

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a big week is already under way for elon musk, a lot of buzz surrounding his tesla robo taxi event, which takes place on thursday. over the weekend, he joined former president trump on the campaign trail at a rally in pennsylvania, the site of the assassination attempt against trump back in july, ended up at the steelers game, jim, talked about going dark maga, arguing that if trump doesn't win, it will be the last election. >> we're in that moment where the people who are in favor of trump are really kind of adamant that we're into some sort of weird spiral down for the democracy, and then for whatever we have, and then the people on the other side are saying we're in a spiral down. i read timothy snider from yale, who's really great, who says, look, we're going to be with a dictator. i want to step back and say, look, i don't want people to be freaked out by any of this stuff because we may have -- you need -- if you have a split government, you're not going to

have this. if you're worried about democracy, david, maybe split government is the antidote. did you watch this? >> no, no. >> why not? >> why would i? >> because it's a business story. >> yeah, i -- you know, the two sides of musk are hard to -- there's all the things he tweets or whatever posts and reposts, many of which are politically related now. many of which are not accurate. and then there's the other side of him. by the way, largest government contractor as well, which is interesting. and then, obviously, the business genius that we all know and that so many, frankly, even a handful of years ago, universally, almost admired, and i would argue that is certainly not the case. he's made himself such a divisive figure, but as he said famously back to me in may of

2023 during our interview then, he doesn't care. >> he doesn't care. october 10th. deal with the business side of it. waymo's made incredible strides from alphabet. that's one of the reasons why i kept some alphabet on for the travel trust. at the same time, who's going to count musk out? he's got all this data, theoretical data. >> that was the thrust of the barons piece over the weekend is what kind of data will he be willing to share? do they have data that suggests that driver assist is safer than humans? if so, thursday would be a good time to show it. >> i think he can make that claim. this guy has more -- >> more miles by far than anybody without a doubt, and they have been using generative a.i., and they have been meaningfully, from what i understand, i do not drive a tesla, so i can't say firsthand, but what i understand is meaningful upgrades in terms of full self-driving and what that means, where they are, 12.3, whatever the number is right now, and we'll see. you know, obviously, he's been

promising the robo taxi for years. it would be a -- it will be a significant shift in the business model for the company if they're successful, but he famously, of course, has told his own investor base, don't buy us if you just are interested in my car numbers. >> right. >> buy us because you care about robo taxis and robotics, and robots. >> well, his robot strategy is one that i know jensen huang agrees with. jensen is in town this week, ringing the opening bell on friday at the nasdaq, and i would tell you that if he can get into austin and atlanta, like waymo, it's off to the races. off to the races. and i didn't even talk about starlink, which is just so fabulous. >> that's something else. we'll be watching it. huge story all week regarding autos. we'll get cramer's "mad dash" and countdown t oni tohepeng bell on this monday. busy, busy week headed our way. stay with us. al markets. if we focus on the mortgage market and follow the life of a loan from origination right through its pricing in the capital markets,

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lot of tech events this week. you got some amd events. we mentioned tesla. nvidia's a.i. summit. for the time being this morning, though, little bit of weakness in the semis. you see asml leading the index lower premarket. we will get the opening bell in about four minutes and don't

forget, you can catch us any time and anywhere. just listen to and floolw the "squawk on the street: opening bell" podcast.

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all right, let's get to a quick "mad dash." opening bell, a little over a minute from now. what do you got? >> i feel bad because it's a complicated story, but gordon haskin actually starts foot locker with an couple. people haven't cared forfoot locker. i think mary dillon is executing a textbook mary dillon turnaround like she did at ulta and what's interesting is the nike assortment headwind is a big one. there was cheering in beaverton when donahoe was fired. most importantly, they're going to revitalize some of the most important relationships they had, with nike, with dick's, but particularly nike with foot locker, aspirational buying of sneakers, so expensive. i like this call, but more importantly, david, we're going to have to stay more focused on nike because there could be a turn. >> some say that turn is going to take quite a while, jim. >> i'm not denying that.

>> a marathon, not a sprint. >> exactly. >> at nike. >> it's not a starbucks, by in means. there's a lot of damage done by this man. >> let's get the opening bell here. at the big board, it is oracle. software company. at the nasdaq, sanofi, celebrating one million patients on dupixen, which treats eczema, copd and some other drugs. >> we have the co-founder in the news talking in the "ft" about, look out, the drugs for wait loss lose protein as well as fat. they're trying one that just loses fat. i would point out that, don't bet against lilly ahead of the quarter. >> speaking of the quarter, jim, pepsi tomorrow, delta thursday, jpm, blackrock, friday. you think it's going to be -- what's your feeling about the season? >> i look at the -- i have what i'm looking at. we just call it the ten.

i have 49 of them, the most i've ever had. these are just notes on what happened this morning. there's a lot of people who want out of this market. and that's been the theme for a long time and pepsico has come down very big. people think their snack business isn't going to generate a good number. they made a very good acquisition in snacks. i can tell you that delta, i think, is putting up pretty good numbers and the banks, i think, are very well set up. they are set up for a slower -- wells fargo and jpmorgan, set up, david, for a slower rate cycle. that's what they do best. so, i think people have one foot out the door, but isn't that been this whole rally is a one foot out the door? >> yeah. i don't know. the banks are sort of a conundrum. >> each one is different. >> and the way they've been moving lately, ultimately, almost all the big ones are still outperforming the broader market this year. >> right, right, and jpmorgan had a huge rally on friday, because they're probably doing the best in a slower for, you know, higher for longer. >> that said, if memory -- if i recall, wells fargo continues to

be your favorite? >> yes, it is, and i think charlie scharf is doing a remarkable job, and i want to own it into the quarter. >> you do? >> yes, i do. very much so. >> why? >> because he set up, ideally, for slower -- where his assets are, and liabilities,set up very good. >> has the stock responded significantly to the idea that the asset cap is finally going to be removed? >> it hasn't been. >> it hasn't happened but there have been reports that it's getting close. >> the 8th of 2018. i think that charlie is remarkable, and i think there isn't anyone rooting against charlie right now. people really like charlie. >> the stock's done fine but it's trailing jpmorgan's performance and it's sort of in line, more or less, with the s&p this year. >> that's one i have, and morgan stanley, i have. and morgan stanley had been terrible. now look at morgan stanley. it's just doing incredibly well. >> i know, and it had been a laggard. >> aarde is what i call it.

