SOTS 2nd Hour: Fed Decision Day + A Deep Dive with the CEOs of Arm, Ralph Lauren, and Zillow 11/07/24

Sara Eisen (0:00)

Good Thursday morning. Welcome to another hour of Squawk on the Street. I'm Sara Eisen with Carl Quintanilla, David Faber, Jim Cramer, sticking around here at Post Night of the New York Stock Exchange. Jim has a big interview coming up in just a few moments with Arm Holding CEO, Renee Haas, first on CNBC on the back of the company's latest earnings and outlook. Shares of the chip designer, by the way, reversing some earlier losses. We're gonna get more details on what Arm is seeing when it comes to AI demand in just a few moments. Quick check here on the market's follow through after yesterday's giant rally, the celebration of President Donald Trump and the red sweep. The S&P is up another half a percent. The NASDAQ, well, not officially, not officially. We don't have the house called yet. Thank you, Carl, giving me the look. Looking, appearing that way. Yes. Market continues to celebrate up 1% on the NASDAQ. Dow up 53 points. 30 minutes here into the trading session. Here are some other big movers we are watching. Another chip maker in focus, Qualcomm rallying on Rosie Guidance. The company is seeing stronger than expected demand in markets like autos and handsets. Stocks up 2.4%. Moderna is a top gainer as well, reporting a surprise profit. Revenue also comfortably beating estimates. That said, share is still a big underperformer on the year. And check out the move in Dutch Bros. Dutch Bros. up almost 40%.

The coffee chain seeing revenue jump almost 30% from a year ago. Don't see that a lot in the consumer discretionary.

Jim Cramer (1:23)

And I have her on soon.

Sara Eisen (1:25)

That's been one of your favorites too, right?

Jim Cramer (1:26)

Oh, it's one of the best stories out there.

Carl Quintanilla (1:28)

I was just playing with a one year Bros. versus Starbucks.

Jim Cramer (1:32)

I know.

Sara Eisen (1:33)

Ugly.

Jim Cramer (1:33)

Well, Dutch Bros. going national and I'm going to bring everybody a drink and you guys will join me in staying up.

Sara Eisen (1:39)

What's so good about it?

David Faber (1:41)

It's the Annihilator. Come on.

Jim Cramer (1:43)

It has more caffeine than anything I've ever had.

Sara Eisen (1:46)

That's what you need.

Jim Cramer (1:47)

It's the highest octane and they know you every time. They knew me coming back a second time. Old ball guy, one strike.

David Faber (1:53)

A lot of calories too in some of their drinks.

Sara Eisen (1:55)

Starbucks is bringing back Sharpies.

Carl Quintanilla (1:57)

Ahead of this Fed Day and Fed Decision, let's get some inventories with Rick Santelli. Morning, Rick.

Rick Santelli (2:03)

Good morning, Carl. Indeed. Now, these are September, the last month of the third quarter, and we all know that inventories moving up may boost GDP, but this report's a little different. First of all, let's look at the sales side. What uses up the inventories? Expecting up one-tenth comes in much stronger, up three-tenths, and last month's minus a tenth of a percent moves to up two-tenths. So, if we look at July, August, Sep, the whole quarter in terms of sales, it's turned pretty good. Up 1.1 in July, now up two-tenths in August, up three-tenths in Sep. Now, let's look at the inventory side. We're weaning away at the inventory. The mid-month read was down one-tenth. It now becomes down two-tenths. So, we have up two-tenths. We have down two-tenths. So, we're washing out the inventories. Don't look for any big ads to any revisions to third-quarter GDP. It's very interesting to see that the consumption numbers were hot, the sales numbers were hot, but the inventory channel seems to be a little on the light side. Interest rates, well, they're given a little bit back from yesterday. We're roughly down a half dozen basis points on twos and tens. Sara, back to you.

Sara Eisen (3:14)

Yep, seeing the dollar give some back to three quarters of a percent now lower. Thank you, Rick. Rick Santelli. So, Fed has its big decision today. Not a lot of mystery in what it's going to do. Markets almost 100% price for a 25 basis point cut. The bigger question is what he's going to say about future cuts and how much might be necessary given the economy has done pretty well. As Rick said, consumer spending has been strong, at least if you look inside the GDP.

Here's the chart that they have basically tattooed on their arms right now, which is the PCE price change, price index change. This is what they're targeting and this is their preferred measure of it. And look how much progress they've made. We're down to 2.1% was the last PCE reading on the headline. Core, if you strip out food and energy, little bit firmer, back up to sort of 2.7-ish. But this will allow them to cut today and to say that they will continue to cut. It gives them a lot of breathing room to try to preserve the recovery because they've made so much progress on inflation. Expect a lot of questions, of course, about President-elect Trump and what he might do on tariffs and whether that's going to be inflationary, what he might do on taxes and whether that's going to be bad for the deficit. Don't expect Fed Chair Powell to prejudge any policy from an incoming administration. However, we'll be watching that inflation rate as President Trump comes to power with probably control of Congress to see what he'll do. By the way, he doesn't even need Congress on the tariff front. As far as inflation, though, if it's done so well in terms of progress, some people are wondering about the election. Inflation was top of mind when it comes to issues for Americans dealing with the economy. I treated out this chart of ground beef prices last night, and I think it really tells the story, which is even if they've stopped going up sharply, they are up sharply. I mean, this is just from 2018 We've seen a 60% rise in prices on ground beef. And I think this is part of the story of the election and how people were feeling and how they were sort of reminiscing for days where they didn't pay as much for basic household items.