SOTS 2nd Hour: Live from Citi's TMT Leadership Conference in Pebble Beach, CA with Citi and IBM CEOs 11/8/24

Carl Quintanilla (0:00)

Good Friday morning, welcome to another hour of Squawk on the Street. I'm Carl Quintanilla with David Faber here at Post 9 of the New York Stock Exchange, alongside our Sara Eisen live from Citi's TMT Leadership Summit in Pebble Beach today. Some big interviews, Citi's Jane Frazier, IBM's Arvind Krishna, and a lot more to come over the next couple of hours. Meantime, all time highs for the Dow and the S&P, 59.91, we're keeping our eye on a potential six handle, best week of the year for regional banks and oil services. Some of the movers we're watching today, China announcing a $1.4 trillion stimulus package over five years to tackle local government debt, but the package falls short of some expectations. Capri Holding, Monster Beverage, Sweetgreen, Bloomin Brands, all down on some weak demand. NVIDIA and Sherwin-Williams joined the Dow today. NVIDIA is the first company ever to hit a market cap of $3.6 trillion. We're getting some Umish. Let's get Consumer Sentiment with Rick Santelli. Hey, Rick.

Rick Santelli (0:54)

Hi, Carl and Dee. Now, these are November Preliminary. In a couple of weeks, we'll get different numbers. We'll update them. But what's important here is it's a real mixed bag. Pay attention. Headline number, much better than expected, 73 It's about two points better and sequentially higher than 70.5. That's the strongest since April of this year. Now, if we go to current conditions, it's coming in on the light side. At 64.4, it's the lightest, well, just since September. On the expectation side, much stronger, 78.5. This is about three points higher than expected and sequentially really powerful versus 74.1. 78.5 would be the strongest level going all the way back to July of 21 Now, the inflation data, and here's some surprises. If we look at the one-year inflation rate, it moved down again. It's been steadily coming down. It's not near 2%, but it's getting closer, 2.6. It's one-tenth cooler than the wind shield, one-tenth cooler than the rear view mirror. 2.6 would be the lightest level since DC of 2020, but I do want to let you know that the last couple of months, even at 2.7, would comp to the same DC of 2020 Now, here's the other direction.

It was one year, went down, five to ten year, went up. 3.1%, we were expecting three, rear view mirror is three. 3.1, it equals where we were in September to find a higher number. You have to go to last year in November, when it was 3.2. So, as we watch the market, not a huge amount of change. We're actually seeing the long end continue to drain on yields a bit. And our comp was last week at 438 That was JobJob's jobs report when rates went up. So, we're basically down 10 basis points in a 10-year. We're only down a basis point or two in a two-year. Lots of curve movement. Carl, back to you.

Carl Quintanilla (2:51)

Rick, thanks so much. Rick Santelli, some important numbers. We'll choose on those throughout the hour. Let's get back to Sara, though, in Pebble Beach. Talk about what's on the way this morning. Hey, Sara.

Sara Eisen (3:01)

Hey, Carl. Couldn't ask for a better time to talk to some of the top CEOs, in specifically the banking and tech sectors. These are two of the best performing sectors in the market this week, post Trump win, but also year to date. It's top three performing sectors.

Really excited to hear from Citigroup's Jane Frazier this hour about what she expects now that Trump is going to be back in the White House. Everything from tariff policy to the regulatory agenda. By the way, what also is going on with her own transformation in the bank, the stock has very much outperformed over the past year. Questions about AI, what that looks like under a Trump administration. Arvind Krishna, the CEO of IBM is going to join us also with an outperforming stock on the year. So excited to get to some of the big picture questions now that we have a completely different outlook for the markets and the economy and the Federal Reserve. I mean, there's something to talk about here as well, Carl and David, I read the Fed transcript, the news conference transcript three times and I still could not tell you if there was a hint about what he was going to do in December. Clearly, they still have an easing bias. They're in that mode, but Fed Chair Powell many times spoke about the strength in the economy and said that we're not in a hurry to do something. What is the market telling us this morning? Well, still more than 50% odds that the Fed cuts again in December, but those odds have come down from last week and the odds of next year, there's only a 100% chance right now that they cut two more times next year and then maybe three odds around there, around 50%. But I think it will be interesting to see what the dots bring next December, where they had their own forecast, because in September, guys, they expected four rate cuts in 2025 Trump coming back into the White House and improved economic outlook based on deregulation and lower corporate taxes. Does that change the trajectory for the Fed? One thing we got for sure clarity on, Carl, is the defiance of Fed Chair Powell that he will not step down if asked. A simple no on that. That was probably the biggest news of the conference and doesn't think it's legal for him to be removed as well if he does come under scrutiny and attack from President-elect Trump as we saw in the last time. The only other thing I'd watch going forward here with regard to the Fed is these bond yields. As Rick said, they're coming down a little bit today, but the move up in bond yields since the Fed cut 50 basis points in September has been interesting. Usually when the Fed cuts yields come down, they've gone the other way on a stronger economic backdrop and an improved economic outlook. Here's what Fed Chair Powell said about it yesterday.