And currencies ahead of europes close. Speaking of m a, a massive deal in tech. Why cisco bought splunk and what it might mean for more m a in that space. Topping the tape, higher for longer. Are stocks setting up for a test of the august lows . Senior markets commentator mike santoli is with us. Does feel like stocks are playing a catchup to bonds, which were ahead on the higher for longer. To a degree, yeah. Were sort of arguably in that test thats under way. The s p 500 about 0. 50 where it bottomed out in midaugust. Its also the lower quarter ep end of stocks are waiting to see if longer term treasury yields were, perhaps, topping out around those october highs. Now weave clearly broken higher. What happened with the fed yesterday, even in broad strokes, as weve been saying, not a radical change. Theyre done or near done. Any moves come slowly, theyll be careful. They did remove those potential rate cuts, however anything longer than six months is all kind of hazy on the horizon. What it did do, though, powell said, we dont know how restrictive we are. He doesnt want to get dirty with the neutral rate. You know when you see it. How do you see it . When the economy slows down. Thats the message the economy is taking away. The higher yields are rubbing against the main raw nerve in the market right now, which is can the consumer handle whats already happened in rates . Obviously Energy Prices and all the rest of it. To me the worst Case Scenario is not the economy wont quit, its running at a higher metabolism, rates have to stay higher for longer. Its weve already gone too far and the lag effects are going to catch up with us. Small caps on the cusp of losing gains. Small caps have broken down. They havent been a great guide or bellwether. The equal weighted s p is struggling. The cyclical groups are more crucial to the outlook than mega cap growth stocks. They are down a fair bit because thats where all the profits are and valuation concerns and, yes, people worry about yields in the context of valuations. Theyre no cheaper than the rest just safer. To me the consumer cyclicals have been struggling. As i said, the august lows, maybe we just got to get a little more oversold and the seasonal weakness runs its course. Well see if it can turn. Do you think the outlook for the market and the outlook for Earnings Growth depends on when the fed cuts next year . I dont think it most immediately depends on that. I think the psychology is very dependent on, can we see our way clear to when the fed is going to be easing off, before the economy buckles. To me its this late cycle psychology its that the market kind of assumes that once the fed is done raising rates, the next thing we look forward to is a cut. And the sooner that happens, that will be a big relief for stocks. I think my my take on it, were going to have a few quarters of earnings. Almost no matter what before the fed cuts unless something really blows loose in the system. Were not wishing for that. We want to see earnings progress from here and support equity valuations in the context of where the economy is before we get to the point where the feds going to cut. I think powell told you yesterday, theyre not going to be preemptive about the cuts. Theyre not going to be very didactic price early. Yeah. They dont want to just trust what the neutral rate is and say inflation is going to come down because were restrictive relative to the new utral weigh its its in emergency, break glass . I think its going to be, well know it when we see it. Inflation is going to come down. If inflation comes down, that gives the green light. Other than that you dont have an escape hatch from the late cycle feedback. I love the postpowell psychoanalysis. Thank you, mike. Our next guest is out with a new report saying its unlikely rates will revert to levels we saw in the postfinancial crisis era. The reason . Policy lags, fiscal deficits, ambitious Capital Spending plans, particularly tied to the energy transition. Joining us is Carlyle Group head of global research, jason thomas. Thanks for having me. Thanks for being here. Whats your outlook broadly for rates . Whats the view from carlisle . Well, i think that weve been locked in this period of time where weve had this hard versus soft landing debate. And, you know, i think, first of all, the hard versus soft landing is illdefined. Theres certainly a wide range of Macro Economic outcomes that dont fit neatly into either bucket. Secondly, the question of when the landing occurs. Theres no specified time hor horizon. We could be a year from now with the economy continuing to grow, inflation above target. Would we still be debating this question . I think the real lesson of the past year has been that theres some potential for a more permanent or more enduring upward pricing of capital and longer term period of higher rates for a number of reasons. Like what . Is one of them that the fed is just not going to be able to cut . Yeah. First and most obviously, you have total spending in the economy that remains above levels the fed believes is consistent with 2 inflation level. Consumer liabilities are overwhelmingly fixed rate. The bulk, of course, mortgages. The average Interest Rate paid on the outstanding stock of mortgages is still 3. 6 , lower than it was in 2020. So, there has not been much of an impact from rates on household cash flow. Secondly, you have extraordinarily large fiscal deficits. 6. 2 of gdp at full employment. This leads to aftertax incomes of households and corporates. Thats about 1. 