SOTS 2nd Hour: Prepping for Big Tech Earnings, Woes Growing At Boeing, and Rating Apple’s AI Roll-out 10/28/24

Jim Cramer (0:00)

It's Jim Cramer here. You're listening to the opening bell of CNBC's Squawk on the Street. Don't miss a minute of the action.

Carl Quintanilla (0:07)

Good Monday morning. Welcome to another hour of Squawk on the Street. I'm Carl Quintanilla with David Faber. Deirdre Bosa is here at Post 9 of the New York Stock Exchange. Sarah Eisen is on assignment. Nice opening game, doused up almost 300, got outsized gains in some of the small caps, rustle up better than 1 percent. Treasury is a bit elevated ahead of a lot of macro this week. Ten year does get to 429 this morning, and then energy, of course, 6714, the low print of the morning, on pace for the worst session in about two years.

Deirdre Bosa (0:34)

We are 30 minutes into the trading session. Here are some of the movers that we're watching at this early hour. Keep an eye on the airlines and the cruise liners gaining after the big plunge in oil prices. Boeing launching a $19 billion capital race to shore up its finances. As the company's workers strike continues, more on what it means for the investors later this hour. Robinhood is in the green after announcing plans to jump into election trading. Users are now able to buy Harris or Trump contracts starting today, as long as they meet certain criteria like being a US citizen. Much more on the state of the race with just eight days to go now later this hour.

Carl Quintanilla (1:12)

It's great to have you on desk today. Dee, you came armed with a lot of insight regarding the Mag-7 earnings we're going to get this week.

Deirdre Bosa (1:18)

We get the five of them this week. It is going to be so busy. What strikes me always when we get to this time of the year, four times a year, is just how much exposure to so many different themes. You've got AI, you've got streaming, you've got autonomous vehicles, you've got advertising and the growth rates, right? Even though we've seen the trade dry up a little bit recently, it's hard to argue with the EPS growth and the double digits for a few of them. Even single digit is better than the what? About 3.6% gain for the 493 others.

David Faber (1:49)

Yeah, I always come back to the numbers themselves because they are just so stunning in terms of the size of these companies at this point. We certainly will be adding up how much they are spending on capex because it's such an important component overall. The numbers, Deirdre, are going to be in the hundreds of billions, certainly for the year. We're going to keep tracking it. We'll hear what the companies have to say on their respective conference calls about their plans as to whether to maintain or even potentially increase.

Deirdre Bosa (2:15)

If you remember back to last quarter, spooked investors a little bit when Sundar Pichai, Alphabet CEO, says things like they can't be spending enough. Investors increasingly want to see the follow-through of that, the gains from all of this AI spending.

Carl Quintanilla (2:29)

Here to break some of that down this morning, what he calls the three key market debates going into the end of the year. Our senior markets commentator Mike Santoli is with us as well, Mike.

Mike Santoli (2:37)

Yeah, I would say the key one initially anyway is looking at what's happening in the bond market and the why of the rise in yields. Most of that seems to be tracking the better than expected performance of the US economy, but it fits in to one of the second debates or the second of the three I'm going to mention, which is to what degree the market in its recent run in terms of cyclical leadership, banks working, small caps coming off the mat, and those yields going up are pricing in an election scenario, and whether that's a reliable indicator of what the policy swing is going to mean. I think I'd point to the 2016 and 2020 elections. You both had massive rallies after the election outcomes. That was a Trump win and a Trump loss. And the difference perhaps now is in 2016, the market really wanted policies that were going to wake up an underperforming economy, low inflation, low growth, high nominal GDP policies were what the market craved. Not clear. That's where we are right now. Obviously, we have coming off a high growth, high inflation scenario. And then in 2020, what the market was really betting on was massive fiscal response, right? It was going to be this big Keynesian push. Also not really what we want right now. So I think there's an interesting question as to how the market metabolizes whatever does happen next week. And then beyond that, whatever this tension release that might come just because the election is passed, is whether we should start to be kind of pairing back our expectations of in general what the market can deliver in the way of returns. That debate was really crystallized last week with Goldman Sachs talking about it's an expensive concentrated market. They say 3% annualized over 10 years. Who knows if that's right? But it sort of gets at this idea that the market is more expensive than it was and it builds in a lot of good stuff. And we have a very low initial dividend yield, by the way, as well.