Bears Tighten Grip, Apple and the Mega-Tech Correction, Bloomin' Activism 8/18/23

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Carl Quintanilla (0:31)

Market moving insight and analysis. Join Jim Cramer, David Faber and me, Carl Quintanilla on the opening bell hour of CNBC Squawk on the Street.

Good Friday morning. Welcome to Squawk on the Street. I'm Carl Quintanilla with Sara Eisen, Mike Santoli at Post 9 of the New York Stock Exchange. David and Jim have the morning off. Bulls may look forward to putting this tough week to bed.

Futures down, S&P set for three weeks lower, longer streak since February, even with this slight bit in bonds. Got some options expiration today as well. Our roadmap begins with the markets, though, extending this week's losses after major indices closing below their respective 50-day moving averages.

Sara Eisen (1:06)

Also ahead, the mega cap tech correction led by Apple, this month's worst performer on the Dow.

Plus, activism in the restaurant sector, outback steakhouse parent blooming brands up sharply after Starboard Value discloses a stake in the company. We've got more details.

Carl Quintanilla (1:22)

Let's begin with the markets extending this week's losses. Not a lot going right. And today, Mike, a lot of it surrounds China.

And worries about not just weak growth, but the debt burden as well.

Mike Santoli (1:32)

You wouldn't say it's a new factor, but it's one that's been on the list of worries. Now it's kind of bold and italics. And I think you have one of these situations where once you have this pretty sharp break in momentum to the upside of several weeks ago, some breakdowns in the longer term trend, some concerns about valuation that were always there that are being exacerbated. And then why is the yield become unanchored?

Treasury yields and even global yields. So all that stuff in the mix. And then you have the related concern of, oh, what stress points might we see emerge out of that? So all that's in the mix. I do think also yesterday with the yields making those new kind of 15 year highs, you started to see the impact on consumer cyclical areas. So housing stocks had been very strong, took a break. Other consumer discretionary as well, which says the people are worrying that it's gonna be a little bit too much for the economy if yields continue on that path. What does that mean? It means higher yields can take care of themselves by creating buyers and bonds, which now have good 2% real inflation adjusted yields to capture at the long end if they dare.

Sara Eisen (2:40)

You know, the story of the week, no question, was the rise in bond yields. And the fact that that spooked equity investors and had ripple effects all over the world. What's interesting about this backup in yields that we saw is it hasn't been accompanied by rising inflation expectations, at least if you look at some of the market rates, it hasn't been accompanied by rising expectations that the Federal Reserve will raise rates, at least if you look at the Fed funds futures market, September still priced under 20% chance that they go and November's a little bit higher than that in the 30% range. But it's not like we've seen a spike in expectations. I just pointed out because it's interesting because a lot of the narrative as well, the people are expecting inflation to rear its ugly head, people are expecting the Fed to continue to raise rates.

Instead, the commentary is around a stronger economy. And that's really been the story this week. Retail sales backed up by housing starts and industrial production. The minutes confirm that the Federal Reserve sort of might see this strong data as a sign that inflation is gonna pick back up and they're gonna remain hawkish. So I would offer that the explanation here is strong economy. That's a good thing. And that rates will have to stay higher. In other words, that rate cut that everybody's trying to pencil in and Goldman thinks is coming in the first half of next year and so does the market, will be pushed farther. And I think that leading up to Jackson Hole next week where the Federal Reserve chair, Jay Powell, gives his big speech could be what to watch.

How he portrays the strong data we've seen so far since the minutes, because the minutes were a few weeks old and since then the data's coming strong.