2 trillion larger than we would expect at this point in the cycle, which also, of course, supports spending, making it harder for the fed to cut rates in the near term. Jason, if youre following along at home and higher for longer is the message hammered over and over again from the fed and also it sounds like you very much buy into that idea, should you be reducing your exposure to stocks . Well, i think theres actually a lot that should be encouraging about this. As we move past this hard versus soft landing debate, and, you know, people stop waiting for the landing, youre going to start to see a pick up in Capital Market activity, which has been paralyzed by this sense of waiting. Ill wait for the landing if im a seller or issuer to get top dollar. Ill wait for a hard landing if im a buyer waiting for better prices. So, i think the signs of deal volumes increasing, the signs of ipos is actually something that should be very encouraging. Of course, there are parts of the market that i would say, you know, do look, you know, pretty expensive given the expectation that discount rates on those future earnings, maybe its somewhat higher than people had been anticipating. Right. Are those areas that everyone talks about being expensive . Is it obvious . Yeah. I think it is. You know, again, as we mentioned, there is a lot of defensiveness in some of these Companies Just in terms of the sheer volume of cash flows they generate. And just the fact their growth generally persists through cycles. You know, however, i do think that people are misplaying the a. I. Revolution. Because theyre really loading up on those high beta stocks, related to the hardware and infrastructure. When, in fact, the revolution, most of the Earnings Growth and productivity is going to be downstream and accelerating drug and therapy development, ex accelerating software development. Thats an area where the hype is real, but, perhaps, people have not correctly mapped that reality into income statements. For sure. Part of that is just the difficulty and timing the delivery of these use cases, which i dont know, is q1 too ambitious to think we might actually start to see the rubber hit the road on some of those ideas . I do think that we have seen already 25 , 30 increases in productivity related to software development. I think were at the earlier stages as it relates to pharmaceuticals and therapies. There are some use cases that we are talking about a 2024 phenomenon. Much of it, of course, is further downstream. Again, getting that timing right is critically important when thinking about the price at which you want to enter those stocks. Well leave it there, jason. Thank you very much for joining us. With some of the commentary from carlyle. Meantime, broad com is lower on reports that google wanted to drop it as an a. I. Chip supplier. Our Kristina Partsinevelos has more on that story from the information and some of the pushback today. Broadcom not only builds google a. I. Chips which also provides specific ip that allows chips to talk to each other. Google is broadcoms Main Customer custom chip customer. If that relationship were to end, it would deal a huge blow to broadcoms earnings which is why the stock is down 2. 5 . This may be an overreaction for two reasons. First, this could be a negotiation tactic. Google doesnt like how much broadcom is charging for the chips and considering switching to marvel, who also makes custom chips. Google may just want broadcom to cut prices. Broadcom provides that specific ip that allows chips to talk to each other. Its not easy to replicate or build at scale at cost. Broadcom is making news in south korea after antitrust department, tim to the ftc here, said they would fine broadcom for 14 million for an unauthorized deal to samsung. On a positive note, broadcom is inching closer to the vm acquisition which would help further diversify broadcom from large chip customers like google and apple and add to its future earnings potential growth. Analysts at wedbush, evercore, bernstein, they all defend broadcom despite this information report and saying this stock drop could be a buying opportunity. Meanwhile, this remarkable piece in the journal about what theyre calling apples spectacular failure in building its own modem chip . Just a few weeks ago, like you said, apple had to succumb and sign another contract with qualcomm because they couldnt create their own wifi chip in house. It was too difficult to replicate within this period of time. This shows, though, the larger trend the hyperscale companies, google, amazon or aws, i should say, even meta, theyre all trying to vertically integrate, create their own chips, move down the supply chain so they should push out the chipmakers. This could be a threat to many chipmakers, including nvidia, in the near term. What we see today with broadcom and google is an example of it, even if its not true right now. Just shows how hard it is when some of the best have trouble making it happen on their own. Thanks. Kristina partsinevelos, a ton of chip news. Still to come, the streets growing increasingly bearish on the consumer. Why that may lead to more m a, especially the food space. The coceo of blue owl and the overall market sentiment. Squawk on the street will be back. The dow is down 172 points. S p down a full percent. I was just frustrated. I almost gave up. With miracleear its all about service. Theyre personable. Theyre friendly. Im very happy with them. We provide you with a free lifetime of aftercare. Meaning free checkups, cleanings, and adjustments. I see someone new. Someone happy. Its really made a difference. Hear the world better during our limited time sounds of autumn event. Call 1800miracle to test drive our hearing aids risk free. Call 1800miracle to test drive every day, businesses everywhere are asking is it possible . With comcast business. It is. Is it possible to help keep our Online Platform safe from cyberthreats . Absolutely. Can we provide health care virtually anywhere . We can help with that. Is it possible to use predictive monitoring to address operations issues . We can help with that, too. With the advanced connectivity and intelligence of global secure networking from comcast business. Its not just possible. Its happening. Kd home lower after orders missed and q4 margin guidance missed. Management saying they continue to see Strong Demand despite higher Interest Rates. The entire sector is under pressure on the back of these results. Existing home sales, which was a miss. Tin creasing worries about Housing Affordability as we continue to see treasury yields go higher, Mortgage Rates follow. That puts pressure on consumers. 