SOTS 2nd Hour: Consumer Concerns, On The Home Front, and Berkshire’s Big Moves 5/16/25

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Sara Eisen (1:06)

Good Friday morning. Welcome to Squawk on the Street. I'm Sara Eisen with Carl Quintanilla and David Faber, live as always from Post 9 of the New York Stock Exchange. Stocks are up again today, just a little bit, but we're adding to some significant gains for the week right now. S&P at four and three quarters percent for the week. NASDAQ up six and three quarters. What's strong today? Well, healthcare's coming back. Consumer, sorry, communication services and consumer staples all at the top of the list. Information technology is lagging a bit today. That's thanks in part to Applied Materials, which is down seven percent off earnings. Treasuries, we've seen this stabilization. We're talking about high yields earlier in the week. Well, they're moving a little bit lower. Got it yesterday, got it today. Ten-year yield, four point four percent. So it's come down a little bit. The two-year yield below four percent. Ahead this hour, JPMorgan's David Kelly with us to talk about the standout week for the Bulls and if the rally has legs from here. Plus, Bank of America's energy expert Francisco Blanch on how optimism around a deal with Iran will impact the oil market, which has been under a lot of selling pressure lately, Carl.

Carl Quintanilla (2:09)

One of the last data points of the week. Let's get University of Michigan with Rick Santelli. Hey, Rick.

Rick Santelli (2:14)

Hi, Carl. These are some wild numbers here. University of Michigan sentiment made preliminary read. And do keep in mind that this data series goes back to 1946 in some form and in 2024, they did change the way they collect the data. They went from cell phone base to web base. And many believe that these changes ought to be noted. So the number 50.8, well below expectations of 53 and change. And all of the numbers are sequentially lower. Our last look at 52.2 comes in at 50.8.

50.8. And that would be the second lowest reading, second lowest reading going back to 1952

So, that comes to 50.0, which was June of 22 I have a database that goes all the way back to 52 on this headline number. There's nothing smaller than 50.5, which was June of 22, just to give you a feel for it. Current conditions, 57.6, well below the 60-ish we were expecting, and 57.6 would be the weakest going back to June of 22 Same thing. Now, if we look at the expectations, this is really, really wild here. 46.5, expecting a number that was 48.5 in the rear-view mirror, 47.3, like I said, were sequentially lower across the board. 46.5 comps to, well, comps to March of 1980, when it was a whisker above 44 Now, the real wild numbers, 7.3% on one-year inflation. 7.3%, that equals NOVA of 81 To find a higher number, you're in April of 81 And 5-to-10-year inflation, 4.6, 4.6. Now to find a higher number, then you go back to JANA 91, it's equals 4.6. 4.7 would be September of 1990 And as I said, draw your own conclusions, whether some of these surveys have changed based on how they're conducted or University of Michigan just really is more aggressive in some of their survey samples. These are really extravagantly wild numbers. Sara, back to you.

Sara Eisen (4:35)

I just want to add a little more color. Thank you, Rick. So the survey was done between April 22nd and May 13th. So this was full-on reaction. Remember when the markets were very volatile, reacting to Liberation Day. And University of Michigan does note that the next update, which they have on May 12th, the final release, which the May 12th pause on China and on some of the tariffs, that will be in that data. It's not in this data. So that potentially helps explain why there's such a dip in consumer sentiment here and such an increase in inflation expectations. Carl, I'll just also mention, you know, this is always very politically tinge. The Republicans have had more of an upbeat outlook than Democrats. But in this report, they do note a 7 percent decline among Republicans in sentiment and 60 percent of consumers mentioned tariffs as a reason for lower sentiment.