Nvidia and a New Market Week, Commerce. Sec. in China, 3M Jumps On Settlement Reports 8/28/23

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Carl Quintanilla (0:31)

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. At post nine of the New York Stock Exchange, Cramer has the morning off. Future steady as the bulls finally put together a winning week on the S&P.

EcoData is gonna dominate this week. Joltz tomorrow, jobs number on Friday. Two year does hit five one, that's almost a two month high. A roadmap begins with Commerce Secretary Raimondo in Beijing today telling the Chinese it is quote, profoundly important for the two countries to have a stable economic relationship.

David Faber (1:08)

Plus 3M is one of the biggest gainers on the S&P this morning. The company reportedly agreeing to pay about five and a half billion dollars. It would settle those cases over defective earplugs sold to the US military.

And we will have the latest around M&A. As the FTC suspends that challenge to block Amgen's $27 billion deal for Horizon Therapeutics. We'll have a lot more on that and what it means, Carl, in just a moment.

Carl Quintanilla (1:33)

Let's kick off the markets though with a new week. Action on Friday actually coming out of Powell's speech. Not too terrible. Lot of discussion on Friday, David, about optionality, balance, something for everyone. But on the dovish side, talking about some of the lagged effects of prior hikes that maybe haven't hit the economy yet.

David Faber (1:53)

Yeah, I mean, reading all the commentary, I'm not sure that I understand anything more than I did before Jackson Hole in some way in terms of what it truly means for the movement of interest rates. But you can see a positive response this morning thus far before we get started with trading. About 29 minutes from now, Carl.

You know, in my world, a lot of talk about the lack of response of that Nvidia quarter. Not necessarily Jackson Hole as much as in terms of market action. What does it mean when it not just exceeds, but greatly exceeds the already dramatically improved expectations and guidance, and yet the stock did not really respond in a positive way?

Carl Quintanilla (2:31)

Yeah, Mike Wilson gave a interview on Friday, Morgan Stanley, who's not been constructive on the market, who says that markets top on good news. And I can't think of any better news than what we got from that company.

Today, Goldman's desk note kind of points out, all right, stocks not going up on good news might be troublesome for bulls. On the other hand, there's enough hand-ringing about China, about payments, about specialty retail that maybe the Tina effect, there is no alternative effect kind of returns for tech.

David Faber (3:03)

We'll see. Well, yeah, we'll see. I mean, when you have over 5% in the two-year, you also do wonder, although again, we've been dealing with a higher rate regime for some time, but it does sort of, when the risk-free rate is available at that level, it is that debate yet again, in terms of how much of a bid there will continue to be for equities in a market environment like that.

And as for, you know, again, the response in the treasury market, we can see right here in terms of after Jackson Hole now, one year you'll briefly hit a high of let's call it 5.5, two year again, 5.106. That's the highest level since July 6th. Ten year though, come down a bit, Carl. So the longer end sort of calming down a bit after hitting some recent highs last week.

Carl Quintanilla (3:46)

Yeah. JP Morgan note this morning with Jackson Hole behind us. Where do yields go from here?

Over the next month, we do see yields moving lower.

This view seems to be driven by a series of data prints that are disinflationary, both from the labor markets and from official inflation data. Of course, we'll see what Joltz brings us tomorrow. The jobs number on Friday, David, estimates are in the 170 range, which would put the three-month average at about a two-year low, going back to the beginning of 2021 And that's kind of, those are the incremental steps you would imagine the FOMC is going to want to see.