Iran-Israel Tensions and a Relief Rally, Goldman's Big Beat, Tesla and Apple Under Pressure 4/15/24

Carl Quintanilla (0:00)

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 Monday 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. Future's solid as global markets look for some de-escalation in the Middle East, but we're close to session highs of the morning as March retail sales crush estimates, strongest control group in over a year, 10 year for six. A roadmap begins with these geopolitical risks for stocks. Futures rallying on hopes that the conflict will not escalate further.

David Faber (0:34)

Plus, Tesla cuts reportedly set to lay off more than 10% of its staff globally. CEO Elon Musk saying the company's looking for cost reductions and increased productivity.

Sara Eisen (0:45)

And financials in focus again. Goldman Sachs topping first quarter estimates fueled by trading and investment banking.

Carl Quintanilla (0:52)

Begin by kicking off a new week for the markets. Geopolitics obviously on the front burner, guys. We're watching some of the risk premium in oil. Back below 85 Brent, I think off of 90 once again. But what an eventful weekend.

Sara Eisen (1:05)

I think some people might be surprised to come in and see oil prices lower after the events of the weekend. I'm just going through some of the research. Eurasia Group, which is a big commentator on geopolitics that Wall Street likes to read, says the size and scale of the assault by Iran is greater than Eurasia Group anticipated. But, you know, there is hope, as you say, Carl. And potentially some signs that we might have a diplomatic sort of response by this. It's certainly what the US is encouraging. Unclear what Israel is going to do. Obviously, the next few hours and days will be decisive because Wall Street's trying to figure out is there going to be an escalation of this conflict that would jeopardize oil supply, right? When it comes to Iran, one of the biggest producers, that is always the question.

And it's interesting to see oil prices down when you might think coming out of the weekend that there are at least greater odds of a bigger escalation in the conflict.

And yet...

David Faber (2:04)

If you were watching Saturday night, you certainly would not have anticipated, I think, that the futures would be looking the way they are right now.

Obviously, you might not have at that point expected that 99 plus percent of the cruise missiles, the ballistic missiles and the drones that were launched against Israel would have been intercepted. That said, to your point, Sara, the question is what is the response going to be? We don't know. We don't know. And the market seems to at least believe or hope, one would expect, that it will be a muted response of some kind, not lead to a hot war, because if that were the case, you'd probably expect to see a different picture for the market open, not to mention to your point, oil prices.

Sara Eisen (2:47)

I mean, it does come against a very different backdrop. Some are making the point, then say Ukraine on the onset of that. First of all, it's completely different conflict and war, but the backdrop is different, because that was right as the Fed was raising rates on the precipice of raising rates in one of the fastest hiking cycles in history.

And as Tom Lee, who we're gonna talk about later, a fun strap points out, and he's in the buy the dip camp, that things like the deleveraging, it was in a very different position in terms of margin debt with much higher levels then than we are now. And then you get into questions, Carl, about even if oil prices do go higher, if this gets worse, what's that gonna mean for inflation? What's that gonna mean for a Fed that we assume the next move is going to be a cut? Maybe that cut gets pushed further out. That was what last week's sell off in the market was all about. And the view is, I mean, high frequency economics published on this over the weekend, it'll affect headline inflation, but not core inflation, which is what the Fed is really looking at.

And the Fed doesn't have control over oil prices. Now you could argue doesn't have control over insurance, right, car insurance either, which is one of the culprits of these higher inflation readings, but that's one view as well.

Carl Quintanilla (3:58)

Yeah, meantime, the discussion continues about how less intensive, oil intensive, energy intensive the US economy is. Apollo with a nice chart today from Torsten Slock, once again, reiterating US is the biggest oil supplier in the world. And in fact, this Wall Street Journal poll calling the US economy the envy of the world as a lot of the forecasts get lifted. Retail sales, of course, we mentioned a moment ago, 7 tenths, Core one one, we were looking for 0.5.