SOTS 2nd Hour: The Inflation Debate, El-Erian’s Bull Call, & Nvidia: Buy, Sell, or Hold? 7/16/25

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How those ahead, stay ahead.

Sara Eisen (1:09)

Good Wednesday morning, welcome to Squawk on the Street. I'm Sara Eisen with Carl Quintanilla. David Faber has the morning off. We are live at Post 9 as always from the New York Stock Exchange. Stocks are kicking off the morning green mostly. We've lost a little bit of the morning gains though, the S&P unchanged. Natsat comes off a record high, but again, just a mini sell off here. What's working today? Real estate, healthcare, financials are having a good day on earnings, utilities and consumer staples. So a little bit more of a defensive field to today's rally. Technology is giving back some of the gains. Of course, chips have been very much in the lead, which we'll talk about lately. Take a look at treasuries right now. Reaction to PPI, wholesale inflation comes in not so hot and the market rallies, at least bonds rally, a 10-year yield lower, $4.45 after we saw firming yields yesterday on CPI, two-year yield just below 4%.

Today, it's not just Nvidia. How resuming China sales could give a big boost to AMD as well. We've got some new details. Plus, what a cooler than expected inflation report means for the Fed. Mohamed El-Erian joins us live with his first take on the morning data. We are 30 minutes here into the trading session here. Three big movers we're watching on the earnings front. Johnson & Johnson, top gainer, beating expectations, raising guidance, while ASML is falling in the opposite direction after the CEO there said he, quote, cannot confirm the chip company will grow in 2026 Shares of Payments Processor, Global Payments, in the green after report, activist investor Elliott Management has built a, quote, sizable stake in the name. Shares are more than 60% off their 2021 all-time highs. And then keep an eye on the automakers today. Shares of French automaker Renault slumped double digits after that company lowered guidance and appointed a new interim CEO, down 18% right now. But Carl, I think the story of the moment in the markets is that the Trump trade war is working out a little bit, a lot better, I would say, than originally thought. I mean, remember in April after Liberation Day and the markets plunged and there was so much concern about what this would do to growth, these higher reciprocal rates, what it would do to inflation. Guess what? First of all, those rates haven't panned out. And while we have seen higher tariff rates across the board, what hasn't panned out either is a big surge of inflation, weakness in the economy, or a slump in the financial markets. Besides the fact that the S&P has rebounded 30% from those lows, tariff revenue has come streaming in. And that's a sign that President Trump is winning his trade war. We are adding to the coffers of US. Treasury. Here's what we saw. I mean, look at just in June. We saw $26.6 billion come in in the month of June. Of course, someone's paying for the tariffs, but it's not the American consumer, which is what everybody was worried about. Yes, there are parts of it where we're seeing it filter through. We saw that in CPI, but overwhelmingly, it's not leading to a spike up inflation. Look at CPI, and now we got PPI as well, which was dead flat for the month. This is the wholesale inflation number. And what you can see is that since the beginning of the year, we saw that big drop down from the high levels in 2022 And then since the beginning of this year, and really in the last four months, since the tariffs have been implemented, Carl, they haven't, it hasn't been much on the overall headline number.

Carl Quintanilla (4:26)

When you say implemented, I mean, the deadline is August 1st.