Squawk on the Street 2ND Hour 8/18/25

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Carl Quintanilla (1:08)

Good Monday morning, welcome to Squawk on the Street. I'm Carl Quintanilla with Leslie Pickard, David Faber here at Post 9 of the New York Stock Exchange. Sara Eisen is off today. Markets calm before the storm as we await a bunch of Fed speak, Jackson Hole, retail earnings later this week. Breath is actually slightly positive, even though we got some red numbers on the indices. Tenure 432, that's gonna be almost a month to date high. Take you back to July 31st. Today, Ukraine's president goes to the White House following Friday's summit between the president and Russian President Putin. We'll talk to Michael O'Hanlon from Brookings today about what to expect from today's meeting. We'll also break down the news, sending shares of NOVA sharply higher in early trading today.

Leslie Pickard (1:46)

But first, breaking housing data just crossing Diana Olek has that for us. Diana.

Diana Olick (1:51)

That's right, Leslie. Builder sentiment in the single-family housing market dropped 1.232 in August on the NAHB index. The street was looking for a 1 gain. Anything below 50 is considered negative. Last August, it stood at 39

Now, the builders pointed to elevated mortgage rates, weak buyer traffic and ongoing supply side challenges. Mortgage rates, though, actually came down nearly a quarter point from the end of July to the first few weeks of August, but that clearly didn't help much. Now, if the index is three components, current sales conditions fell 1.235, sales expectations in the next six months was unchanged at 43, and buyer traffic did increase two points, but just to 22, so still the lowest of those three indices. Now, 37% of builders reported cutting prices in August, that's down from 38% in July, but it's been at 37 or 38 for the past three months. The average price reduction, 5% in August, it's the same it's been every month since last November, but the use of sales incentives was 66% in August, up from 62% in July, and that is the highest percentage in the post-COVID period. So again, the builders relying on those incentives. Guys, back to you.

Leslie Pickard (3:00)

Diana, I'm curious where, why estimates were for a gain, and kind of what led to the gap there between expectations and the actual numbers you saw.

Diana Olick (3:12)

Mortgage rates, it's as simple as that. When you see mortgage rates come down, that's why when mortgage rates come down a little bit, you see the builder stocks go up, whatever the day, whatever the situation. So when you saw mortgage rates go down, I'm guessing all the analysts said, well, builder sentiment must go up. But the builders on the ground are really seeing who's coming in, who's putting money down, who's really able to afford these homes and at the current rates, even a quarter point lower, they're just not seeing it. So that's probably what's behind the mess.

Leslie Pickard (3:38)

Yeah, makes a big difference there. Diana, thank you so much. It could be a big week for stocks with more earnings in Fed Chair Powell's speech at Jackson Hole. Let's bring in Keith Lerner, Truist Wealth Co-Chief Investment Officer to discuss. Let's start with Jackson Hole because some out there are saying that could be potentially bearish for stocks, especially if Fed Chair Powell indicates to the market something a bit more hawkish than they may like to see. What's your expectation for Jackson Hole? Do you think it will be a sell the news event?

Keith Lerner (4:09)

You know, first, great to be with you. To your point, when you look at the Fed Fund's futures, we're pricing in about an 85% chance of a Fed rate cut in September. So the market wants to see a little bit of an inclination. Listen, I think he's still going to kind of hold things somewhere tight because we do have two inflation reports. And probably the most important report in my mind is the September 5th employment report to see if the revisions that we saw were maybe somewhat overdone. But to your point, I think expectations are so much high and you could get a little bit of a setback. But all in all, I don't think that's going to disrupt the underlying trend for the market, which is still higher. What I think could happen is really what you're seeing in the small caps, the home builders, they're really banking on that cut. So that's where I think you'll see more of the action.