do you know that chelsea closes for chelsea? nfl is going to dublin. oh my god. there's just -- >> you can't -- this time of year, now for the next i don't know how many more months, carl, and you're not far behind him, by the way, in terms of your obsession with the nfl. >> bo nix. >> you can't say seven sentences without referencing football. >> bo nix. >> unbelievable. >> this is just -- as remarkable, david, as air products. >> i don't talk about football for obvious reasons. i'm a jets fan. >> we have a, you know, the assau subway series. we have the "squawk" series. >> schefter said rodgers is clear for this weekend. is that good or bad? >> that's great. it's going to adjust go great. >> your wide receiver went off this weekend. >> yeah, yeah, it's fine. >> how about that air products? >> you want to talk air products now? >> no, i want to talk football

but i wanted to throw you a bone here. >> let's talk air products because the stock is up almost 7%. industrial gases is the business. not that exciting, you may think, not something we necessarily talk about that often. we are this morning because, again, the stock is up almost 7%. this reports late friday from the "wall street journal" that mantle ridge, a hedge fund run by paul hallal, nice guy, always emails me back to tell me he will never talk to me but is always very kind in doing that. >> that's sweet. >> they found out, somehow, of a significant position there. there is frustration among some in the shareholder base, and again, it's a similar situation in the sense of, you want to get ready here if you're going to nominate directors, because the nominating window will be opening up, you know, in a number of months. here, the frustration is with the ceo, to a large extent, and what has been a strategy, jim, in terms of pursuing the

production of green and blue hydrogen through huge projects that require enormous amounts of capex but are not yet returning significant or any returns. >> for him. >> saudi arabia, louisiana, and i want to obviously hear everything you've got on this, jim, but you know, the company has sort of bet itself to a certain extent that the price on hydrogen will be far higher in the future, and they have not signed off, and again, this is at least some shareholders saying on these off take deals that you typically would to reduce just how much you're spending or get a return. they haven't brought in partners. they haven't essentially shifted capital allocation in a significant way, and so, you've got that frustration in terms of the big bets they're making without the return yet based on the idea that the price of hydrogen is going to be far higher in the future, and you also have frustration with governance, namely in the form of a ceo who is -- >> 80 years old.

>> -- 79, 80 years old at this point and has made a kind of few succession plans but never have come to the fore. and some would say has sabotaged -- these are their words, not mine -- succession plans in the past. so, what do you want here? well, you probably want to a defined succession plan that you can believe in and you want them to start to change their capital allocation so that it will get some off-take agreements for these big things. yeah, you potentially take away future returns but you also generate nearer term returns and reduce the risk. you want to announce no incremental projects, and you ultimately want to potentially find partners as well so you can reduce your current capital outlay by taking in partners. so, that, at least, i sense, is what those who would be active in the stock may be arguing for. unclear at this point what management will actually say in response. >> dead right.

now, i do feel that he's a bit of a dreamer on some of these things, but you know that lindy has a deal with exxon on hydrogen, carbon capture. very lucrative. so, i think that this man is pursuing projects that are not lucrative, whereas lindy, if we put the difference -- a five-year chart of lindy, which is the biggest competitor to air products, you'll see one guy knows what they're doing and the other guy, no, and that's air products, and i do think that this will be met well, david, because people are concerned about the governance for some time. >> they have been. >> yes, they have been for some time. frank mitch has really helped me on this. >> my understanding is, for example, they had a c.o.o. who appeared potentially to be in a position to succeed and that person has left the company as well. not that long ago. so, yeah, to your point, defined succession plan is certainly one of the things that i have heard in addition, of course, to this larger question of just how much you're spending. all that said, you know, there's

a decent multiple here. you know, and instead of shooting for the moon, they just want them to get a decent return. >> that's what lindy's done. lindy was very -- i was adamant when i used to speak to lindy all the time about, why aren't you doing air products? they were like, guys, we have to make money. >> the point is, even though it has performed okay over the last five years, trades at a discount to the rest of the group, as you just pointed out to lindy. >> it's a very important story because a lot of people feel that the governance here is among the worst of companies and it's worth focusing just for that reason. >> okay. >> we mentioned hurricane milton, jim, being upgraded to a cat 4 this morning, winds now 150 miles an hour, moving to the east at about 8, kind of brings to mind the concerns we've talked about lately regarding insurance. "the journal" today with this piece about the florida migration coming undone.

>> it is -- it's all happening the way mr. fishman said it would from travelers. >> speak up, speak up. >> he said, do not write insurance, travelers, don't write insurance in florida, and this was seven years ago. and he said, this is coming. >> he cited climate change at the time. >> yes, he did. he cited climate change. i will also just point out -- i was very torn. i don't want to talk about how you can profit. this is like profiting off ka tree katrina but there are people who are selling home depot and this is a rebuild situation. right up front, the previous hurricane, so selling home depot, i think, is just a fool's errand right here. that's what you buy. >> we'll be looking for landfall sometime, i think, wednesday night. >> incredible. >> if it is a direct hit on tampa, i think that's the first for tampa since the '20s. we'll see. >> yeah, i think that the people moved down there for the tax benefit, david. they can't get the insurance.

>> you can't get insurance. that was, to a certain extent, a key part of the "journal" story about the fact that homes are now sitting on the market for quite some time. not the case on the other side of florida. miami still seems quite vibrant, but to your point, and the business side of this, insurance is just extraordinarily expensive if you can even get it in terms of homeowner, and that obviously figures into your annual cost in a significant way. >> you bet against evan greenberg here, as i saw a downgrade at chubb, talk about a stupid thing to do. he's the best underwriter there is at chubb. the best. >> because it's so expensive. >> well, but you know what? you get what you pay for. you get that check the moment that something goes wrong with chubb. they have the check and that's what it's about. he's got my stuff on his left-hand corner of his desk, i think. check to cramer. i'd rather not get the check. >> we don't talk about it as often, the auto insurers,

progressive. >> geico might not be writing for the cybertruck. >> becky did some nice reporting on that this morning. i don't think it's as big a story as this one gentleman makes it out to be. >> no, i would say progressive is known as the company that uses the most successful a.i. look at that stock. that's a.i. do you know they changed their pricing by the minute. >> it's not flo and jamie? it's a.i.? >> they change their price by the minute. you watch sports. if you know flo, you watch sports. >> i love sports. i just don't have the nfl on my brain every half second. >> for me, flo means flowers foods. >> really? >> yeah. >> f.l.o. >> yeah. is that what it is? oh, yeah, flowers foods. >> nice call. what do they do? >> they make bread, for heaven's sake. what else do you have to give them? >> jim, we do have some union news to watch, and that is the machinists in boeing. >> yes. >> back to the table today.

