Blue Chips Lead Earnings Parade, China Stimulus and the U.S. Election, Trump Triple Jump 10/29/24

David Faber (0:00)

Market insight and analysis. You're listening to the opening bell of CNBC's Squawk on the Street.

Carl Quintanilla (0:11)

Good Tuesday morning, welcome to Squawk on the Street. I'm Carl Quintanilla with Jim Cramer, David Faber at Post 9 of the New York Stock Exchange. Futures under some slight pressure as the 10-year climbs to 432, highest since July. Earnings are at full boil. Pfizer, Royal Caribbean, SoFi, PayPal, all guiding above. Our roadmap begins with this parade of blue chips earnings. The McDonald's comps fall more than expected. Pfizer does hike guidance, and Ford cuts to the low end.

David Faber (0:36)

Plus, China reportedly, considering a new $1.4 trillion fiscal stimulus package with the US election, of course, being a key driver. And as subscribers flee and staffers resign, billionaire Jeff Bezos defends his decision for a non-endorsement at the Washington Post.

Carl Quintanilla (0:56)

Let's begin with McDonald's, a beat on both the top and the bottom line. Got a slight miss on comps moments ago on the earnings call, CEO Chris Kamchinsky. It did address the E coli outbreak and its impact on the quarter.

Chris Kamchinsky (1:09)

I want to address the recent E coli cases related to slivered onions in a handful of US states. While the situation appears to be contained and though it didn't affect Q3 numbers, it's certainly an important development, which I know is on many of your minds. For over 70 years, McDonald's commitment to food safety has been uncompromising. I'm relieved that this situation appears to be contained and I remain confident in the safety of eating at McDonald's. Let's turn now to the update on our performance in Q3.

On our last call, we shared the QSR sector had meaningfully slowed in many of our markets with industry traffic declines in several major markets, and that consumers, especially those in the low income category, were choosing to eat at home more often. This trend continued in the third quarter. QSR traffic has remained pressure, reflecting industry-wide challenges. And while we anticipated a challenging environment in 2024, our performance so far this year has fallen short of our expectations.

Carl Quintanilla (2:19)

Even with the value dynamic, Jim, traffic is still negative, and international also was a miss.

Jim Cramer (2:25)

It's really interesting that this stock held in there, and actually was up dramatically before, remember something in the low 300s when this outbreak occurred. It was all just a belief that the $5 was really putting in a floor. And it turned out to be a floor that $5 was more anecdotally good than empirically good, and international was weak. And I come back and I think the key thing, I think Chris does a very, very good job. They've handled this, you call it much better than the government has allowed him. The government has not helped them that much. But David, throughout this period that we're getting, in the last three, four days, whether it be D. Horton, D. Horton is, that's Ford and Tassler Homes, that's Starter Homes, McDonald's, so-called Starter Food, we're discovering that people just say, you know what? There's really been ridiculous amount of inflation. And I think that's the zeitgeist again. We're back in Tarja with like, there's been too much inflation. And so there's this kind of, well, let's just do it either at home.

Wealthier people are-

David Faber (3:24)

But there hasn't been inflation any more than there was last quarter at McDonald's. I mean, McDonald's, so I don't understand.

Jim Cramer (3:29)

But you know how yesterday, Carl, I posited that it was something hard to understand. I was immediately ridiculed by my partner. I'm positing it's harder to understand. And you can ridicule me all you want.

David Faber (3:38)

Well, it may just reflect the weakening to a certain extent of the consumer.

Jim Cramer (3:42)

But no, it's not.

David Faber (3:43)

That's the margin.

Jim Cramer (3:44)

I don't think, yes, that could be. But I think the consumers are still fed up because they've got the sticker shock for the rest of me.

David Faber (3:52)

They weren't fed up last quarter. Now they're fed up this quarter.

Jim Cramer (3:54)

I think they thought the things would come down.

David Faber (3:56)

But they have come down. Am I wrong?

Carl Quintanilla (4:00)

Half of the CPI food basket is in deflation.

Jim Cramer (4:03)

But you go to, okay, maybe, let's look at it this way. You go to Walmart. I was in Costco last weekend. You go to Walmart, not just because of the samples, all right? You go to Walmart, you go to Costco. Amazon, but Walmart and Costco, food is so cheap. And those companies are, they have done more to fight inflation than any other companies on earth. But they also make it so like, you know what? I know how to cook. I can cook. I don't need to buy their hamburgers. I don't need to get fat on their food. I can have thin food. I am telling you that it wasn't just that these guys raised price, but Costco and Walmart have held the line and they've done a remarkable job and the stocks are saying the same thing.