10AM Hour: Bank of America CEO on Earnings, FBI Arrests Saudi OpenAI Employee, Meta’s Muse Boost 10/14/26

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Carl Quintanilla (0:53)

Good Wednesday morning. Welcome to Squawk on the Street. I'm Carl Quintanilla with David Faber here at Post 9 of the New York Stock Exchange. Sara Eisen is off today. Stocks are mixed, yields are higher following a hotter than expected CPI print. Evercore's Julian Emanuel will join us in a moment with his reaction and why he says the S&P will end the year below current levels.

A big interview with B of A's chief Brian Moynihan. Stocks falling hard today after quarterly earnings were hit by this $1.2 billion fine from Treasury. Also ahead, Morgan Stanley's Ted Pick will join us after his bank beat estimates on the top and the bottom line. And we'll talk about the FBI's arrest of this Saudi OpenAI employee who allegedly planted a recording device in an executive conference room.

David Faber (1:36)

Let's start, though, with this morning's CPI number rising to 3.7% year over year. And of course, we are joined by Steve Leesman to help us understand what the number means and what the impact is. Steve.

Steve Leesman (1:49)

Good morning, David. Yeah, hot CPI cord number causing a rethink on the street for the outlook for the Fed. It's October meeting and that rethink is for a hike October. Odds now at 50%.

That's more than double what it was going into the number at 22% December. Now at 96%, was at 90% before the number. Here's the data coming in where we thought it was going to be on the headline, 06, leading to a year over year of 3.7. But it was the core CPI at 3 We'll talk more about that number in a second. But it had been expected to be 2 The 2.6 year over year, that's a tick higher, 2.5, bottom line going the wrong way on the Fed. How did we get there? Energy surging 9.3%, bleeding into airline fares up 1.2%.

Used cars, though, also rising, hospital services. Shelter, a big part of the reason why the core went up. It had been really favorable and helpful to the core rate. It went the other way from to 2 to 3 in the month of September. One surprising category I want to look at here, audio and video equipment, up 3.6% year over year. This is a category you can see on the left of that chart. It had been deflating until the tariffs came along. It backs up one of the Fed fears that tariffs could still be working their way into the economy and consumer prices. Also could be a factor there. The rise in memory ships could be playing a factor. Joe Busuelas from RSM writing, one can clearly observe evidence that the three shocks trade, the three shocks, trade, energy and artificial intelligence, all are combining to drive inflation higher, heading into the final three months of the year. And it could have been worse, guys. The actual core increase, let's take it out, 0.335.

That means it was really this close to rounding up to a 0.4% increase tomorrow. PPI will be the key. It's part of the PCE report. A hot report could make it difficult for the Feds to justify an October pause, guys.

Carl Quintanilla (3:46)

And then Steve will work our way to retail sales. I think it was JPM yesterday suggesting that with the energy squeeze, fading fiscal stimulus, maybe the consumer takes a quarter or two off.

Steve Leesman (3:56)

Well, we keep waiting for that, Carl. Every month I look at the retail sales report, our own CNBC and RF monitor, and I do the following exercise. Gas was up. I knew that. What happened to discretionary spending? And it has only just barely ticked off, Carl. And that could be a source of disinflation down the road if consumers find it difficult to buy things other than the essentials, you could get some disinflation there. And by the way, Carl, worth pointing out that two year is having a day to day, not on the good side up.