>> oh, what a mess. the machinists is a very smart -- look, i mean, no one's smarter than the longshoremen, but the machinists aren't dumb and they've seen these executives do horribly and get huge pay packages and it disgusts them and i think a lot of america feels just like they do. disgusts them. elizabeth warren would tell you -- senator warren, she's quite good on this, believe it or not, because she equates herself to where ronald reagan was in 1980 with the disspparit between the ceos and the rank and file. look what they did to the company. it's a duopoly. any one of us could go in there and run it. belichick could go in there and run it. >> you've not been tempted by any of this long-term discount? >> i was tempted but my partner made fun of me. >> i appreciate you thanking me. i'm here to help. >> i know you are.

i'm going to call you bryce. >> bryce? okay. >> yeah. not the one that you foisted on us in the eagles. i'm talking about the one that's the greatest -- maybe one of the greatest players of all time. >> brite yce harper, man, do yo know him at all? he looks so mean. >> i don't know him. is he meaner than ian reed, former ceo of pfizer? >> nobody's meaner than ian reid. bryce harper just looks like he's -- he's scary. >> jeff buchus nice or mean? >> great american. >> there's some media news today, whether it's jury"joker box office is not as strong as warner might have hoped although this netflix upgrade of piper -- >> that's a face-off. how could you downgrade netflix ahead of the advertising component? i thought that was fatuous. a fatuous downgrade. piper piper is going to be wrong on

that. barclay's is going to be right. nobody wants this. >> when it comes to the duelling downgrades, apple not down nearly as much as amazon. >> maybe because foxconn had a blowout number. >> amazon is down 3% on this wells note we cited. they reduced their operating income estimates, '25,' 26, and '27. this is the jeffries downgrade of apple. i was talking about amazon but not having nearly the impact in terms of percentage decline that the wells fargo downgrade of amazon is having, guys. again, we mentioned at the top of the show, margin expansion could be capped in the first half of next year. >> you're dealing with some of the great ceos of all time and the executives, andy jassy. >> you think andy jassy falls into one of the great ceos of all time. >> yes, i do. he's done a remarkable job furtheri furthering things that bezos did.

this is an opportunity -- no, an opportunity, i would say, $179, you know, carl, it lasts -- this thing goes down for, like, four days, and then you find out something new they're doing. i mean, maybe they'll find a way to -- alexa will make something happen. >> are they still spending money on project cooper, the satellites? >> they have the money. >> oh, they've got the money, baby. >> they have a.i. that actually can identify people, apparently, apparently, who are serial orderers, and so you can actually -- if they can get it so that you only get one box sent to you, rather than the hourly orders that my wife puts, you know, and she's not alone, but you know, i told jassy to stop sending her presents. but i do think that to bet against amazon is to bet against future and it's been a terrible bet. it's been a decent trade to get out but what do you do with that? >> it is interesting.

mizuho reiterate,outperform $240. it's a battle. >> it is a battle. and we do care about shopping, obviously, but there's a -- did you get another amazon prime day today thing? >> it's coming really soon. >> right? >> opportunity to spend even more money. >> do you buy the stuff that you would have bought at walgreens, david? >> yes, i do. >> so do i. >> i buy razor blades, shaving cream. i literally walked into the cvs, it was unfortunately behind lock and key, you ring the button, nobody comes and you're like, i'm going go home and i'll have it tomorrow morning anyway. >> my rite aid is out of everything. it's like a dystopian thing. >> it's like the soviet rite aid, yeah. way back when i lived in washington, d.c., 40 years ago, whatever the hell it was, nothing was on the shelves. >> you see the limited time only ninja ever clad stainless steel and you have to click on it to

find out what the last word is. they're so smart. the amazon prime is going to be so good. every thursday, i find myself watching thursday football, got better. >> yes, well, certainly, the commentary's awesome. >> it is awesome. just awesome. my god. but you can call these games and be, you know -- >> are we back to the nfl? >> it's been a few seconds. >> bet against amazon and i'm going to send you, what? an invitation to your funeral. >> oh, yes. >> there we go again. >> how about flowers foods? you all in on that? >> f.l.o. >> i had a huge hit in that in 1989, named my cat flo. >> did you really? >> naming your pets after a ticker is not new? >> no. and i named my other cat bessie because i was short bessie to zero. >> his animals have so many names. >> remember comag? he got run over by a truck and jumped six feet. >> you didn't name your fish stride right or something? >> no, but there was a dog by

the name of nvidia. >> yes, i know. >> three bucks, david. >> was the stock three bucks? >> yeah. >> you know, it's funny, we haven't mentioned it at all. we've mentioned the nfl 17 times but nvidia, that's the first mention. >> jensen is going to be here friday. >> we're 47 minutes into the show. >> i'm sorry. >> i'm losing my voice. >> i'm sorry i let you down. >> nvidia is up. >> david, i see you nvidia and i raise you duck horn. >> oh, yes, duck horn's in the news too. >> duck horn god t a bid. >> we didn't do arcadium. we didn't do chevron canadian national. >> that's a big number in terms of what they're selling. >> it was big and i thought mike did a good job. someone's going to say, got to go, so i'm not going. mike wirth, good job, chevron. >> dow is down 140, holding 5,730. watch bonds as well. no at lot of data today. we'll work our way towards cpi later in the week, but twos,

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it's time nor jim to stop trading. >> abbott labs. there are people selling it.

one of my top ten i've been doing. seems the investing club. this is for free. must watch top ten. abbott have this lawsuit. the lawsuits have been very hard. it's about a particular kind of special formula they have. they lost a $450 million one. the fda, cdc said there's no conclusive evidence this formula has been linked with any of the terrible intestinal illness, and that's just a huge win because this is what's been keeping the lid on the stock. i think it could be perhaps entered into evidence. there's a trial going on right now. i would stop selling abbott. it makes no sense after you got this victory. these companies, this company produce this stuff because they want to do the right thing. there's only $9 9 million in sales. i think it's really important. >> all right. important piece for your. >> very. top ten. i think it's free by the way the top ten.

doesn't cost you anything. >> how about tonight? >> i've got paychecks. they had a remarkable quarter. by the way, they're talking pretty still robust. little bit of slow down in hiring. i think john is a small, medium- sized business. that's where the action is. look to make sure that doesn't fall apart. >> look forward to tonight, jim. good show. >> a lot headed our way. mad money tonight 6:00 p.m. when we come back, we'll watch these markets. dow down 91. only two sectors green at the moment. energy and healthcare. don't go away.

