SOTS 2nd Hour: AMD CEO Talks AI, Financials To Bank On, & Cantor's Equity Drawdown Warning 1/6/26

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Carl Quintanilla (0:45)

Good Tuesday morning. Welcome to Squawk on the Street. I'm Carl Quintanilla, Sara Eisen, David Faber live at Postal 9 of the New York Stock Exchange. Coming up this hour, big interview with AMD's Chief Lisa Su, live from CES in Las Vegas as the company announces its new AI chips after a stellar year of gains. Plus, big bank stocks trading at some record highs. Cyclical names start out the year with a bang. We'll talk to an analyst who says it's still too early to take profits. And of course, the latest on Venezuela as the president is expected to meet this hour with House GOP members in Washington.

Sara Eisen (1:17)

Guys, the overall vibe in the stock market continues to be optimistic. We're up again. And part of the reason why is that there is a lot of hope about a rebound in growth in Q1. So this is when the impact of the one big beautiful bill, the tax legislation, starts to really hit. And so I've been going through some of the market research or the Wall Street research about how much it's actually going to help growth in consumer spending. So Goldman Sachs says the tax cuts will boost household consumption growth by 0.2% for the year. Remember, the idea is bigger refunds, tax relief on things like overtime and tips. Wells Fargo says incremental 800 to 850 in tax return per filer on average, representing a 45 basis point tailwind to GDP. Not bad, almost half a percent. And Deutsche Bank says 50 to 60 billion dollar boost to consumer spending. So that's part of, I think, the underpinning, Carl, why the setup looked good for this year. If you look overall at what Wall Street is expecting on growth, remember, we haven't had fourth quarter GDP yet.

But if you look ahead to the first quarter on GDP, Wall Street estimates are pretty strong. They're expecting more than 2 percent growth, two and a half percent growth, which would be a rebound from the fourth quarter, which the estimate is at 1 percent. So that's kind of the story right now, that along with Fed cuts, which is keeping earnings expectations high and I think the market in a good mood.

Carl Quintanilla (2:43)

Yeah, Atlanta Fed on Q4 is a little more optimistic. I think 2.7 yesterday down from the prior three. There are still some worries about, I mean, a prior estimate of Atlanta of three. But there's some worries about health insurance premiums and what that's going to do, utility prices, some of that money that we're going to get as a tailwind is going to get spent on things that are gotten more expensive.

Sara Eisen (3:05)

I know that's the question is where the money is going to be spent. Is it going to be spent on consumer staples like health insurance and like groceries, which has seen elevated pricing pressure? Piper actually, interestingly, had a note on this very thing, the beneficiaries of the consumer release from the tax fund. Recent changes, they say, from OBBA could deliver significant tax relief to middle and upper and middle income households this tax refund season. They suggest disposable personal income will see an incremental one and a half percent lift, one percent lift in Q2. They called out names like Home Improvement, Home Depot Lowes, for instance, On Running, Birkenstock. So they actually chose some of the discretionary names. Ulta, they like, Kava, Starbucks and Chipotle. We know those stocks have been a little bit under pressure, so maybe some incremental spending would be good for the restaurant names.

Carl Quintanilla (3:54)

Yeah, we've mentioned the UBS upgrade of Brinker today, and I think Chipotle is still one of their top picks in the restaurant space.

Sara Eisen (4:01)

Yeah, I mean, Brinker has been. Yeah. That one's been an outlier. That execution and strength there compared to some of the others, Chipotle was a loser in at least the stock and the performance in 2025 So certainly better consumer spending environment would bode well, I think, for all of these names. Food, beverage, household products.