Tech-Led Market Rally, Whale Watching, More Job Cuts 2/15/24

Jim Cramer (0:00)

It's Jim Cramer here. You're listening to the opening bell of CNBC's Squawk on the Street. Don't miss a minute of the action.

Carl Quintanilla (0:07)

Good Thursday morning. Welcome to Squawk on the Street. I'm Carl Quintanilla with Sara Eisen, David Faber at Post 9 of the New York Stock Exchange. Cramer has the morning off. Futures are higher, 10-year back to 4-2.

Some of the data comes in light today, including the biggest retail sales decline in about a year.

Add to that some lowered guidance from Cisco, Deere, Wendy's and others. Roadmap begins with stocks and the economy. Investors closely watching the data today, including retail sales, claims, manufacturing, IP.

Sara Eisen (0:33)

Plus Cisco shares moving lower. The company cutting more than 4,000 jobs and lowering its revenue outlook.

David Faber (0:39)

And Warren Buffett, Berkshire Hathaway, has trimmed that massive position in Apple.

Carl Quintanilla (0:46)

Let's begin with the markets though in this morning's batch of eco data. We mentioned retail sales coming in a bit light. Philly Fed was a little bit better, but then Empire was a miss. And a lot of desk notes today, Sara, they were basically saying maybe Tuesday was a hiccup as we got the two-year, basically back to where it was prior to CPI.

Sara Eisen (1:02)

The best news of the economy this morning was jobless claims, which continue to surprise lower. Only 212,000 jobless claims filed last week. That was less than expected. It was at least we've seen in about four weeks. Continuing claims, those that are continuing to get paid out on jobless claims, that number a little bit elevated. But retail sales is the big miss that we should talk about. Negative 0.8% on the month. That was worse than expected. I mean, the economists were looking for a decline of 0.3%.

Some other important numbers here, so X gas, excuse me, X autos, and we knew autos were gonna be weak because this number is not inflation adjusted either. That number was still negative 0.6. And then the most important one here is the control group. That feeds directly into GDP on the spending side, dropping negative 0.4% from the month.

It was expected to be higher.

Now, there are a few caveats here on this retail sales number. It's a noisy number. If you read all the economist reactions right now, weather plays a role.

Holiday spending hangover plays a role in January. And you saw the weather effect because one of the hardest hit areas in this report were the building materials down 4.1%. We know that's weather sensitive when it comes to building. So yes, it will reduce spending in GDP, David, but I don't think it's something to really worry about in terms of, oh, the consumer's collapsing because there are some interesting January factors and that are usually unusual. We need to see more evidence.

David Faber (2:32)

Okay, so what's our next big data point coming up as we continue to try to ascertain when and if there's gonna be a rate cut at some point, let's call it, before the first half of this year goes by?

Sara Eisen (2:42)

Next week is gonna be a big one because we get the PCE, which is the Fed's preferred gauge. And there's been this narrative after CPI this week, which was hotter than expected, that PCE will, and it has looked better, it's been a point better, doesn't have the owner's equivalent rent in there. And so that's gonna be a key metric next week. Look, we still have more data today, I mean, minor data, and we have FedSpeak. We have Waller speaking about the US dollar later, which I think is gonna be interesting, but there will be, there's a higher bar now for CPI. Carl, you mentioned that some of the trading notes are saying, okay, look, they're teeing off the Fed comments. A lot of the Fed comments post CPI and Jenny Yellen, the Treasury Secretary, have been, don't make too much of one data point. Here's what Secretary Yellen said about it.

Janet Yellen (3:29)

I think it is a tremendous mistake to focus on minor fluctuations and to fail to see the longer term and bigger trend. And the trend here is that inflation is moving decisively down.

Sara Eisen (3:52)

So she dismissed it, we've heard other commentary. Barr was the latest yesterday, the Fed governor who gets a vote at every meeting, that he expects it to be noisy coming down to 2%. So they're not really surprised, they're playing it down. But I do think that Carl the market has this nagging feeling that especially the super core inflation number coming in at 0.7%, which was a big upside surprise.