10AM Hour: Jobs Report Analysis, An AI Bull-Bear Debate, & Chip Volatility 7/2/26

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Carl Quintanilla (1:05)

Thursday morning, welcome to Squawk on the Street. I'm Carl Quintanilla with Leslie Picker, Mike Santoli here at Post 9 of the New York Stock Exchange. Today's show, Goldman's first take on Jobs. We'll talk to Jan Hatzius at Post 9 about his read on this morning's Soft Print. We'll talk to one expert who says OpenAI and Anthropica are running, quote, horribly unprofitable and unsustainable businesses, as OpenAI reportedly weighs a 5% stake for the US government. And speaking of stakes, we'll tell you why your 4th of July barbecue could cost a whole lot more this year.

Leslie Picker (1:37)

Love speaking of stakes. But first, new factory orders data. Rick Santelli has that for us. Good morning, Rick.

Rick Santelli (1:44)

Good morning, Leslie. Indeed, these are May factory orders. Expecting down 2%.

Well, we have the sign, right? Not minus number, but not as bad. Minus 1.3%. That would be the lightest month over month change percentage-wise going back to last year, basically June of 2025 However, when you strip out transportation, zoom, zoom, zoom, it goes up to 1.9%.

Pretty much double expectations. 1.9 would be the strongest of the year. You're going all the way back to the first quarter of 2022 to find a stronger X transportation number. All right, durable goods. Now, this is a May final, folks, which means we take the mid-month read, we toss it for the new read. Mid-month read on the headline number of durable goods was minus 4.5. It remains at minus 4.5, which is the weakest in basically a year, June of last year. But once again, when you strip out transportation, much better, up 1.4, that replaces the 1.3 of last month. Now, capital good orders, non-defense, XR, a proxy for capital investment, up 1.4 percent, that replaces 1.6 percent, but it's still a pretty good number. And finally, if we go from orders to shipments, the up 3 tenths now becomes up 1 tenth. On the shipments, that would basically equate to the second weakest number of the year outside of January when it was unchanged. We see that yields on the week are down, but down more in the short end, down six basis points at 412 in a two-year, and then at 447 in a ten-year, were virtually unchanged, but both maturities are up on the week, up three on twos, up ten on tens, and we want to continue to monitor how today the curve is steepening as yields in the shorter maturities are much lower than the relative value of the longer maturities, and that really is a change from taking out all of the easing which flattened the yield curve. Carl, back to you.

Carl Quintanilla (3:52)

Rick, have a good long weekend. Happy fourth, Rick Santelli. Any time, we mentioned not just the macro data today, but sort of the volatility in South Korea overnight.

Mike, as we continue to sort of get your temperature on this semi versus software dynamic.

Michael Santoli (4:06)

Yeah, the South Korea action overnight felt like kind of pricing in what we did yesterday. So that's sort of how the volatility and this kind of sort of violent rotations have been passing around the world. Today it's a little more in gear. You have the majority of stocks up and you also have the indexes up. That's actually been unusual recently. We're on an eight-day streak when the S&P 500 index moves opposite in the direction of its own breath. Also eight days this year when the NASDAQ 100 was down at least 1% in a day and the majority of all stocks were up. Okay, so what does that tell you? Well, it tells you the math is it's a very concentrated market. We overplayed the AI hardware trade probably. If you take a look at NASDAQ 100 versus the equal-weighted S&P, it tells the story the market's been trying to come together.