10AM Hour: Mastercard CEO, Ferrari’s First Fully Electric Model, Pope Leo’s AI Warning 5/26/26

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Sara Eisen (1:05)

Good Tuesday morning, welcome to Squawk on the Street. I'm Sara Eisen with Carl Quintanilla and David Faber. We are live at Post 9 of the New York Stock Exchange. We've got a big interview with the CEO of Mastercard, who is here at the New York Stock Exchange after ringing the opening bell, to celebrate the 20th anniversary of the company's listing. We'll talk about the consumer, inflation and much more. Plus, Anthropic investor Byron Dieter with us as the Pope raises concerns about AI, cautioning against the construction of a modern day Tower of Babel.

Details on the EV launch of sending shares of Ferrari in reverse this morning as well. We'll get to all of that.

Carl Quintanilla (1:41)

Going to be a busy week for data. Let's get some conference board with Rick Santelli. Morning, Rick.

Rick Santelli (1:46)

Yeah, it's going to be a busy week. First one to be spending later in the week. These are confidence numbers from the conference board, May.

93.1 is the headline, much better than the 92 expected, and a positive revision in the rear view mirror, which pushed up 92.8 up to 93.8, which means that even though 93.1, the current read is better than expected, it is now a little bit less than our last month at 93.8. That's the highest read of the year, the revision last month. And if we look at the present situation, exactly the opposite, a little bit light here at 121.2, that will be the lightest since Feb of this year, when it was 118 and change. And finally on expectations, very strong, 74.4, that would be the new high water mark of the year.

So that takes us to Dease of last year, and also a positive revision from last month, 72.2 to 73.4.

All three metrics here, Carl, had positive revisions from last month, and that is a good thing, as confidence levels seem to rebound, and now are maybe correlating a little bit more to the level of equities, which is historically where it's always kind of correlated. Ultimately, what's going on at the gas pump, of course, taking a little confidence away from many Americans. Interest rates, they're falling rather dramatically following oil, even though oil is pushing up a little bit here. At 406 in a 10-year or in a two-year, excuse me, we're down six half-dozen basis points and a bit under 4.5% for a 10, down seven basis points. Sara, back to you.

Sara Eisen (3:30)

Okay, thank you, Rick Santelli. I'll pick it up right there because we do get that important inflation reading later on Thursday. This is Fed Chair Warsh's first week basically in the job. And nobody really knows where his head is at when it comes to rates. We know before the war, he was leaning toward lower rates and tightening the balance sheet. Unclear where is he stands right now. Just to give you a sense of the inflation problem that has developed as a result of the higher oil prices. PCE, which is the Fed's preferred gauge, they want to see it around 2%.

It is expected to move even higher this month, 3.8%. Year over year, so that's farther away from the 2% level. Even if you strip out food and energy and look at core PCE, we are expecting prices to be at the highest level since back in 2023 That's what we saw with consumer prices in the past month's reading as well. The question is how much of it is temporary because of the higher oil price, which is filtering through. I'll show you that the 10-year break even, the inflation expectations that Fed watchers look at and trade, come down from the high levels of where we've been in recent weeks. So that's a good sign. The pressure is easing a little bit. As Rick mentioned, we're seeing that happen in yields as well, come off the highs of the cycle that we've seen here in the last few weeks or so. And then as far as the odds, guys, 64 percent odds that the Fed actually titans hikes rates by December. But again, we haven't heard from Warsh yet. His first meeting will be June 16th, 17th, and we don't know if he's going to push for a tighter policy via the balance sheet, which is something he's pushed for before and maybe a hold on rates at this point. We do know from the minutes, the meeting notes of the last meeting, that there's very little appetite at the Fed to cut rates, which they had been in the cutting mode. And there's consideration that they might need to hike if these prices go higher.