24 consecutive months of down yearonyear. Pretty amazing. The fed and the bank of england may be keeping rates steady but with high inflation in place, u. S. Consumers are feeling the squeeze. Barclays sees retailers moving down, says headwinds range from the savings draw downto student loan repayment. Ubs says if 10 billion shifts away from soft goods to repay loans, it would mean a 2 overall headwind on industry sales. Then theres piper finding student loan survey, 34 plan to cut back on grocery once repayments resume. And speaking of grocery, td cowen held a summit with package food, walking away with one theme, forecasts for next 12 months need to fall. The analyst joins us. Fascinating discussion where you say, not a lot of conviction as to when or how. Yeah, thats right. And i think the part of the issue is when you try to break down reasons for why volumes have been weak and why sales are decelerating so sharply, you come up with five different reasons. Delayed impact of elasticity, reduced snap funding, a long list. The problem is you cant really focus on one big reason for it thats transitory. As a result, i think that its too premature to assume that food that consumers will just slip back into normal shopping president earns, say, in september when they stop traveling and go back to school. And i think theres a lot of scratching heads going on. Not a lot of conviction from the companies themselves as to what the driver is for sales growth to stabilize and return to positive. But, robert, isnt that why the stocks have been so weak . Food stocks have really underperformed. How much is already baked in . What are the expectations . Yeah. I think thats a very fair question. I launched coverage here a week ago. The reason i didnt have more underperforms is i performed a Sensitivity Analysis to try to look at, you know, what happened the last time that Food Companies had to reduce price, reset margins in response to weak volumes . That was like 2018 and 19. When you put it through that and you assume that valuation multiples kind of come close back to normal, you dont get a lot of downside to the stocks. So, as a result, i have more neutrals than normal. I normally have a lot of underperforms but not at this time. So, is m a bolton the answer from here out . Is campbells svos a major tell . Absolutely. A major theme from our summit, especially in light of smucker buying hostess as well, the pattern is when food growth slows, the Big Companies accelerate m a in order to buy growth and improve their portfolios. This is a time when you have more capacity to do it. They paid down a lot of debt since the pandemic. So, a lot of our outperforms are on digestible, higher Growth Companies like fresh pet, lamb west and i dont think theyll get bought out tomorrow, but i do think that they are in play longer term. You think lutz is in play as a takeover target . Over time, yes. Its still family controlled but you have a board thats very diverse. And any i would argue, not entrenched. I think realistic. But they have a lot of wood to chop. They want to improve their Operational Efficiency and they have a great runway to do that. Im a big fan of their new ceo and i think he can get it done. He comes on the show a lot, off earnings. You also like smucker, which im sort of surprised about because i feel like its been hated and underperformed even worse than some of the Food Companies. Marco isnt thrilled about the hostess deal. Not sure how thats buying growth, to buy a company thats multiple hundred years old. Why do you like smucker . Yeah, i certainly got a lot of pushback on it. It is a a lot of questions about why now . I like smucker for two reasons. One is, this is a company that has truly changed its commercial model for its core business. I think thats underappreciated by the street. They have inbested more in Data Analytics and Management Category and that improved their biggest customer, walmart. Walmart is the Fastest Growing customer out there because of consumers trading down. Smucker has improved their relationship there, gained category advisership and now walmart is 34 of their sales. Secondly, look, im going to take the other side of concerns that people have about indulgent snacks like hostess. I think consumer demand is resilient and will continue. Theres a lot of worry that those drugs will penetrate as much as 30 million consumers. Ive worked with the td pharma team here, which is excellent and forecasting something much lower than that. And i think thats more realistic. I think the reality is different than the concerns on gop1s. Theres a lot of theories floating around how its going to change consumer habits. Ro Robert Moskow from td cowen. The ipo class is struggling to hold onto gains seen on the first day of trading. Earlier trading, arm fell below the 51 offering price. Well talk more about what this could signal. Meantime, fedex, big earnings beat, stock close to yeartodate highs. More about that quarter on cnbc. Com this morning. You founded your Kayak Company because you love the ocean not spreadsheets. You need to hire. I need indeed. Indeed you do. Indeed instant match instantly delivers quality candidates matching your job description. Visit indeed. Com hire watching shares of snap today. The Company Announcing its Snapchat Plus Subscription Service has reached more than 5 million subs in over a year since launching, up from 4 million in june. Shares down about 4 this morning in what is admittedly a tough tape today. European markets set to close in just a few moments. Negative across the board as well, across a flurry of central bank decisions. In england, sweden, norway and turkey. Of course, were watching all of them. The one catching everyones decision is the bank of englands decision to pause after 14 straight rate hikes. The Boe M