SOTS 2nd Hour: Fed Governor Waller, Canada’s International Trade Minister, and Trump’s Treasury Pick Before The Senate 1/16/25

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Sara Eisen (0:43)

Good Thursday morning. Welcome to another hour of 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 under a little pressure here. S&P's down two-tenths of 1%.

You've got some strength in groups like financials. Better bank earnings continue today with Bank of America, Morgan Stanley, PNC. Utilities, industrials, energy, real estate all higher, but technology's weaker. And guess what? NASDAQ down a third of 1%. You do have some of the chip makers up, like Broadcom, NVIDIA, perhaps off those better TSMC, Taiwan Semiconductor numbers. That stock's surging. But Tesla's down. Apple's a little bit weaker. So is Meta. And that's dragging down the overall market. Take a look at treasuries after that big rally we saw yesterday off the back of the softer core CPI number. A little bit of a reversal today. Yields firmer, 4.67, two-year yield just below 4.3%, Carl.

Carl Quintanilla (1:37)

Got a huge hour ahead for the Street. The President-elect's pick for Treasury Secretary Scott Bessent will face questions from Senate Finance at his confirmation hearing this hour. We're going to take you live when that begins. Also watching the Supreme Court this hour as the justices debate whether to step in and block a potential TikTok ban from going into effect on Sunday.

Sara Eisen (1:58)

But first, we have some economic data crossing the tape. Rick Santelli has it for us. Morning, Rick.

Rick Santelli (2:03)

Good morning, Sara. Yes, our November read on business inventories. Of course, this is a fourth quarter number. We want to pay attention to the widgets to see if it adds or subtracts to GDP. We're expecting up one-tenth exactly what we received. Up one-tenth of a percent in the rear view mirror. Up one-tenth last month now becomes zero. So not much going on to add to GDP there. But there is an interesting stat. This is the 11th month, of course, being November read and 10 out of the 11 months have been positive. You look at last year, nine out of the 12 were negative. So we've had a much better inventory backdrop in 2024 than we did in the previous year. Interest rates, well, as we sit, 429 in a two years up to 467 in a 10 is up to parallel shift on the yield curve. And that's not all. We have more data on housing. NASA Association Home Builders Housing Market Sentiment Index is coming out. And for that, we head east to Diana Olick. Diana?

Diana Olick (3:05)

Well, Rick, Home Builders Sentiment in January rose 1 to 47 on the NIHB index. The street was actually looking for a 1 decline. So it's an improvement, but anything below 50 is still considered negative. The index stood at 44 in January of last year. Now, the builders cited optimism for an improved regulatory environment and economic growth, but also concern over how building material tariffs and costs and a larger government deficit would put upward pressure on inflation and mortgage rates.

Of the index's three components, current sales conditions rose three points to 51, buyer traffic rose two points to 33, and sales expectations in the next six months fell six points to 60, in part due to the elevated interest rate environment. NAHB chief economist Rob Dietz wrote, while ongoing but slower easing from the Federal Reserve should help financing for private builders currently squeezed out of some local markets, builders report cancellations are climbing as a direct result of mortgage rates rising back up near 7 percent. Regionally sentiment is highest in the Northeast, lowest in the West, Sara.

Sara Eisen (4:09)

Well, hopefully we can get some answers to that right now, Diana. Thank you very much. The latest inflation prints, raising questions about what the Fed will do next and when when it comes to rates. Joining us now for CNBC exclusive is Federal Reserve Governor Chris Waller. Governor Waller, welcome to the show. Good to see you.

Chris Waller (4:25)

Hi, Sara. Good to see you. Thanks for having me on.