Inflation and the Fed, Trump's Tariff Threats and Economic Team Picks, A Downer for Dell 11/27/24

David Faber (0:00)

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

Carl Quintanilla (0:06)

Good Wednesday morning. Welcome to Squawk on the Street. I'm Carl Quintanilla with David Faber, Sara Eisen at Post 9 of the New York Stock Exchange. Cramer has the morning off. Some mild weakness in futures after some disappointing tech earnings last night, a jam packed macro calendar today, and some new economic staff announcements from the transition. Markets, of course, close tomorrow for Thanksgiving, and we'll get a half day on Friday. Our roadmap begins with the Fed's preferred inflation gauge. The street bracing for October PCE due out this morning.

David Faber (0:32)

Also, we had President-elect Trump rounding out his economic team, naming his choice to lead the National Economic Council, as well as his pick for US. Trade Representative.

Sara Eisen (0:41)

And on the tech earnings and AI front, shares of Dell take a hit after posting a revenue miss and issuing weaker than expected guidance.

Carl Quintanilla (0:49)

We'll begin with the markets and this record run ahead of October PCE. Of course, another important number as we wait for the December Fed decision. Got some numbers, though, for the quarter. Core PCE at 2.1. Course claims another six month low. Durables came in a little bit light. It's going to be busy today, Sara.

Sara Eisen (1:07)

I'm just thinking about David saying he's not thankful for me.

David Faber (1:10)

I said that off camera.

Sara Eisen (1:13)

It stayed with me.

David Faber (1:14)

I'm sorry. I didn't mean to start you off like that. I was just kidding.

Sara Eisen (1:17)

I know. So GDP, not bad. I mean, third quarter, 2.8 percent is pretty decent. That's where we expected it to be. This is the second look at the third quarter. But a nice surprise on the core PCE, which comes out on a quarterly basis in GDP. We're going to get the October read at 10 a.m., which is exciting. We never get the big numbers at 10 a.m. So we get the economic data because of the messed up Thanksgiving week. But a good surprise there on that 2.1 percent core PCE for the quarter, especially if you're one of those that have been worried about stickier inflation. As far as jobless claims, also good. Not really seeing evidence of stress or layoffs. 213 for the week, lowest since late April, as you mentioned. Carl, continuing claims, a little bit elevated, and that just reflects that it's harder once you're on these jobless claims to go back into the workforce and get a job. But you're really not seeing the layoffs. And I would just add also, good signs on the job front. Consumer confidence, remember, came in yesterday a little bit better than expected. And the quote from Dana Peterson, the economist there at the Conference Board, did mention that the improved confidence was because of the labor market, better conditions in the labor market. So that might bode well for next Friday's big jobs report. That's when we're going to get the November payrolls report. And it might be as important, if not more important, in determining what the Fed does in its December meeting to today's PCE number. Remember, we're going to get PCE today. We'll get CPI and jobs all before that Fed meeting, which the market is sort of wavering between whether they'll cut rates again.

Minutes weren't clear. They didn't give us a strong hint.

David Faber (2:54)

I have a feeling we're going to have this discussion many times in the weeks and months ahead. And then as we obviously start to digest the possibility of tariffs and what that's going to mean. Yeah, what are we being told by the by the futures in terms of I'm talking here on the Treasury side, in terms of potential cuts now and when they're going to come?

Sara Eisen (3:12)

Yeah, we're sort of like 50 percent. I mean, most people a little bit more than that, chances for December. Most economists and trading notes that I read expect a 25 basis point cut in December and then a pause in January. But it's not a done deal. And the messaging from some of the Fed members have been a little bit mixed. You know, one, we got the minutes from the last Fed meeting yesterday. It's a little bit stale. But one point that people are paying attention to have to do with the fact that they see this balance being pretty equal between inflation risk and employment risk. The employment risk of a softer jobs market, they did say has decreased because we're just getting good signs on the labor market. So that might point them to what they're calling gradual, how the market interprets it as a pause. December, January, don't know exactly what that's going to come. But the ultimate repricing of the curve is that we're going to get fewer cuts than initially thought into next year. And that's not even factoring in necessarily Trump policies because the Fed doesn't want to preempt any of that.