← Squawk on the Street
Squawk on the Street
SOTS 2nd Hour: December Jobs Report - Goldman's Takeaways, Rockefeller's Ruchir Sharma; Plus - SCOTUS/Tariffs Decision Latest 1/9/25
00:44:32
Carl Quintanilla, Sara Eisen, & David Faber kicked off the hour with a breakdown of December's full jobs report - before breaking down the numbers with an all-star lineup of market veterans, including Rockefeller's Ruchir Sharma and Goldman Sachs Chief Economist Jan Hatzius. Plus: SCOTUS not making a decision on President Trump's tariffs just yet - but Wolfe Research's Head of Policy joined the team with potential outcomes ahead of an official ruling. Also in focus: GM taking a multibillion-dollar charge tied to scrapped EV plans - the team talked fallout, and whether there's more pain ahead... Along with the latest from Washington ahead of a huge meeting at the White House with energy executives to talk the road ahead in Venezuela.
Loading summary
Transcript125 lines
- [00:00]
A
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@schwab.com Market Update podcast or find Schwab Market Update wherever you get your podcasts.
- [00:29]
B
Not every sale happens at the register. Before AT&T business Wireless, checking out customers on our mobile POS systems took too long. Basically a staring contest where everyone loses. It's crazy what people will say during an awkward silence. Now transactions are done before the silence takes hold. That means I can focus on the task at hand and make an extra sale or two. Sometimes I do miss the bonding time.
- [00:53]
C
Sometimes AT&T business Wireless Connecting changes everything Market insight and analysis. You're listening to the opening bell of cnbc. Squawk on the Street.
- [01:08]
B
Good Friday morning. Welcome to Squawk on the Street. I'm Sarah Eisen with Carl Quintanilla and David Faber. We are live from Post nine of the New York Stock Exchange. We are getting ready for what could be a big hour of breaking news as we wait to see whether the Supreme Court will issue a ruling on the President's tariffs. We'll bring it to you. Any news as soon as we get it. We also have some big names ready to weigh in on this morning's jobs report, including Mohamed El Erian, chief economic adviser at Allianz is here. Plus Goldman Sachs on Hatzius with his first take on the numbers, what it means for the Fed policy moving forward.
- [01:42]
D
Let's get to Amy Jabras, talk about this possible decision on the legality of the President's tariffs.
- [01:47]
A
Morning Eamon yeah good morning to you Carl. We are on high alert here in Washington waiting to see whether the Supreme Court will issue that decision today. They're under a lot of pressure to get this done because of course companies are paying the tariffs in real and companies want some clarity of whether those tariffs are in fact legal for the administration to collect. To put this in perspective for you Carl, take a look at sort of what's at stake here. The overall tariff revenue that was collected in 2025 and 2026 so far this year and then what the subset is from these so called IPA tariffs which are at stake here in the Supreme Court. Total tariff revenue collected $251 billion. The IPA specific tariffs $133 billion. That's the part that at risk here because the question in the Supreme Court is whether the International Emergency Atomic Economic Powers act actually has the authority in it to collect tariffs. That's the law that the president used to justify his tariffs, and that's what's at issue in the Supreme Court today. So if those tariffs are struck down by the court today, the expectation is all this could be determined by the court in a different way. But the expectation is now that the US government would be expected to repay that 133 billion doll to the companies that sent those checks to the US Government. So a lot at stake for all the companies that paid tariffs, a lot at stake for the Trump administration. The president himself has been hammering home in recent weeks just how important he thinks this ruling is to his leadership as president of the United States, his ability to bring foreign countries to the table to negotiate, his ability to collect revenue for the US Government, and his leadership overall of the American economy. Guys. So a lot at stake. We expect over the next couple of minutes that we will get a sense of whether the Supreme Court has issued a ruling or not, and we'll go through it page by page as soon as we get it. Carl, back over to you.
- [03:43]
C
Amy, you know, Kevin Hassett earlier indicated the administration has this fallback plan already of using other authorities, conceivably to replace the authority that may be lost if in fact, the Supreme Court rules against them. Do we have any sense as to how quickly that could take place?