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good monday morning. welcome to another hour of squawk on the street. i'm sara eisen. stocks start off the week in the red. if you look across the board

the s&p 500 down about four tenths of one percent. got a big rally on friday after that better jobs report. giving a little back. the nasdaq down half a percent. the dow is down about a third of one percent. just looking at the sector performance. most sectors are red right now. you have two pockets of green. energy stocks as oil continues to rise and healthcare as well are higher. everybody else is lower. consumer discretionary is your worst performing group down 1.5%. a number of these consumer names. some home builders as well. treasury, this is a story. back above 4%. first time receive we've seen 4% since august. do want to point out oil. it's pushing higher yet again. 75.52 wti crude up 1.5%. it's been a big boost so far in september and going into october here. we're 30 minutes into the trading session here are some movers we are watching.

big tech a big driver this week. nvidia kicking off a three day ai summit. watch tesla out of the company's widely anticipated robo taxi event on thursday. the casino names are also on the move. some of the best performers and further adding to gains this morning as investors continue to bet on this rebound in china. pfizer also gaining news that activist investor starboard has taken a billion dollar stake in the name. much more on that later this hour. but guys, sad day. somber day as we commemorate october 7th. in the next hour we'll talk to the u.s. ambassador to israel jack liu. looking forward to that conversation as the region is still embroiled in war. oil prices have surged on this question about what israel is going to do in retaliation to iran. are they going to go after the

oil facilities and oil capabilities which is iran's moneymaker. wti crude is up 12% month to date. so, you know, it's coming off the lows of the year. but it's something we're watching because there's always an impact. price at the pump goes up. impact on consumer. impact potentially on inflation. nobody is quite worried about these things yet. we are watching prices rise and they're rising quickly. as far as inflation, we are going to get a key reed this week. cpi, ppi on the wholesale level toward the end of the week. those are going to be big sort of week ahead moments. we have the fomc minutes from the last meeting where they made that surprise cut which in hindsight looks a little odd; right? we got that very strong jobs report and a bunch of strong data. we'll get earnings this week as well to talk about. but 4% is where we are in the ten year yield and haven't seen that since august. there's a rethink, is it going to be a soft landing?

is it a no landing situation? are they going to be able to cut as much? that's the conversation today and that's what's being reflected i think in the market. >> we will see. i mean it's not so much about economic growth as it is about inflation. goldmans estimates for core cpi later in the week. i think they're at .28. estimates .2. >> benign inflation. higher wage growth. goldman lowered the recession odds. wasn't high recession odds to begin with. but if you look at all the notes this morning, it's a little bit of a rethink given the strong jobs report. here's jan hatzius. strong september job gains and upward revisions have for now calmed fears that the labor demand might be too. we have lowered by five basis points. now only 15% in response. along with that, on the equity

side raises the s&p target to 6000 from 5600. 12 month target from 6300. goldman is not the only one. jp morgan changed their fed call for november. 25 basis point cut instead after 50 basis point cut. also they revised their fixed income team revised their two year yield forecast by the end of the year. lifting that higher now. which a lot of firms are doing. 3.7 from 3.4 prior. again, reflecting the fact that the fed doesn't have to do as much. >> yeah, jp morgan was in the 50 camp. they were way off on the jobs number. they were looking for 125. we got 254. citi also goes to 25 versus a prior 50. apollo over the weekend argue no more cuts. >> i highlighted both of those notes because the question is how good does it have to get

for the fed to not do anything? they kind of put themselves in a corner with the expectations that they're going to cut in every single meeting but remember, the ecb doesn't cut at every meeting. they take pauses. the consensus might pivot to no rush to ease further during the fall. we can't rule out higher for longer making the comeback. we are in the none and done camp for the rest of the year. apollo has been, he's been worried that the inflation is going to come back. the fed doesn't need to do too much. he says no more cuts. saying it remains sticky and above pre-pandemic levels. the 4% wage growth was as much of a surprise as anything given usually wages feed into inflation. there's it looks at wages on goods, which is the top, which is doing quite nicely. in the middle is basically the wage number at 4%. that's just the average hourly earnings total industries and

then they break it down by services. but the point is it's high. and now we're getting real wage growth. you always point this out. if we get inflation this week at what, what's the consensus? 2.3, around there for the monthly number? and we have wage growth of 4%. that's a spread where you get real wage growth and should help the consumer going forward amid worries about the consumer and declining sort of purchasing power. but this is a good news story. the question is is it going to keep inflation high? >> that's coming off the consumption that's running 2.5, 3% on an annual rate. >> all of this few weeks before an election. presidential. >> the question is do people feel it? the surveys have showed. >> they don't. >> they don't and they still feel the high sticker prices and they still feel like there's not a lot of certainty about jobs. even though the numbers have showed a good news story. >> the jobs is interesting. it's been a strong jobs economy for quite some time. inflation is psychological.

