SOTS 2nd Hour: A Divided Fed - Where Things Stand, AI Cyber Threats, & LIVE: Ares CEO, Magnum Ice Cream CEO 12/10/25

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Sara Eisen (0:45)

Good Wednesday morning. Happy Fed Day. Welcome to Squawk on the Street. I'm Sara Eisen with Carl Quintanilla live from Post 9 As always, here at the New York Stock Exchange, David Faber has the morning off. It is Fed Day in America. And while most on Wall Street do expect a cut in rates today, the main focus will be on the statement and Chair Powell's press conference. We'll ask former Federal Reserve Vice Chair Alan Blinder what he's expecting this afternoon. Plus, do not miss our exclusive interview with Aries Management co-founder and CEO Michael Arigetti from Goldman Sachs' Financial Services Conference. And AI expert and Sandbox AQ CEO Jack Hittery will be with us as his company launches a partnership with the Defense Department to fight against AI-driven cyber threats. Senior Markets commentator Mike Santoli here to kick us off on a big market day, a big Fed day. The key debate, I think, today inside the Fed is going to be around what's happening with the labor market because we don't have all the data. It's incomplete because of the government shutdown where we're waiting really key jobs reports. But we do have enough data to have a pretty robust debate about just how much the labor market is softening. Remember, if the Fed thinks that the labor market is in danger, that's probably why they're cutting and why they might cut some more. So here's the recent data, where it stacks up, what they're going to be looking at. On the weaker data points, the argument for cuts, for softening, September's 4.4% unemployment rate. That was the highest level we saw in years. Not good. Also, yesterday we got the quits rate for October. Carl, you mentioned this live. It was notable because it was 1.8%.

Low quits rate means people are unconfident that they're going to go out and get jobs. The ADP report, November, ADP has taken on more significance as we haven't gotten the official jobs data. That had a negative number on it, negative 32,000. On the other hand, for those that want to hold rates, they can point to the job openings data that we got yesterday. 7.7 million was an upside surprise. The jobless claims data, especially in late November, three-year low. So fewer Americans filing for unemployment claims, and then the September jobs number, yes, it was a high unemployment number, but we also saw more than 100,000 jobs created. So I think this is going to be the core of the debate. We know inflation is stuck around these levels and elevated. There's not much to chew on there. But on jobs, it's really a question about how soft are we getting and should they make a bigger move?

Michael Santoli (3:08)

It seems to be netting out, obviously, that the risks to the labor market have risen enough based on everything that the Fed messaging is implied, that we're getting the cut today. And then if you convey data dependence, non-committal, we have a split Fed, we're not that far from neutral, all those things you're likely to hear afterward, then we do have the kind of double jobs data next week. That could sway exactly where the outlook goes for next year in terms of rates. But I don't think they're going to pre-commit to very much. And I do also think that you're down 175 basis points in Fed funds rate in 15 months.

Carl Quintanilla (3:46)

It's almost after today.

Michael Santoli (3:47)

It's after today. It's almost never happened when you either were not in a recession or really not on the verge of a recession by any observable measure. So I do think they feel as if they've gotten us to a place where we can wait and see for a little while. Now, I don't think that means that the market is going to be surprised by some kind of hawkish bent. I think the market is going to have to digest the fact that we have conflicting data, therefore a conflicted committee. We're not that far from neutral. We're going to have to be grownups and deal with the data.