- [03:57]
A
Yeah, David, I'm just being told here by our producer, Ashley Trujillo, that we have one decision from the Supreme Court that has just come in. It is not the decision that we're looking for. Correct, Ashley? So no opinion today on tariffs, guys, Just one opinion from the Supreme Court. They don't tell you exactly what's coming each day. So you just know there's a decision day. And what we're being told right now is that they have issued a decision, but it is not the decision in the tariffs case. That means we're going to continue to wait here. And that means, as you mentioned, David, that that meeting that Kevin Hassett discussed on our air this morning to plan for sort of plan B options on tariffs. The White House is going to have a little bit more time to consider its plan B options. They have said they have a lot of options. One would be changing the tariffs into some sort of fee in order to just replace the tariff language with a fee language. That might be enough to pass Supreme Court muster depending on what the decision is that comes down. But as of right now, we're being told no decision by the Supreme Court on tariffs today, guys.
- [05:00]
C
Okay, when would we get it then? I mean, if it is.
- [05:04]
A
Good question. Yeah, we don't know. I mean, the Supreme Court works in mysterious ways and they announce these decision days, sometimes a couple days in advance. So you will get a sense that there's another decision day coming. But because there's so many pending cases in the queue, so to speak, at any given time, you just don't know which decisions are going to be issued on which day. And the Supreme Court kind of, you know, sends these decisions down from Mount Olympus and we stand here waiting to, to hear what they have to say. So we don't know when this decision is going to come. And again, you know, you go back to the idea that companies are paying these tariffs every single day. Companies want some clarity here. And so the court is under some pressure to do this decision as quickly as they can. They've said they're going to take it on sort of an expedited basis and move as quickly as possible, but that doesn't seem to be as quickly as today.
- [05:52]
B
All right, let us know when the next decision comes due and I guess we'll give you both all over again. Thank you. Amen. Jabbers. We also have some data crossing on top of jobs already today. Consumer sentiment. Rick Santelli has it for us. Rick?
- [06:05]
A
Yes, Sarah, there's some surprises here. These are University of Michigan sentiment with inflation gauges. They're January preliminary, which means in a couple of weeks they may be modified. Headline number comes in better than expectations at 54. That would be the best level since Sep of last year. And if you look at current conditions, 52.4, that's also above expectations. And both these are sequentially higher than the previous look. That's the best since October of last year. Now let's look at expectations. It Equals expectations at 55 and 54.6 in the rearview mirror. And all three are sequentially higher. That would be the best since August of 25. Now the inflation gauges and these things really did get out of whack for a while. 4.21 10 warmer than expected equals rearview mirror. That's one year inflation. It equals where the read was in December of last year, the last month of 25. To find a lower number, you go into January of last year. And finally the 5 to 10 year outlook comes in warm on both sides. Whether you're looking in the rearview mirror through the windshield, 3.4%. That equals where we were in November of 25 to find a higher number. You're going back to October of 25. Now real quickly here. Here we hover at 418. Okay. You all remember Pac Man. We've taken so many bites on the 10 year on the top of this range right around 419. And 419 happens to be where we settled last week. So that would be unchanged on a week. Pay close attention to that 420 level. Should we settle above that? I would look for significant selling to be coming in next week. Sara, back to you.
- [07:46]
B
Yeah. Just some color here from this, from this report that you just shared, Rick. Improvements in January we're seeing among lower income consumers. That's good because we know that was a weak spot. And Rick, they also say consumers worries about tariffs appear to be gradually receding. That's also a notable improvement.
- [08:04]
D
Absolutely.
- [08:05]
A
And considering the tariff issue. Listen, Steve Liesman always says he's waiting for some effects down the road, but boy, I'll tell you, it's like waiting for Godot. So that doesn't surprise me that the respondents had that impression.
