SOTS 2nd Hour: PCE Breakdown, Trump Tariffs Latest, & Moody's Chief Economist Talks GDP 9/26/25

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Sara Eisen (1:38)

Good Friday morning, welcome to Squawk on the Street. I'm Sara Eisen with Carl Quintanilla and David Faber. We are live for you, as always, from Post 9 of the New York Stock Exchange. Stocks are higher today, and it's a pretty broad rally. It's actually led by energy for a change. The best performing sector right now of 1.4%. Only one sector lags, or is red, and that is consumer staples. But interestingly, this rally is not being led by technology for a change. Yes, there's strength in Microsoft, Amazon, Intel, Tesla, but it's really energy, utilities, industrials, and financials that are driving the market forward right now. We are pairing some of the losses for the week. Still negative on the S&P, but less than a third of a percent now. Coming up this hour, how new proposed tariffs on pharma, furniture, and chip makers could impact your portfolio as investors try to keep up with the flood of announcements from Washington. Plus, Moody's chief economist Mark Zandi will join us with reaction to today's inflation print, how a government shutdown could muddy upcoming data releases as well.

Carl Quintanilla (2:34)

Speaking of data releases, let's get some new news with Rick Santelli. Hey Rick.

Rick Santelli (2:39)

Hi Carl, indeed these are final reads for September on University of Michigan sentiment and inflation numbers and expectations for some improvement. The reality is each one deteriorated on growth. 55.1 from 55.4 is the headline number. It's still the weakest going back to May. If we look at the current conditions, 60.4 versus the mid-month read of 61.2, also lower, but it doesn't change the comp back to May. And if we look at expectations from 51.8 mid-month to 51.7, still the weakest since May as well. And on the inflation front, very similar but in a positive way. We're expecting 4.8 on the one-year inflation. 4.8 was last looked. The mid-month, it comes in 4.7.

And the 5- to 10-year inflation, instead of 3.9 mid-month, it moves to 3.7. 3.7 would be comping to 3.5 in February. So the growth with respect to what's associated with when you look at Michigan sentiment, well, much of it's supposed to reflect the equity market. It's downgraded just a bit from the last two weeks. But if you look at the inflation indicators, they also moderated a bit. The market hasn't moved a lot on them, kind of a wash. And how do we summarize? Well, right now, 418 on a 10 year is up about a basis point on the session, but it settled at 413 last week, so it's down five. And if you look at a two year, it settled at 257 last week. It's down almost 10 basis points on the week. It is virtually unchanged on the day. We did have good income and spending, and the PCE numbers, rather sticky. Sara, back to you.

Sara Eisen (4:27)

Okay, Rick, thank you very much. Just some more color.

According to the survey, a modest decline, as Rick mentioned, and it was broad across age, income and education. Key exception, consumers with large stock holdings. Stock market obviously did very well in September, and so those consumers actually didn't feel as pessimistic, but everybody else did. Look, Rick just mentioned the PCE. This is the Fed's preferred measure of inflation, and the good news here is that there were no major surprises on the inflation front. It was up 0.3% on the month in August, and then if you look at core, it was only up 0.2%. So where are we tracking on inflation overall? We're not at target. Remember, the Fed wants to see 2% inflation. We're at 2.7%. Core is 2.9%.