people can still remember 2019 what something costs and obviously it's far higher now than it was then. but the job security is interesting. >> i mean look, companies themselves, even with a strong economy you've seen deteriorating confidence among ceos even though hiring is still strong and wages are still strong. everybody's just worried the high interest rates and the high cumulative inflation is going to bite. it just hasn't yet in it a meaningful way. >> meantime stocks are coming off four straight weeks of gains. the best performance year to date to october since '97 as the ten year yield moves back above 4. higher level since early august. big departure from the recent lows. goldman did up its target. lowers their recession odds. here to break it down mike santolli. are you reassessing the path

for rate cuts? >> in terms of magny constitute, in terms of speed you have to. that two year yield did this u turn back to 4% which is where it stood before the poor jobs report. we had this two month growth scare. i still think we're in a mode where good economic news is generally supportive of stocks and even if that means somewhat higher yields and somewhat less fed easing. that's been the formula for a while. history says orderly in no hurry, nonurgent fed easing cycles are ones that tend to be more associated with a better stock market. all that is to the good. four weeks of gains but it's been diminishing gains over that period of time. it's been more of a selective market. the s&p 500 is only percent above where it was in mid july. the average stock is 3%. it has been a more inclusive

rally since that period of time. you have this situation where only three out of the seven stocks are outperforming the s&p. in terms of the blue chips it's been hit or miss. it's been more discerning. in terms of the overall market i think cyclical type parts of the market are supported here. you mentioned though the election being out ahead. the vicks 20 issue. they're unwilling to spend down their risk budgets s we get into this period of tile. maybe longer term it's good. it keeps the market from getting out over its skis too far. we sort of are keeping things on a short leash as we figure out both components of the soft landing scenario if they're going to be friendly. what the fed does in reaction to it. on the economic side. are we extrapolating 250,000 jobs a month from here? i doubt it. >> does any of this change earnings estimates?

>> yeah. >> better backdrop, should bode well for that. >> absolutely. the 12 month forward estimates continue to rise. we were above 21 times forward earnings at the end of the first quarter of this year. and we're still like 21.6 times earnings right now with a dip below 20. so the valuation has held at these elevated levels. earnings estimates are up 7% since then. that's how you move the chains. you move through time and earnings beat the lowered estimates. seems like it keeps the story going. doesn't mean we react immediately in a positive way. i do think that's what is underpinning most of what we're seeing in the market. >> not just the recession odds, not just the s&p but also their china target where they see an additional 15 to 20%.

>> exactly. and i do think if you are tracking, if you feel like markets should follow that, that's where it brings you. the question on the china move is whether a lot has been pulled forward tactically. i do think it is interesting. when it comes to the s&p target, you know, it's sort of interesting that right now the median s&p target for the end of the year is still below where we're trading. a lot of catch up to do if in fact we're going to track earnings higher. >> that picture is going to start to fill in tomorrow with pepsi. we'll talk in a bit. mike santoli. road map for the rest of the hour. could be a make or break week for tesla. stock has soared 50% but essentially flat for the year. we'll talk about how the street's positioning. >> financials coming off their best day since february as big banks get ready to report results. openai raises one of the

largest rounds for a private company ever. we'll have an exclusive with brad lightcap. big show ahead. squawk on the street right back. (man) look at this silly little sailboat... these men of means with their silver spoons, eating up the financial favors of the 1%. what would become of them when they discover robinhood gold allows others to earn their very liberal rates on idle cash, unlimited deposit bonuses and handsome retirement matching? they would descend into chaos. merciless chaos.

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included, for only $15 a month. tesla's long awaited robo taxi deal. joining us this morning, a 254 target and a buy rating on the

stock. george, good to see you again. >> nice to see too. >> skeptics keep bringing up this is taking place on a closed course, movie studio lot. how much promise do you see in real world delivery of either data or demonstrations? >> look, the skeptics re right to be skeptical in the short term. there's something that tesla has to deliver to have autonomous vehicles on the road without a driver. that's meantime between failure. companies are trying to get to something equivalent 10 to the 7th power which is better than a human driver and because tesla's taken a controversial approach with just a camera and a massive ai infrastructure people including ourselves are skeptical they can make that happen in the near term. over the long term we'll see. there are competing companies like mobile eye who are trying to enable vehicles to get to that meantime and also an

autonomous trucking company trying to get there. they take different approaches. they're using multiple sensors. tesla decided to use just a camera. i think most people expect that. >> do you have any sense as to how the stock may trade going in and out of this event? >> that's a great question. look, my sense is that expectations are pretty low and i think there may be some sort of wow moment at the event where they show they can leverage this massive ai infrastructure they're building to animate and give life to robots. because the title of the event is called we robot and that obviously doesn't just include robotaxi. i expect they'll show all the nvidia chips they're buying. the massive data centers they're building. they'll use that to enable a robot army of workers as well. >> is there regulatory risk to worry about here with this future? >> i think -- well from an

autonomous driving perspective, certainly. i think over time as regulators dig into the algorithms that enable the vehicles. they'll want to know where cars made decisions they're making. when you have a massive ai infrastructure that doesn't have software, hard coated software rules like other companies are trying to follow and god forbid there's an accident, well they're going to want to know why did the car make this decision or that decision. based on at least what we can telexes basted on the infrastructure and the software, the ai that tesla is building it's hard to know why their version of robotaxi made decisions it's making. other companies we mentioned are hard coded software rules that let regulators and people know if a company did this -- if a car did this or that they can understand the decision making of the vehicle. >> finally, george, we always like to ask what portion of your price target on tesla

accounts for just the core auto business? >> it's a great question. so what we've done with our models so far is we assume there's going to be a ton of margin improvement over the next several years. four to five years. that's based on people adopting full self-driving on traditional tesla vehicles. that's going to significantly help margins over the next three, four, five years. in addition -- in terms of robotaxis, we don't have a lot built in right now. frankly, we don't know when this stuff is going to hit the road. we're skeptical in the near term that tesla can have a robot or robotaxi army in two or three years. it's probably later in the decade and into the 2030s. our model goes up to 2030. just for now we're building in increasing rates and a reacceleration of their auto business. >> not to -- just to come back to summarize. what in your opinion is the key

point that musk has to answer? >> can he and tesla enable robotaxis using just cameras and an ai infrastructure? they're not using radar. they're not using lidar. those additional sensor sets are used to increase safety. so if they can prove to the world they can get to a meantime between failure of 10 to the 7th power just using cameras and just using a lot of nvidia chips then that's a big deal. we have to know a little bit about that timing. maybe they can get there in the 2030s using that approach. that's not good enough right now for the stock. >> appreciate it as always. good to see you again. >> nice to see you guys too. >> after the break, activist investor starboard value has a new potential -- new investment and a potential target. it's pfizer. you can see it's hinavg an impact on the stock price.

openai's coo brad lightcap is going to join us. don't go anywhere.

