SOTS 2nd Hour: Holiday Retail Stock-ing Stuffers, Trump’s Treasury Secretary Pick, and 4 Cases For A Year-End Rally 11/25/24

Sara Eisen (0:07)

Good Monday 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. Take a look at stocks. We're starting the week strong. S&P up about half a percent. The NASDAQ Comp up four tenths of one percent. So we've got a nice rally to start the day. The Dow is up 450 points. Take a look at Treasury. It's part of the story here where there's buying today. And yields are coming a little bit lower. The 10-year Trinote yield, just below 4.3%.

The two-year yield, just at 4.3. As far as what's working in the market, it's a broad rally. You've got almost every sector higher except for information technology and energy. Consumer discretionary is one of your best-performing sectors, up one and a quarter percent. Real estate also very strong today. So broad. And the NASDAQ, I mentioned, up four tenths of a percent. So tech is playing in, although information tech as a sector is lagging. We're 30 minutes here into the trading session. Here are three big movers we're watching today. Look at Bath and Body Works gaining double digits after a top and bottom line beat as well as raised guidance. We're going to talk winners and losers this holiday season later this hour. Speaking of retail, Macy's under pressure after the company reported preliminary results. That missed expectations and also disclosed an investigation into an employee who Macy says intentionally made erroneous accounting entries to hide more than $130 million worth of delivery expenses over several years, stock down 4 percent. Also keeping our eye on Bitcoin, of course, after hitting a new all-time high of a little more than $99,849 a coin late Friday. The crypto now up 40 percent this month alone, backing off today a little bit but still at 95K. Guys, as far as what we're watching this week, we do have some notable earnings, especially going to be watching the consumer earnings as we get into this holiday season, like a Dix or Nordstrom, Kohl's or Macy's as we wrap up the earning season, we get to some of the big retailers. Then economic data, I think the highlight will be the PCE, because remember Thursday is Thanksgiving holiday. We'll get the Fed's preferred measure of inflation on Wednesday. This is the market obsession. Why? Because the Fed has been obsessed with it and trying to tame inflation. There is some expectation that we'll see a stronger month-over-month number in terms of core PCE, core inflation, stripping out food and energy, a 0.3 percent. That's the expectation. Again, it would be a little bit firmer than where we've been in the last six months. Questions over how the Fed's going to deal with it. Inconsistent, Fed speak on whether they'd be open to a pause as soon as December. Most economists are now forecasting that they'll pause in January and cut in December. Guys, what I'm paying attention to today though are the forecast for 2025 They're starting to come out and they're looking very strong as far as the economy. Here's, for instance, Bank of America economic outlook for the year ahead. A brave new world, they call it. We expect another year of unbalanced growth characterized by US outperformance and policy uncertainty, which will impact the euro area in China the most. All in stable 2025, 2026 global growth in the 3.2 to 3.3 range. After better than expected 24, we upgraded our forecast for the US but downgrade them for the euro area. Meanwhile, we expect China to grow below targets. And that's kind of the vibe for David, what we're seeing in terms of the outlook, which is continued US outperformance, which we see in the capital flows, which we see in the US dollar strengthening, and which we see in the economic data.

David Faber (3:36)

Yeah, in the land of the blind, the one-eyed man is king.

Sara Eisen (3:39)

I guess so. Deutsche Bank also came out today and said, base case, stronger US growth and inflation, higher. This is also, it comes with some caveats, which could get in the way of all this optimism.

Higher Federal Reserve Terminal rate than previously expected with the opposite conditions for Europe, because if we get better growth and we get maybe firmer inflation, then that means the Fed can't cut as much. So that's a risk. The other risks that I'm reading about, which are still very much wild cards in the Trump administration, tariffs, of course, which could hurt growth and also create inflation. And then the immigration policy, which could ultimately be negative for the labor market. The market.