Market Week and Fed Summit, Ukraine-Trump Watch, Gains for Novo Nordisk 8/18/25

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Jim Cramer (1:00)

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

Carl Quintanilla (1:08)

Good Monday morning. Welcome to Squawk on the Street. I'm Carl Quintanilla with David Faber, Mike Santoli, here at Post 9 of the New York Stock Exchange. Cramer has the morning off. Future is pretty steady, but arranging the placemats for a consequential week at Jackson Hole. Plenty of July and retail earnings and, of course, the meeting today at the White House between the president, EU leaders and Zelensky. Our roadmap begins with the Fed, though, front and center, as Powell and global central bankers head to Jackson Hole this week for their annual policy conference.

David Faber (1:34)

Also ahead, Ukraine's president and other European leaders will be at the White House today. This follows the president's meeting with Vladimir Putin on Friday and a big week for retailers, Walmart, Home Depot, Costco and Target, all amongst the names that will be reporting earnings.

Carl Quintanilla (1:51)

Let's begin with the markets, though, after a week of record highs for stocks, including one for the Dow, first one of the year on Friday. Mike, a lot of discussion over the weekend and today, not just about the percentage of companies that are beating on earnings and the way in which Q2 earnings came in double digit, but credit spreads got to go back to the late 90s to find spreads this tight.

Mike Santoli (2:11)

Oh yeah, financial conditions are pretty loose. The corporate sector is doing its part. It's interesting to have all that be the case and then we're still kind of fixated on the likelihood or prospect of a September rate cut. Though it does make sense in the abstract just because of the power of that payroll report from August 1st. Two-year note yields are down 0.2 percentage points since then and they've kind of held down there. So market's ability to kind of shrug off three really imperfect inflation reports from last week, if you really want to slice it, does show the conviction building there. And in terms of the beat rate for earnings, I think that in multiple respects, we're still feeding off of the extreme fear and mental adjustment that went on in the spring, right? During and right after Liberation Day, you got beat people panicked out of risk assets. People not only assumed it was going to be rough for corporate earnings and reduced estimates, but also kind of assumed that the sort of US exceptionalism trade was going to have to unwind. And you're just building back toward that. I mean, I think in a very important respect, we have this massive beat rate off an incredibly low bar. I mean, for the second quarter, we're still going to come in lower than we thought the second quarter was going to be at the beginning of the year.

Same thing for the full year, same thing for the third quarter. So you're kind of benefiting from over adjusting to the downside psychologically and getting scared out of stocks. And I think it also kind of counts in positioning for stocks, too. Even though people are now involved, and it's no longer the case people are fighting this rally, for the strength of the four month or five month run that we've had, and the fact that you've had low volatility and you've stuck near the highs, you would have expected institutional positioning to be a little more aggressive than it is right now. That's not saying a lot, right? It's just, oh, we could be crazier. I mean, that's kind of the bull case right now. But I do think that explains why we're here. You got a decent amount of rotation last week, even as you price it a lot of positive stuff at $64.50 on the S&P. It's a level of market seemed to really be intent on holding last week. That was Tuesday's close after the CPI report.