11AM Hour: TD Bank's Jeff Solomon, Novartis Shares Plunge & Oil Prices on the Rise 9/8/26

Sara Eisen (0:06)

Good Tuesday morning again, welcome to Squawk on the Street. I'm Sara Eisen with Carl Quintanilla, live from Post 9 of the New York Stock Exchange. Today, TD Bank's Jeff Solomon back with us, why he says US economic resilience, driven by AI investment, is the biggest driver of the market right now.

Carl Quintanilla (0:21)

Oil prices on the rise after Iran's Houthi allies attacked multiple Saudi energy facilities. B of A's head of commodities research, Francisco Blanch will join us. Weiss still says the market could see a swift reversal.

Sara Eisen (0:33)

Plus sounding the alarm, why OpenAI's chief scientist is warning that no one is prepared for the consequences of AI. We'll discuss with Citigroup's head of artificial intelligence investment research, Heath Terry.

Carl Quintanilla (0:45)

Market continues to bounce around in this say 100 point range here on the S&P, just a shade below 7700, yields backing off a little bit from the morning highs. Sector-wise, got some strength and energy, obviously, utilities and then some weakness today in financials down a full percent. Let's bring some breaking news to you out of the New York Fed. Steve Leesman's got it. Morning, Steve.

Steve Leesman (1:07)

Good morning, Carl. The New York Fed Survey of Consumer Expectations for the month of September saying inflation expectations were largely unchanged, but remaining at that elevated level. Take a look at the numbers. The one year ahead expectations 3.6 percent unchanged. Elevated since the war with Iran, though.

Three year, 3.2 percent. That was down a tick. And the five year, 3 percent unchanged. That's been unchanged since October, essentially. New York Fed saying inflation expectations rose for gas. They rose for food, medical care and rent. Now, on the unemployment expectations front, expectations for unemployment were up at 1.6 percentage points. That's the highest reading since April 2020 at odds with the Strong Friday jobs report we got. The increase was broad-based across age, education and income. The probability of losing a job, however, declined 0.4 percentage points to 13.8. That's the lowest reading since February 2026 Still elevated, though, and has been since 2025 or the beginning of 2025 The probability of finding a job declining 0.8 percentage points to 45.4 percent, and a heads up. This time tomorrow, we should have the amount of bonds that Treasury will buy back through the enhanced program announced last month. Treasury is saying it would buy at least 4 billion of off-the-run securities up from 2 billion. But Treasury Secretary Scott Besson is saying on our air, it could be larger than the minimum, and CNBC reporting that the government could use the Treasury general account or its checking account to make these purchases. Morgan Stanley is saying in a report with a modernization of Treasury's cash balance policy, that is, using the TGA, we think it ultimately could provide scope for 80 to 200 billion of cash to fund buybacks over time.

Morgan sees as much as 10 billion as the upper end of the operation this week. Others have penciled in 5 to 6 billion dollars. Here's the look at the 10-year real quick. Yields have marched higher since the announcement. You can see there. The question is, how big a surprise does Besson have in store for the markets?

Martin Tobias from Morgan tells me he thinks the buyback could be around 8 billion dollars as large as that, but said the real effect on long end yields could only happen if Treasury decides to issue fewer long-term securities paying for them by issuing bills. Guys?

Sara Eisen (3:23)

Yeah, I guess when the word surprise, Steve, is it surprised, I guess, if it's bigger than expected or smaller than expected with some of those numbers that you threw out there. But in the scope of things, I think the bigger question is, well, will it ultimately work? Will it put a lid on yields in the near term?

Steve Leesman (3:43)

Yeah. On the one hand, Sara, you can see that yields are actually higher by, I don't know, 15 or 13 basis points since the announcement, but you can't know what the counterfactual would be. Would they indeed be higher? Here's a little something to watch out for tomorrow. The Treasury could announce a big number of, say, eight billion, but it might only take up a smaller amount of that depending upon the offers.

Look, I mean, to the Treasury's defense, they're trying to keep the cost of funding the government down to a minimum. On the other side, there's criticism that it's intervening in the market, and we'll see who wins this race beginning this week.

Sara Eisen (4:19)

Yeah, I mean, that is a good point. It is something that Secretary Besson sent to us last week, which is, you don't know where it would have been if we hadn't announced that intervention, you know, on the point that yields are higher. Steve, we'll see what happens. Thank you, Steve Leesman. For more on the overall market, let's bring in TD Bank US. Vice Chair, Jeffrey Solomon, here with us at Post9. Jeff, welcome back. It's good to have you.