Inflation Cools Further, Nike Tumbles, Markets Aim for 8-Week Win Streak 12/22/23

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Jim Cramer (0:30)

It's Jim Cramer here. You're listening to the opening bell of CNBC's Squawk on the Street. Don't miss a minute of the action.

Carl Quintanilla (0:37)

A good Friday morning. Welcome to Squawk on the Street. I'm Carl Quintanilla with Scott Wapner, Leslie Picker at Post 9 of the New York Stock Exchange. Cramer and Faber have the morning off. Futures a bit mixed here as the last big data point of the year is dovish. Headline PCE drops month on month. First time in three years. Core now below the Fed's target on the six month annualized. We'll get to all of it. Our roadmap begins with inflation and Fed expectations. Core PCE prices rose less than expected. What it means for rate policy ahead.

Scott Wapner (1:03)

Plus Nike shares tumbling after slashing its sales guidance, announcing $2 billion in cost cuts and delivering its second straight quarter of worse than expected revenue.

Leslie Picker (1:12)

And shares of Bristol Myers slipping ahead of the open after announcing it agreed to buy Corona Therapeutics for $14 billion.

Carl Quintanilla (1:20)

Let's get to the markets in this reaction to PCE. People were expecting maybe a dovish number after some of the GDP data, but six month annualized is getting tossed around a lot at one eight seven. Obviously below Fed's target. We'll see. We'll talk to Lail Brainard later this morning about whether or not that's celebrating a bit too early. But the expectation is that you would get to target on a full year basis, maybe in the next few months.

Leslie Picker (1:42)

But clearly showing progress because the prior six months it was about 4.5 percent. So 4.5 percent to below 2 percent definitely shows kind of a tale of in the bifurcation of this year that we've seen.

Scott Wapner (1:55)

Kind of justifies why the market is where it is, right? Because the whole notion of this rally was based on the fact that the economy was going to hold up. Inflation was going to come down. The Fed's going to start cutting. And you don't have to. I heard one guest a few moments ago say the Fed wants to slow the economy. Well, no, it doesn't. It actually just wants to bring inflation down and would be really happy if the economy just maintained where it is now.

That's the definition of a soft landing, that they actually would pull it off. Now, I've also heard some suggest mission accomplished today. Is the Fed ready to declare that? Maybe not.

But you can't fault them if they feel close.

Leslie Picker (2:32)

Yeah, I didn't know that slowing the economy was part of the dual mandate. That's a new one. I haven't heard that.

Scott Wapner (2:37)

The triple mandate. It wasn't part of the mandate, but at least it was thought that they had to choke off demand and slow the economy to bring inflation down when, in fact, inflation has come down without choking off the economy.

Leslie Picker (2:50)

No, it's absolutely true. I think a lot of people, especially as we reflect now on the entire year, basically everybody had their base case of 2023 as we would have a recession because history tells you that if you raise interest rates, and we saw this just historic regime this year of interest rate increases, you'd have to have some kind of recession. So now you're kind of at this fork in the road where people, you know, are becoming more comfortable with the idea that, you know what, maybe this time is different. Maybe we have avoided, you know, what kind of history and precedent has told us. That said, there are some concerns out there, and this, of course, was November's reading. You've got the Red Sea that is creating some inflationary pressures or potential inflationary pressures out there, and then other dynamics too, which we just, I don't know, the mission accomplished thing, I've heard that said as well this morning on our air, and I don't know.

It's always scary to say that, especially when things can change so quickly.

Scott Wapner (3:46)

Well, because, Carl, there's still the long and variable lags, as the Fed chair himself would suggest, that no one truly knows if there's impact yet to come.