Stickier Inflation, Another Hat in the Ring, Retailers Rally 5/24/23

SPEAKER_1 (0:00)

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David Faber (0:25)

Market insight and analysis. You're listening to the opening bell of CNBC's Squawk on the Street.

Carl Quintanilla (0:31)

Good Wednesday morning. Welcome to Squawk on the Street. I'm Carl Quintanilla with Jim Cramer, David Faber. Live at CNBC's inaugural CEO Council Summit in Santa Barbara, California. Take a look at futures this morning.

Still in debt ceiling limbo. Although, as Becky said, talks resume today.

UK inflation runs a little bit hot. Decent batch of some specialty retail earnings. Our roadmap is gonna begin, though, with that elusive DC debt deal. No signs of progress, but negotiators are set to meet again today with Wall Street on watch.

David Faber (0:59)

Plus retail bounce shares of Kohl's, Urban Outfitters, and Abercrombie. All are rallying rather sharply on quarterly results.

And Palo Alto CEO says AI will transform the software industry. He joined Jim last night on mad money. Palo Alto shares, by the way, also are up ahead of the open.

Carl Quintanilla (1:19)

Let's begin, though, with the markets. NASDAQ coming off its worst daily performance in about a month.

Dow hoping to avoid four straight days of losses as we did get some good commentary on the markets and the economy here at our CEO Council Summit. Jim, David Solomon talking about sort of a view that you share, which is that inflation is going to be hard to tamp down.

Jim Cramer (1:37)

We can't seem to get anything going in terms of wage, just even stabilization, an increase. Yesterday there was a conference call, I mean, a release, Toll Brothers.

The Toll Brothers, the release was incredible. Doug Yearley's great, million-dollar homes, the average price of a Toll Brothers house is $9 million. I remember when it was $600,000 just a few years ago. David, sold out.

I mean, sold out. It doesn't matter what rates are doing. I mean, the wealth, if you read that, if you read what Doug Yearley said, he's a straight-shooting CEO, you would say, okay, we got to stop this juggernaut. PMI strong yesterday. This thing was, it's like, look, there are so many wealthy people. Now, I'm not saying we need great redistribution or anything. I'm just saying that it's unaffected by mortgage rates.

David Faber (2:24)

In the face of steadily rising mortgage rates is my question. And look at that chart. So what is that?

Why?

Jim Cramer (2:30)

Because there's just tremendous inflation system. People just keep making more money and these guys can charge whatever they want. And I think that that's kind of what our problem is. That's, when you talk about sticky, it's not necessarily the generic food at a Walmart.

They can't stop this.

Carl Quintanilla (2:48)

Mortgage, 30-year fix, back to seven.

First time since March 9th. And Jim uses the term sticky, which is getting used a lot around here anyway. This is what David Solomon told us yesterday at our council summit.

David Solomon (3:02)

More in the camp that we're probably going to have a recession is because I think that inflation is going to be stubborn. I don't necessarily see rates really easing at the end of the year based on what I see now. And so I think it's stickier and harder, but also uncertain. And there are a lot of factors that are going to have to be balanced, and it's just not clear.

Carl Quintanilla (3:26)

You're changing your mind on June? What's going on?

Jim Cramer (3:29)

No, I think you can still take a pause in June because we've got to see what damage is being done. And look, we're also in this every day we come in. Market's bad. This is starting to get very reminiscent. If you go back to that period in 2011 where you realize every day, I'm looking at the S&P and Dow, every day they were down as we went closer and closer.

Carl Quintanilla (3:48)

1345, 1345

Jim Cramer (3:51)

And then 12, I mean, it's every single day was down. And so you start getting a sense of, well, we got to pull back. We got to see what really is going to happen. Now, the people, you know, the people who are on Social Security, who so-called might miss a payment, are not Toll Brothers people.