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pfizer stock is on the move this after news that starboard has amassed a roughly billion dollar stake in the name. we've confirmed it as well. frustration here is sort of focused on that huge covid bump that phaser had in terms of faking in enormous additional revenues from the vaccine and also the paxlovid treatment. and the fact that costs have not adjusted to the new reality which of course is back to the old reality in terms of revenues. you had a $60 billion revenue become 100 billion. generate as much as $30 billion in additional cash flow and spend double that on acquisitions. the main one being cgen but a host of others as well. now perhaps some frustration at least that the structure has not come down as much to reflect what may be in some

cases an expectation that, you know, run it like you have a $50 billion instead of certainly one far higher. and focus on a handful of compounds and listen, we've yet to see the returns from deals. there's not a lot of questions as to whether over time there will be, although how much of course continues to be a question. >> $70 billion on acquisition doctors they may have overpaid. the portfolio of cancer drugs potentially there is significant. and then perhaps some frustration as well with dr. borla who has been running the company since 2019. the potential additional of the former ceo ian reid and former cfo in terms of being in an advisory capacity associated with starboard is interesting. it's not one that you often see. we have seen it in the past especially because they were the team that bourla took over

from. >> different backgrounds. more thought of financial disciplined guys versus bourla the scientist. it kind of reminds me of other stories like a nike, for instance where there was a time and a place. john was brought in to focus on digital and e-commerce. worked really well during covid then post covid companies changed and you couldn't necessarily rely on the revenue that was generated during covid. it's kind of a similar story here at least if you look at the stock. and the revenue picture you just painted really well. there was covid and you have to give albert bourla and pfizer credit for moving fast, spending big, saving the world and distributing it. >> having an enormous piggy bank with which to spend, which they did quite aggressively. they should have because you want to diversify away from some of your core franchises. use it as an opportunity to do so. in this case it would appear to the extent there will be pressure on the cost structure

and perhaps as well on succession for mr. bourla. particularly given you do have the inclusion of those gentlemen. has a high dividend. as i've pointed out over the long term, 20 years, it's still has been dead money. there have been great periods. ian reed did oversee a decent move in the stock. ultimately, you're not really talking about much. a lot of that is today. basically the stock is flat. >> i think it's gone from 41 to 29 since bourla took over. it was hard to anticipate that we wouldn't be dependent on these covid vaccines in a way that was originally thought. that's fair. that was. >> i think they thought they had a longer tail. >> this was the new base of revenue. that's why the spending ramped up. i guess the pivot never happened and that's why analyst investors have been frustrated over the spending and the lack of discipline.

>> always worth mentioning, this is obviously still a small percent. large position for starboard. small percentage overall. as we've seen time and again, these large influential activists can have a significant impact even with a smaller stake percentagewise because many shareholders share their frustrations. nominating window opens in january. we're starting to see real activism come to play in part because of the calendar. by the way, to be fair, starboard, you know, i remember them i think it was elon, haven't always had the best track record in healthcare. some people pointing that out this morning as well. >> mean time, still ahead, financials coming off their best day since february. kicking off a make or break earnings season beginning this week. we'll get you ready. as we go to break, check out some of the biggest gainers this morning. you see generac as we continue to watch hurrica mtoneiln now a

cat 4. stay with us. (man) look at this silly little sailboat... these men of means with their silver spoons, eating up the financial favors of the 1%. what would become of them when they discover robinhood gold allows others to earn their very liberal rates on idle cash, unlimited deposit bonuses and handsome retirement matching? they would descend into chaos. merciless chaos.

ment welcome back to squawk on the street with your cnbc news update. israel marked one year since hamas' october 7th surprise attack that killed about 1200 people. the group fired rockets at tel aviv this morning while the israeli military issued evacuation notices for much of northern gaza in what appears to be a major new offensive. officials in gaza say nearly 42,000 people have died there in israel's year long assault on the enclave. a russian court sentenced american citizen steven hubbard today to six years and 10 months in it prison. the 72-year-old was convicted in a closed door trial of serving as a mercenary for

ukraine. according to reuters reporting. russian investigators claim ukraine paid him $1000 per month to serve in a defense unit. hurricane milton is now a category 4 storm as it barrels towards florida. it is expected to make landfall on wednesday evening near tampa, less than two weeks after hurricane helene brought flooding. the hurricane is expected to bring life threatening storm surges. it's a lot of folks thinking it was going to downgrade a little bit and here it is category 4. >> thank you, bertha. watching the banks, they're coming off their best day since february. one of the best performing sectors of the year. the gains coming as the big banks get ready to report earnings this week. jp morgan, wells fargo, blackrock, they're all on deck. let's discuss. i can't keep track if the bank investors want lower rates or

higher rates. feels like it changes all the time as it comes to profitability and whether these are good stocks. and now we adjust to sort of higher for longer possibilities. what does it all mean? >> you know what, me neither. so i guess i'll say a couple of things. this is why i think they're just so, so stocks right now, especially at 11 times next year's earnings. so before the friday nfp report, what the market was anticipating is sort of this perfect combination of the yield curve steepening. margins will start to go up to the right. and then the fed landing the plane perfectly and credit being very quiet. so i think now with the narrative shifting back to higher for longer, i'm kind of surprised at today's performance. to be quite frank, i think maybe this is just some short

term movement perhaps hedge funds were net short banks coming in because they're expecting them to downgrade, you know, fourth quarter net interest income outlooks. which doesn't set the table well for 2025. perhaps some positioning cover we're seeing. i think that higher for longer is actually going to be tougher for banks in terms of being able to hit that margin inflection point. as well as, you know, what happens with valuation. again, at 11 times earnings for next year, it seems like they're in a little bit of valuation berg purgatory, if you will. >> we got outlooks from banks at the barclays conference and it moved all the stocks. do those outlooks stand? >> so that question is not applicable necessarily as a straight answer to all banks.

for someone like jp morgan, they will earn perhaps more than feared if we're higher for longer. part of why daniel pinto said consensus is way too high, you have to take that down, it's because of all the cuts in the curve we're being priced in in september. if we're pricing out cuts in the curve, you know, and we can then see jp morgan maybe earned more than feared. so the friday conference call is going to be a very oversubscribed one as investors try to figure out what's going on for 2025. and banks very much vary in terms of how they benefit from higher for longer. for trading specifically, i think that maybe volatility isn't that great right now but with the election coming up i think that's probably just a short term blip. i would would expect volatility to pick up especially in the fourth quarter.

