SOTS 2nd Hour: Nov. CPI Print, Grocery Deal Denied, Apple's AI Strategy, 12/11/24

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Sara Eisen (0:47)

Good Wednesday morning. Welcome to another hour of Squawk on the Street. I'm Sara Eisen with Carl Quintanilla and David Faber. Live as always at post 9 of the New York Stock Exchange. Stocks this morning higher across the board. They've been pretty stable since the open up, about 6 tenths of a percent on the S&P 500 NASDAQ is leading. Tech is in charge again, 1.3 percent gain right now, so really bouncing back today. The Dow a little bit under pressure, down 57 points. One reason why, rally in Treasuries. Take a look at the bond market right now. We do have a big auction later today and we got the CPI report this morning, which we'll talk about. But the rally means lower yields. Market likes it. 4.2% on the 10-year, 4.1% on the 2-year. We are 30 minutes here into the trading session. Here are some movers we're watching. Shares of Apple hitting new all-time highs, the tech giant releasing new software, which includes a long-awaited ChatGPT integration with Siri and also reports that it's working with Broadcom to develop its first server chip designed for AI. We're also watching shares of Kroger and Albertsons.

Albertsons this morning terminating the merger after a judge sided with the FTC to block the deal, much more on the fallout and what comes next, with both stocks higher later in the show. Then shares of Hershey and Mondalis go in an opposite directions as deal chatter continues to swirl around these two names. We'll have more on that coming up after Mondalis makes a decision with its use of cash that's sending its shares higher and Hershey lower. But first guys, let's talk about CPI. That's the story of the day, inflation. There's good news and there's bad news in the CPI report. Overall, the headline number comes in in line and the market's taking that as good news. No big surprises. Here's the 0.3% jump that we saw in November. It was higher than the month before, but importantly, it was also consensus. So again, no surprise on that. Now, the bad news is the year over year number accelerates 2.7% inflation from 2.6% inflation. Also, bad news, core CPI, stripping out food and energy prices, 0.3%. Okay, that was in line with forecast, but look at the trend here. Four months in a row where we're seeing 0.3% jumps in core CPI. The Fed wants to see continued further progress toward disinflation to 2%. This is not progress. This is stuck. Some why I say good news and bad news. Okay, the good news is it's pretty stable, the trend, and we're not climbing up into scary levels like we saw. But the bad news is it's stabilizing at a level that's not at the Fed's 2% mandate. If you strip down where the inflation is coming from and where some of the hotspots were this month, we broke it down for you. Food, 0.4% jump on food. That was a bigger jump that we've seen in food prices on the month than in previous months. It was actually food at home that was the culprit here. So, grocery prices to that jump, 0.5%.

It had been food away from home. That had been really some of the problem pressuring food prices higher. Also, big jump in used car prices, 2% higher. Utility piped gas, even though energy overall was pretty stable and shelter at 0.3%. So, it's still contributing to inflation. But the good news here, David, is that actually that is a step down from where we've seen it in recent months. If you look at some of the deflationary spots, not many of them with a negative sign ahead of the number, but a few. Electricity, good. Medical care commodities, good.

Carl Quintanilla (4:22)

There's enough progress.

David Faber (4:23)

So, what's keeping us at 0.3 then? I mean, is there any, I mean, you just went through them all, but I guess what was expected perhaps to decline more than it is? It was unexpectedly stubbornly high?