Reaction to the Fed's Pause and Rate Hike Signals, Cava CEO on IPO 6/15/23

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David Faber (0:31)

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

That is a live shot of the scene outside the New York Stock Exchange as restaurant chain Cava makes its market debut today.

Jim Cramer (0:45)

Happy Cava Day.

David Faber (0:47)

Thank you. It's a potentially major test of the IPO market. And obviously a very important day for that particular company. Nice little thing going on out there. A lot of plants, greenery. We're going to talk with the CEO later this hour. Yeah. Good Thursday morning, everybody. Welcome to Squawk on the Street. I'm David Faber with Jim Cramer. We're live from Post 9 at the New York Stock Exchange. Carl has the morning off. Let's give you a look at futures as we get ready 30 minutes from now to begin the trading day. You can see we're going to have a lower open.

And of course, a lot of that may be a result of what we heard yesterday from Fed Chair Powell. And that is where our roadmap starts with the Fed standing pat for now on interest rates, though it did signal that tightening could soon resume.

From the Fed to the consumer, new data showing retail sales grows in May. And that was something of a surprise.

And as we mentioned, Cava going public today. It, you know, Jim and I have different views of how big a test it is for the IPO market, but we'll certainly discuss that. Brett Schulman is the CEO of what is a Mediterranean fast casual chain, and he's gonna join us later right here at Post 9 to talk about this big day for his company.

Let's start with the Fed. Paused rate hikes for the first time in 15 months, but Chair Powell not ruling out more rate increases before year end.

Jerome Powell (2:10)

Nearly all committee participants expect that it will be appropriate to raise interest rates somewhat further by the end of the year. But at this meeting, considering how far and how fast we've moved, we judged it prudent to hold the target range steady, to allow the committee to assess additional information and its implications for monetary policy.

David Faber (2:31)

All right, what do you think?

Jim Cramer (2:32)

Well, I think a lot of people were trying to figure out whether we're gonna have a soft landing or a hard landing. But yesterday we discovered there's a third choice, which is that the plane is still in the air and doesn't have any intention of landing. So how do you have a soft or hard landing? And the reason is, it's because of housing.

And housing's controlled by wages. I think if you go, you wanna know the key to this, go to the Home Depot Conference Court, the full day, the analyst day, and you will hear why they have to do it. Home Depot is saying, looks, it's an incredibly inflationary time. There's inflation everywhere.

Housing, by the way, $13 trillion in value has been created. Home prices are up 40% since 2019 Everything trickles down from housing, and housing, we're going to hear from Lennar. Same thing. It is where the epicenter of inflation is, and it's rippling throughout the economy.

David Faber (3:27)

You've been saying that for quite some time.

That said, there's not that much action in housing in terms of people selling and people buying as a result of interest rates. I mean, if you have a good mortgage, for example, you are less likely to want to leave and have to assume a new mortgage at a much higher rate, aren't you?

Jim Cramer (3:42)

Well, okay, so there are literally 50% of people don't even have a mortgage, okay? Of the other people who have mortgages, let me get this, 40% of owner-occupied homes have no mortgage.

80% of those with mortgages are locked in at 5% or lower. So if you look at that, you do the algebraic calculation, obviously, then there's almost no one to sell.

David Faber (4:06)

Right, I don't want to move because I can afford my monthly now and I may not be able to afford it.