10AM Hour: Berkshire’s Alphabet Stake, Real Estate Execs React to NYC Pied-à-Terre Tax, Ferrari EV Sets Auction Record 8/17/26

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Good Monday morning.

Carl Quintanilla (0:57)

Welcome to Squawk on the Street. I'm Carl Quintanilla with Leslie Picker and Mike Santoli live at Post 9 of the New York Stock Exchange. Sara Eisen and David Faber are off. Stocks mixed on this Monday as the S&P comes off three weeks of gains. We're going to talk to an expert who says the rally has a lot more room to run. Might push the S&P past 9K.

Berkshire upping its stake in Alphabet in a big way in Q2. Now its third largest position. We're going to take a look at that decision. And the CEO of Brown Harris Stevens will tell us why.

She says, the Piano Tear Tax in New York City already having a chilling effect on its real estate market.

Leslie Picker (1:30)

And speaking of real estate, homebuilder sentiment just crossed the tape. Rick Santelli has that for us. Good morning, Rick.

Rick Santelli (1:37)

Good morning indeed. This is the August Read on National Association Homebuilders Housing Market Index.

Especially expecting a read under 34, it comes in stronger than expected at 35 Now, the low reads of the year thus far are 34 on several different occasions. So this is just a smidge better. And the comp goes back to well just June when we were at 36 But there's something interesting about this number. This is the 16th consecutive month that the reading has come in under 40 That hasn't happened since the aftermath of the credit crisis in 2012 So we want to pay particularly close attention to this variable. And the reason it's so depressed is, well, mortgage rates are high. Affordability is a huge issue. And the K-shaped economy, we have the lower income still preferring to multi-dwelling, which has been a bit stronger in things like starts. But we see high-end homes and high earners seem to be paying cash and moving that high-end market a bit. But in total, still a depressed figure, as I said, 16th month under 40 Mike, back to you.

Mike Santoli (2:49)

Rick, thanks so much.

We were going to dig in a little more to this, the market here and kind of the setup for the week. I think you have to say we got 12 days in which the S&P went up 6 percent, feeding off of a bunch of different channels of relief. Obviously, we stopped punishing the big AI spenders. Semi's pullback turned into a pretty good rebound because that disorderly selling ended. And then, you know, reduce Fed rate hike expectations. I think now we're at the point where does relief transition into belief that this is sustainable. In particular, the earnings bonanza that we've seen. People are celebrating it. I understand it feels really virtuous when we see the stock market go up and earnings go up more. It feels like the fundamentals are in charge. I do think that we have to struggle though with some of the elements of this earnings growth, whether it's a pull forward of longer term AI demand that really reflects continued capital raising commitments down the road, of course, the Wall Street Journal with a lot on that. You got some fragile charts too, in some of the recent beneficiaries like Google, Metta, things like that. They're just sort of perhaps not yet ready to start to take the charge and lead. And then you have this time of year where we have room to re-risk further, I think. We did get exposures down after July. You probably do have some room before you get kind of overbought and overexcited. But VIX was below 15 It's now just clicking to 15 And then the valuation picture is really fascinating because earnings have been growing faster than the index itself. The S&P multiple has been compressed down from 23 last year to 20 now.

Arguably, we've seen the peak in valuation, I think, because that valuation was sort of anticipating this earnings acceleration, perhaps, got rates doing what they're doing. And then look at industrials. That's forward PE of industrials within the S&P compared to the S&P itself. Way more expensive than tech, way more expensive than the overall market. So we've just migrated some of the, I would argue, high expectations into that AI-adjacent sector.