10AM Hour: Stocks Sink as Oil Spikes, Risks for the AI Boom, Qualcomm Inks Data Center Deal with Amazon 9/8/26

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Sara Eisen (1:06)

Good Tuesday morning. Welcome to Squawk on the Street. I'm Sara Eisen with Carl Quintanilla. We are live at post-9 of the New York Stock Exchange. David Faber is on assignment. Stocks are under some pressure here to start the week. Holiday shortened trading week as oil prices jump. We'll talk to former Defense Secretary Mark Esper about the latest escalation in the Middle East. Plus, Rockefeller's Ruchir Sharma has a warning about the one factor he says could derail the AI boom. He's going to join us to discuss. And we'll get to the news sending Qualcomm shares higher this morning, though well off its best levels.

So the big week ahead, Carl, will be defined, I think, by inflation data when it comes to major event catalysts for the economy, the bond market, the stock market. We've got CPI report coming at the end of the week. And then the PPI report is before it. It's the Wholesale Inflation Report. Why is it so important? Well, Fed's in blackout period. They're not going to be talking this week ahead of their September 16th meeting, which a lot of people think is still a toss-up about whether they'll raise rates. Bond market's now pricing at about a 60% chance after that hawkish Jackson Hole speech by the Fed chairman that they will raise interest rates. But let's see what happens with consumer prices. We have some hints, right? In the surveys, the gas prices, the big headline over the weekend is that gas prices were $4.15 a gallon on Labor Day. Busy travel day for America, and that is actually a record high for Labor Day. We have not actually seen gas prices go above $4 a gallon on a Labor Day before. So that's some sticker shock and a psychological impact there.

However, I was going through a lot of the charts this morning and some of the data and research and the theme of it has been market and economic resilience to higher oil prices, to geopolitical shocks. I mean, look, that's not new, but there are some interesting charts put out about that fact. Goldman Sachs, for instance, took a look at the inventories, the landed inventories. So that's inventories not just at sea, but inventories at land. They actually say that it's not all that bad.

In fact, there's a lot here, but what you need to know ultimately is that we're well above the levels that would be a minimum operational storage level. That would be about 4.2 billion. What they say were global landed oil stocks basically have come down from 9.1 billion before the war to 8.6 billion barrels now. So that's good. It's still above that minimum basically operational threshold. That's one good sign and I'll just pair that, Carl, with what the Bank of America chart that showed a lot of the oils now being shipped from UAE. They've ramped it up from Saudi, which is why we're concerned about some of these reports around the Houthis attacking the Saudis. But basically, they look at some of the alternatives and show that those exports have ramped out, 60 percent were at basically the rising hormone crude flows coupled with other directions, covered up to 60 percent of pre-war crude flows in July. Although these numbers have come down since and we'll see what they look at now. But it's not like, I mean, we have this partial shutdown, right, with Hormuz, where it's still not a lot of oils flowing from there. But important to remember, there's alternatives out there. And so maybe this all explains some of the resilience in the market.

Carl Quintanilla (4:25)

Yeah, I mean, Goldman, B of A, UBS all raised their Brent forecast for year end today. And we know it's not about crude. It's about distillates. It's about diesel. We're probably going to hit $7.