SOTS 2nd Hour: PPI Runs Cool, JPMorgan’s Leadership Change, Live: Lululemon CEO 1/14/25

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Carl Quintanilla (0:44)

Market Moving Insight and Analysis. Join Jim Cramer, David Faber and me, Carl Quintanilla on the opening bell hour of CNBC Squawk on the Street.

Good Tuesday 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. Sara Eisen is gonna join us later this hour from the NRF Big Show, along with an interview with Lululemon CEO Calvin McDonald. Meantime, bulls trying to hang on to these opening gains in the wake of this cool PPI number. Of course, CPI joins us tomorrow. Ten years, still a bit elevated, down just a touch around 479 Three big movers were watching, Cignet getting crushed after the retailer cut its sales guidance. KB Home surging after Q4 results did top estimates and deliveries rose 17%. And United Reynolds, the top gainer, acquiring smaller rival H&E Equipment Services in a roughly $5 billion deal.

David Faber (1:40)

All right, we got some inflation data this morning and it did come in cooler than expected. That has sparked a bit of a rally in the equity market, as you see, not too much, but a bit. Let's get to our Steve Leesman. He's got a closer look at the underlying numbers of PPI. Steve.

Steve Liesman (1:55)

Hey David, yeah, finally some good news on inflation. The PPI, the producer price index coming in better than expected, raising some hopes that the worst may be avoided in tomorrow's consumer price index report, which is the more important of the two. Headline coming in 0.2 versus 0.4 last month and an expectation or an estimate of 0.4. The core flat 0.0, goose egg versus 0.2, take out food, energy and trade, it actually fell 0.1 percent. But the headline still showing some in the pipeline 3.3 versus 3.5. Looking at the details, food declining after massive increases last month. Some of them related to the avian flu, other issues were out there, but they were down this month. Energy though popping higher, trade down 0.1 percent. That's the measure of margins out there among wholesalers and retailers.

One concern is that domestic air travel prices rising 6.8 percent on the month. Some of that could carry over into the CPI. But good news there, services, another goose egg. On commentary nationwide, senior economist Ben Ayers writes, this tempers the higher end of expectations for tomorrow's CPI report and clears the way for softer inflation readings in early 2025 That's one of the expectations out there that we don't get the big numbers in January and February that we got last year. Probabilities, well, January, sorry, June 55% for just one cut. That's the first time it gets over 50% is in June. And December, well, we really can't price in that second cut. It's just a 32% probability. Well, Kansas City Fed President Jeff Schmid, he adds to that concern about a second cut. Repeating comments he made last week, he believes we're at a point where the Fed doesn't need to be restrictive on the funds rate or supportive on the funds rate. Policy should be neutral, and it's just about where it ought to be right now, guys.

Carl Quintanilla (3:50)

Steve, you mentioned airfares, Pantheon today, biggest December rise in PPI for air travel since records began in 2001

Steve Liesman (4:01)

I saw that.

Carl Quintanilla (4:01)

I mean, I see some core PCE projections getting lifted a bit on that, as you said.

Steve Liesman (4:07)

Well, that would lift it, and it would be an area of concern. I mean, if you heard what Delta was saying, if you read also the hotel rates apparently are higher, people are traveling. It's one of the reasons why it's hard to say, Carl, this economy is not doing well because a lot of that travel, it's a completely discretionary thing that people do. So it's hard to say we're in a bad place right now when people are traveling, but they've kept their capacity down. If I sound a little angry at the airlines, it's because I am. The planes are very crowded, they're filling them up, and they're charging your top dollar to go. So that is a good sign, but it's going to feed into the inflation report tomorrow. But as you know, Carl, the big story is the PCE. I'm seeing estimates between.2 and.3. Again, not something that's going to get the Fed to cut, but at least they might be on hold while this works through the system.