SOTS 2nd Hour: The State of 'Truflation', AI Private Credit Check, & Is Software Oversold Here? 2/12/26

SPEAKER_1 (0:00)

Thy ticket, Lady Jennifer of Coolidge.

SPEAKER_2 (0:03)

Well, many thanks, good sir. Heareth my Discover card.

Diana Olick (0:08)

They accept Discover at Renaissance fairs?

SPEAKER_2 (0:10)

Yeah, they do here. Discover is accepted at the places I love to shop. Getteth with the times.

Diana Olick (0:17)

With the times?

SPEAKER_2 (0:18)

You're playing the lute. Yeah, and it sounds pretty good, right?

David Faber (0:23)

Discover is accepted at 99% of places that take credit cards nationwide.

Johnny Fine (0:27)

Based on the February 2025 Nielsen Report.

SPEAKER_6 (0:30)

This episode is brought to you by Schwab Market Update, an original podcast from Charles Schwab. Join host Keith Lansford for this information packed daily market preview delivered in 10 minutes or less, including projected stock updates, monetary policy decisions, and key results and statistics that may impact your trading. Download the latest episode and subscribe at schwab.com/marketupdatepodcast or find Schwab Market Update wherever you get your podcasts.

Sara Eisen (0:59)

Good Thursday morning. Welcome to Squawk on the Street. I'm Sara Eisen with Carl Quintanilla and David Faber. We are live from Post 9 of the New York Stock Exchange. Coming up on today's show is the software sell-off of We're Done. We'll talk to noted software investor, Byron Deter, about why he sees a surge coming for select names in the space. Plus Goldman Sachs credit expert, Johnny Fine, will be with us to talk about how the hyperscalers are funding their massive AI spending, including Alphabet's new Century Bond. And from McDonalds to Cisco, we'll talk about the big takeaways from today's most important earnings movers.

Carl Quintanilla (1:31)

Getting some existing homes today. Let's turn to Diana Olick on that. Morning, Diana.

Diana Olick (1:36)

Good morning, Carl. Existing home sales in January dropped 8.4% from December to a seasonally adjusted annualized rate of 3.91 million units. That is a huge miss. The Street was looking for about half of that drop. Sales down 4.4% from January of last year, and it is the slowest sales pace since December 2023 Now, this count is based on closings. So contracts likely signed in November and December when the average rate on the 30-year fix didn't move a whole lot before dropping in January. Inventory came down from December, but was still up 3.4% year over year. 1.22 million homes for sale, which at the current sales pace is a 3.7-month supply. Six months is considered a balanced market.

And that kept prices in the positive territory. The median for January was $396,800, up 0.9% year over year, and the highest January price on record. It is taking longer to sell a home, 46 days versus 41 in January of last year. 31% of sales were to first-time buyers, up from 28% a year ago. And this, as the Realtors did report, slightly better affordability due to lower interest rates. And one thing I'd note, Sara, they did try to blame a little of this on the weather, but these are closing. So that's, again, signed contracts from November and December. Before that January, bad weather hit. And also the biggest drop was in the West, which had zero weather effect.

Sara Eisen (3:00)

Got it. Diana, thank you very much. Diana Olek. Big focus, of course, around inflation this week. Now that we have the jobs number, tomorrow we'll get the inflation number. And you know, we're debating how far it is from the Fed's 2% target. Is it closer to 3% or closer to 2.5%?

Johnny Fine (3:16)

2.5%.

Sara Eisen (3:17)

But there's this new measure out there that's getting a lot of buzz and attention and also got mentioned by the Treasury Secretary Scott Bessent last week on his testimony before Senate Finance Committee. And that is true inflation. It's a new way to measure inflation that's making the rounds. And it's considered more real time because they update it every day and they have thousands of inputs on real time prices. And look what it's done. It's collapsed. A lot of people are citing it, especially the administration, because it's under 1%, which is very far from where the CPI that we're supposed to get is tomorrow. The expectation on that is that we'll get 2.5% year over year inflation. Why the gap? Completely different measurement styles. They say on true inflation that they are trying to account for some of the quarks in the way that inflation is measured, like overweighting rent and owner's equivalent rent, which is kind of a wacky measure of what you would get paid for rent and factors unusually high in terms of the components of CPI. This index, true inflation, they've been tracking it since 2021 It really surged in 2022 way higher than what CPI was showing.