>> so are you more enthusiastic about the bigger domestic banks? i'm not going to call them regional because they hate it. but the pncs and the truist. >> my top pick is the nonregional regional bank pnc. the way we're thinking about it is the money centers have really been the leader in terms of this bank outperformance for the year. some of the regulatory three fears were softened by, you know, the regulators themselves in terms of the messaging. the regional banks had a devastating year in 2023 but as i think about, you know, where small rate cuts can make a difference. small rate cuts will make a difference to businesses and to commercial real estate. i think now is the time to be, you know, accumulating shares of regional banks. nonmoney center banks if you will that will be long term

wipers that have capital. >> is the election a risk to that view? >> the election could be at a little bit of risk in terms of the short term reaction. i think regardless of who wins in november, if we have higher for longer that means the curve is probably flat. if the curve is flat then the bank earnings power isn't that great for next year. in my opinion that's going to likely encourage consolidation. and pnc could be the long term winner here. as well as some of the smaller regional banks that could be bought. >> thank you for the check in for helping us pregame the bank earnings. >> meantime, an exclusive you don't want to miss. openai's coo brad lightcap going to join us next. stay with us.

buckle up because we're looking at shares of ferrari. they've been revving higher but have tapped the brake as of late. y e ad thinks the stock is red lining and has an options play on it. tune in to our market navigator segment later today. power lunch 2:00 p.m. eastern time.

openai raising $6.6 billion. close of one of the largest funding outside ever for a private company now valuing openai at $57 billion. anyone joining us now, openai's chief operating officer brad lightcap. nice to learn you're a mets fan as well. >> that i am. >> i could spend the entire interview on that. i think the rest of our viewers might be a bit disappointed. you have a fairly large agreement as coo but partnerships are one of the key

things you've focused on. i'd love to start with apple. what the relationship is in terms of your relationship with apple intelligence. tell us about what the partnership means for openai and what apple will get out of it. >> great to be here. apple's obviously an amazing company. we're thrilled to be part of apple intelligence. we think it's a step forward. it's a big step. it's the first time that we're going to have ai really start to integrate into the device. you think about how people have used ai to date, it's mostly been accessing it through like apps and really simple kind of services. now you can do really interesting things on the device. so you can actually take a picture, for example, through the camera and have chatgpt understand what's going on in that image and that's, we think that's beginning to create tremendous value for consumers. for the 250 million people that

use chatgpt every week we think it's going to be another way for them to experience it. >> yeah. so from a perspective. revenues continue to go up. investors, private investors are also focused on margins over time. how do you benefit economically here? this is not a relationship the google search relationship where google's paying apple an enormous amount of money. that's not the case here; correct? >> correct. we're, look, the way we think about it is really around product. we don't know what a great product experience with ai are going to look like. i said to our team the other day it's the most dynamic time in technology that i can think of to be building product. it's a face shift. new era for how software works. exploring that frontier and what it means to be able to interact with these devices in this human-like way all of that is yet to be discovered. >> i understand that. but i'm trying to understand, i pay you guys $20 a month now.

>> thank you. >> you're welcome. i'm enjoying but if i have apple intelligence on this phone am i still going to want a pay you? >> i think so. i think there's going to be a range of workloads that you'll want ai to be able to take off your plate. some of those are very simple. they'll be on device. but a lot of them are going to be really big complex work flows that you're going to want to ship off to more powerful models. we recently released a new model called 01. it's a different type of model so in contrast to gpt 3, 4, o 1 can reason. so it actually what that means it is think about a problem, it can break down a complex problem into different steps. so if you think about even giving your ai a simple task. help me plan a trip. that's a series of actual underlying tasks that you actually want more complex higher sophistication intelligence to handle. that's the type of experience. >> so that would be more for the pay model as opposed to

potentially for apple intelligence but you're still going to be using it there. i wonder when you think bout when so many people who own apple, for example, stock think about how is this going to change the nature of the interaction with the device with the use of apps. how do you think about it? is it going to change significantly? >> i think it will. interfaces change. we'll have more human-like interface. one of the cool things you've probably seen chatgpt. you can access our advanced voice mode. you have a system that you can talk to fluidly. like you and i are talking right now. you can interrupt it. you can have it tell you jokes. you can make it sound more serious. more funny. those interfaces will become the norm. a few years from now it will be unusual you walk up to a screen and not expect to be able to talk to it like a person, ask it to do arbitrarily complex things. we're just at the beginning of this. >> i'm trying to understand then the differential. i'll talk to siri potentially

at some point with that kind of an experience but you think it won't take me away from wanting to talk as well to your chatgpt. >> i think these will be everywhere. >> you do? >> yes. >> let's talk about the microsoft partnership. you were instrumental. important to the company. how as you transition from a not for profit to an equity ownership structure, i would assume the negotiations are important ones. what are your expectations in terms of how that's going to go and how microsoft ends up in terms of what their ownership structure or anything else is at the different, the new openai which is a for profit company. >> microsoft has been an amazing partner. our history with them dates back a long time. we've been through multiple versions of our partnership. we'll continue to evolve. i don't see a future of ai being what it could be without microsoft. so bringing them, you know, kind of into that process and along for the journey is

paramount for us. that company has done amazing things to advance the field. from the infrastructure they build to the types of products they serve, there's a tremendously important place for them. openai is growing. we have a business we have to grow. we have now, you know, much more complex infrastructure. much more complex systems. serving 250 million people every week. many, many thousands of businesses. a million business users. our thinking is around how do we continue to set ourselves up to push the frontier on research. also really thinking -- >> how does microsoft play into that? my question was about their rolling in so to speak. >> they'll be n amazing partner on both sides. we think they're critical to the research input. scaling infrastructure. scaling systems. we think there's also interesting ways to collaborate around how we build product. >> do they have enough computes? you did that deal which

included oracle earlier in the summer. is that because you guys were running out of microsoft compute to user? >> we think we need a lot of compute. so we really look at infrastructure is where can we find the best systems that help us scale the models we want to scale. and, you know, we've got plans for that. we think microsoft is a critical input to that. >> is the compute now -- the questions, is it being used to train the new models or is the infrastructure taking up more compute than you thought? i'm trying to understand because sam altman seems to be coming at it. we need trillions and other times perhaps not as much. where do you sit in terms of how much compute is going to be needed and for what? >> this is a keen observation. the o 1 models are really entirely different regime for how ai models work. you mention something that was interesting which is inference compute being a critical input to how these models work.

