SOTS 2nd Hour: Off Target, Palantir’s Pullback, The Race to Replace Powell 8/20/25

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Sara Eisen (0:47)

Good Wednesday morning. Welcome to 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, as Carl mentioned, taking a little bit of a dip here lower. You still have some leadership, but it's by defensives like staples and health care. Energy is also working today. Tech is lower. Look at the NASDAQ. It's selling off more than 1%, 1.3% right now as this rotation out of growth names and tech names continues. As for treasuries this morning, it's a light data week. We got Fed Share Powell speaking at Jackson Hole later in the week. We have more buying of treasuries with yields a little bit lower. The 10-year yield 4.29, the 2-year yield 3.73. So lower yields across the board. Coming up on today's show, off-target, the retailer is sinking as sales and traffic fell in the quarter. As the company announces a CEO change, what the incoming CEO told me about the consumer, about tariffs and employee morale. Plus, Palantir's rapid pullback, the stock now officially in bear market territory, 20 percent off the highs after hitting a record high earlier this month. We'll talk to an analyst who thinks there could be a lot more downside ahead. But guys, today, the news is all about retail earnings. And you know, I like to dig through these reports and see what these CEOs and CFOs are saying about the consumer, the macro tell on the consumer. Because all of these stories have different angles. Some of them are exposed to housing. Some of them are doing better than others. But let's just hear what we're hearing about the consumer toll, for instance. Affordability is the key challenge for homeowners. And here's what the CEO said. People might be waiting to see if rates come down a little bit more. We're going to know a lot more through the month of September.

And I am anticipating, as these rates settle into the market, we're going to see more demand coming out from all this pent up demand that's been waiting on the sidelines. That's why you have folks like the Treasury Secretary saying, we need to see lower mortgage rates. We need to see lower interest rates. The Toll Brothers CEO really echoing that that higher mortgage rate has been a challenge for people, pent up demand waiting on the sidelines. Lowe's, I thought, struck a very strong tone on the consumer as we got from Home Depot yesterday. The CEO there saying, Home owners remain financially healthy, supported by strong balance sheets, wage growth and low unemployment. The medium to long term outlook for the home improvement industry remains positive, driven by an aging housing stock, which is at a record high, substantial homeowner equity and pent up demand from delayed project. There's that pent up demand again in the housing market, but like Home Depot, they actually saw better cadence in terms of sales. They raised their sales guidance, I think, at Lowe's. And they focused on the professional, and that's been a good place to be.

Carl Quintanilla (3:22)

So, really, the weakness appears to be, would you argue it in specialty? I mean, is EL sort of indicative of-

Sara Eisen (3:28)

Lauder, yeah. I say Lauder. Look, yes, but it's their category and it's also because they're highly exposed in Asia, and in the airports and in the travel sector. So the comment from the CFO that I picked up there, while there are early signs of stabilization in mainland China, travel retail conversion continues to be weak and challenges persist in the West, including subdued consumer sentiment in the US and Western Europe. So I would argue, yeah, that sounds a little bit more bearish than we've gotten from TJ Maxx, for instance, killing it and raise again better comps. Customer transactions were up at every division, according to TJ Maxx CEO, as we saw strong demand at each of our US and international businesses. Third quarter is off to a strong start, and I'm very confident in our position as we enter the second half. It really depends which categories you sit in and how you're executing, and TJ Maxx has done a great job.