11AM Hour: Morgan Stanley CEO, Merck CEO & Former NEC Director Gary Cohn 10/14/26

SPEAKER_1 (0:00)

Building a portfolio with Fidelity Basket Portfolios is kind of like making a sandwich. It's as simple as picking your stocks and ETFs, sort of like your meats and other topics, and managing it as one big, juicy investment.

Mm, now that's pretty good. Learn more at fidelity.com/baskets. Investing involves risks, including risk of loss. Fidelity Workers Services LLC, member NYSC SIPC.

SPEAKER_2 (0:30)

This monday.com ad was created by a team of people and AI agents. Reese, our content agent, wrote the copy based on our best practices, like mentioning monday.com three times. That was the second. Johnny, our coordination agent, built the timeline and kept everyone aligned. Olivia, our human creative director, stayed in the loop, because agents are great, but they don't always know when a joke lands. She had one note, tell listeners it only takes minutes to build an agent. So minutes. Create your own AI agent today on monday.com.

Carl Quintanilla (1:00)

Good Wednesday morning. Welcome to Squawk on the Street. I'm Carl Quintanilla with Mike Santoli here at Post 9 of the New York Stock Exchange. Sara Eisen is off today. Big show ahead. September CPI runs a bit hot, highest since May. We're going to break down the print and the implications for the Fed with former NEC Director Gary Cohn.

Mike Santoli (1:15)

Plus Morgan Stanley topping estimates with equities trading revenue beating by more than $900 million. CEO Ted Pick joins us exclusively to discuss the quarter and his outlook.

Carl Quintanilla (1:25)

And we'll be joined exclusively by Merck's Chief Robert Davis to talk about the Pharma Giants' newest R&D facility, its product pipeline and the role of AI and robotics in drug development. Not a whole lot working internally this morning. Got several sectors down a full percent. Financials, utilities, industrials, discretionary, IT, materials. It's really about health care, staples and energy today, Mike.

Mike Santoli (1:49)

Yeah, market trying to rotate away from the weakness.

Obviously, there's some slippage in that process. The jolt to the bond market from the warmer CPI number, something you can't fully sidestep given that you still have this weakness in memory in the AI hardware food chain. So all that working together. What does go up? Apple. Apple is anti-Semis. It works defensively within tech. It's doing its best to limit the damage today. But you mentioned big cap health care too. We now have some suspense two weeks ahead of a Fed meeting about what maybe the next move is going to be. I don't think anyone necessarily thinks it's absolutely going to happen that we get a rate hike. We'll talk more about it. But it's a little more uncertainty about the path of inflation than we thought we had a couple of days ago.

Carl Quintanilla (2:32)

Yeah, we're not done. PPI, retail sales are still on the way.

Mike Santoli (2:35)

That's right. There is more to hear from there before we have to make that call.

Carl Quintanilla (2:39)

We did get a chance to hear from multiple banks yesterday, both in their earnings calls and on this program. Executives painted a similar picture of a healthy consumer supported by a strong labor market despite higher inflation. Take a listen.

SPEAKER_6 (2:51)

Despite these cross currents, the health of the underlying US economy has remained solid with strong corporate earnings growth, GDP growth of 2.2% and a very resilient labor market.

SPEAKER_7 (3:04)

Fundamentally, the picture is pretty simple. The consumer is currently very healthy, primarily because of a healthy labor market.

SPEAKER_8 (3:11)

In the US., whilst much has been made of the AI boom, the consumer is still driving the march of the growth, the labor market is stable, and companies remain active. Our near-term economic outlook remains positive.

SPEAKER_9 (3:27)

Both consumer and businesses are doing really well. On the consumer side, the fact that people have jobs and unemployment is really low still is a great sign. You're seeing wages keep up with inflation.

Carl Quintanilla (3:39)

For his view on the economy following that hotter than expected CPI, let's bring in the former director of the National Economic Council during President Trump's first term. It's Gary Cohn, Gary's also former president of Goldman Sachs and current vice chair at IBM. It's always good to have you in, G.

Gary Cohn (3:52)

Carl, thanks for having me.

Carl Quintanilla (3:54)

So the lead of the journal is rates spoiling the party for the banks. They did try to make a push going into earnings. That's getting unwound. What's your view on what's happening at the minute?

Gary Cohn (4:04)

Well, look, you can't ignore the rate picture. We talk about it all the time. We're talking about the Fed meeting in two weeks.