o 1 models think. you can models now can use compute when you actually ask them a question and the better the more they can think, the more they can use compute the better their answer gets. much like a human the more time you can take to think about something generally the better the output is going to be. we think our infrastructure, completely different for how we scale compute and i think we're at the beginning of understanding. >> give me a little more here. what does that mean for compute? tell our viewers. does it mean you need more or less? >> we think we'll end up needing a lot more. the types of workload you can do with these types of models are -- now these arbitrarily complex and sophisticated work flows. in manufacturing, a field that historically has not generally been well penetrated by a.i., now have models that can do cross-referencing across technical manuals, they have deep understanding of infrastructure and critical -- you know, critical pieces of manufacturing. and you can ask them complex

questions like, i have a broken -- i have a broken machine. i have a broken piece of my machinery. how do i go fix it? that used to be a process in field operations that would take hours, days, weeks. you can now boil that down to minutes. so it's all because 01 can cross-reference what it sees in a manual, solve complex mechanical problems and bring the answer to the people in the field right there, right then. there's no way to estimate what the upper bound of is use. >> everybody who owns nvidia heard you say that and thinking i might need more. it's like boundless need for compute, it seems. >> certainly we're optimistic. >> you're optimistic. even with, as you say, with the new models, even though they're more efficient, they still consume even more. >> again, you can throw arbitrary massive compute at these models and they just get

smarter. they can solve harder problems. we're just at the beginning. >> then we'll get to agi. last time we talked to milken in may, it's a not-for-profit, to develop the most beneficial a.i. for humanity. i hope you're thinking about that sometimes. when do we get to agi, given what you just told me about the new models? >> i swore off making predictions in this field a long time ago. >> you did? >> but we're very excited. >> $6.6 billion comes in. what do you use it for? >> for growth. we have -- one of the amazing things about a.i., we can invest predictably in our research. we know we can proven scientifically how these models will improve as you scale them up. we know with every system you build, every model you train, we have some the ability to continue to invest. >> is it team now? is it people? >> it's going to be primarily

compute. >> it's still going -- >> yeah, compute is the input to these models working. we are continuing to grow our team responsibly, but for us it's just knowing you can predictably invest and you'll get something on the other end that will be better than what you had. >> opening an office here in new york as well, i guess. that goes to the team part of this, right? >> that's what they say. >> why? >> you know, we have critical mass here in new york of a publisher partners, financial services, health care. new york is still this epicenter of industry we think is going to be heavily impacted by a.i. and we want to be where our customers are. so, for us, working with customers, working with enterprises is a very hands-on process. it helps us to actually be close to customers to understand the business problems we're solving. we work with, you know, a variety of companies, financial services in particular, very interesting. for us we want to make sure we're understanding our customers' problems the way they understand them. >> finally, brad, are the

transition, i think you've given yourself two years to transition from a not-for-profit to equity structure for profit. my understanding is that will happen more quickly than two years. is that the case? >> yeah. we're looking at that as the company evolves, i expect our structure will evolve, too. the cool thing about a.i., we try to keep it this super dynamic company. we didn't just do one thing and from here on out it's incremental growth. we see it as our mission we have to usher in this technology that's company. the structure has to evolve, the company has to evolve. we'll ultimately evolve our products, too. >> talk about dynamic, you're there, you've been there for a long time, but a lot of people have left and that's raised some concerns. what about this exodus of significant talent which continues sort of every week? >> companies ee vofl. you know, i've been arnoound a long time. teams turn over. it's natural. openai is a hard place to work.

we all work super, super hard. it's a natural evolution of the company that as we grow and as we hit different milestones and scale the business and research, we want new leaders, fresh ideas, people that can look at problems differently, business problems, technical problems. we feel as good as we've ever felt. we have an amazing team. you know, but we've got way more to come. so, we're just focused on the future. >> brad, always appreciate you taking so the time. brad lightcap, coo of openai. carl, over to you. >> thank you. we're still around 3755 s&p. let's check on stocks as we close out the hour with dominic chu. >> we lead with super micro. they're surging around 12% so far prp it makes those shares the biggest gainer on the s&p in the session for at least right now. some traders are attributing that 14% move at this point to news about the company on new products tied to data center cooling solutions. other traders are looking at

some of the stock moves here with a relatively high short interest. by the way, those shares have seen just around a 63% drop from the highs we saw just earlier this year. so, keep an eye on super micro. also some of the biggest stocks in china are on the move. they're up across the board after goldman sachs upgraded its stocks on chinese stocks to overweight. analysts saying the equities might rise another 15% to 20% after stimulus efforts by the government. those indices have rallied 25% following those moves. they're getting another bid this morning. also netflix in focus. shares are sliding down just about maybe 1.5% today after barclays downgraded that from underweight to equal weight. they maintained the price target of 550 bucks but said with revenue growth is likely to slow down. piper sandler said margins could be conservative in '25 and '26 based upon the margins over the last few quarters. we'll end with a check on apple.

shares are lower, down about half a percent after jeffries downgraded that stock from a hold to buy saying near-term expectations for the iphone 16 are too high. they also said they believe apple's artificial intelligence won't reach commercialization for another two to three years. back over to you, carl. >> definitely weighing on the major indices, d.om thanks. "money movers" begins after this.

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good monday morning. welcome to "money movers." i'm sara eisen with carl quintanilla live from post 9 of the new york stock exchange. coming up, pimco ceo, $1.9 trillion of assets under management and the next steps for the fed. a billion dollar deal in data centers as private equity leaning into the a.i. craze. we'll talk to blue owl capital later. stocks in a bit of a holding

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