- [08:18]
B
Okay, thank you, Rick. Thank you very much. Rick Santelli on consumer sentiment jumping a little bit this past month. Look, it was jobs day and just to rehash the numbers a little bit, there was good news and there was bad news in this report. So the good news, we'll start there. I'm always an optimist, is that unemployment rate fell. Remember I said this was really important. This is what the Fed is watching very closely. It was 4.6% and it came down to 4.4%. David, if you don't round the number, it was actually 4.375%.
- [08:49]
C
Yes.
- [08:49]
B
So that was good news. Did he make that point too? Yeah, I mean, look, I think it suggests along with the fact that we did see wage growth that we're not in any kind of labor market recession or terrible spot in the labor market. Now the bad news is we didn't get as much payroll growth as expected and we know we only grew 50,000 jobs during the month. That was weak. We got revisions lower for the prior few months that were weaker and that subtracted job growth. You can look at this in a number of ways, but one way to look at it, David, is that we know the supply of labor is down because of the immigration policies, because of the visa policies. You know, that it would make sense that you're. That the hiring comes down as labor supply comes down. Does it speak to overall weakness in terms of businesses Wanting to hire maybe a little bit, but they're still, there's wage growth, 3.8% year on year. Wage growth is a sign that, you know, they're still paying for those workers. And with the unemployment rate down, you know, you're not seeing necessarily some, some big stress in the labor market. The Fed probably is going to be heartened to see the unemployment rate go down. But you know, just to, just to add to it, the Atlanta Fed GDP number, which tracks, you know, real time, has, puts in these inputs for fourth quarter, is now tracking above 5%, 5.4%. So we continue this recovery or this, this period that we're in, guys, where it's high growth, high productivity, high investment in places like AI and you know, lower hiring than we're used to in this kind of economic expansion. And that's where we are.
- [10:28]
C
Okay, okay, I believe you.
- [10:30]
B
So there you have it. So nothing to be like so alarmed about. And also, by the way, you know, if you're looking for Fed cuts this year, there are those who look at these numbers and say, all right, unemployment rate came down a little bit, but hiring has really slowed. So and you know, we're not seeing evidence of very high inflation. So the Fed can keep cutting. And for those that are saying the Fed shouldn't cut, they look at this and they say economy still healthy. Job growth, okay, we'll watch it. But inflation is still sticky. They shouldn't cut this year. There's a little something for everything.
- [10:59]
D
Let's talk about this some more with the Mohamed El Erian joins us here post 9. Great to have you, Mohamed, welcome. Thanks for having me. It is the weakest year of job growth outside of recession in 20 plus years. Is that okay?
- [11:14]
E
It is okay for where we are in the cycle. In fact, relative to expectation, as Sarah said, there's something for everyone in this report and it's no drama. And it reinforces the notion that Chair Powell has that we are well positioned to wait. The big issue in my mind is that increasingly we're seeing employment decoupled from output. And you had Kevin Hassett on earlier and he said it's all about productivity and it's going to raise three issues. One is who gets the benefits of this productivity? Does it go to companies or does it go to the workers? And this is really important because the second issue is affordability. This is a real issue. It has economic, political and social aspects. And then third, I think the inflation number next week is going to be even more important. So, so no drama relative to Expectations but it highlights these bigger issues that we're going to deal through this year. Right.
- [12:05]
D
To your point about the fight between capital and labor, I mean pre tax margins on companies are near record highs and the employee share of corporate income is close to multi year lows. I think we know who's winning that.
- [12:18]
E
That fight, but who's going to continue to win. So we have an opportunity now with the productivity gain to pass on more to the workers and this becomes really important. In terms of affordability, it's not just about prices. The focus of the administration about the price of energy, the price of mortgages we saw yesterday, the price of pharmaceutical. It's also about income because that's what affordability is. It's prices and income. So that's going to be a critical issue and it's going to play out not just in terms of economics but also in terms of the politics.
- [12:50]
B
I mean we did see wage growth in this report. Do you think it's just, just an indication that you said it depends where we are in the cycle, that we're just, we're late cycle and we're at full employment?
- [13:00]
E
I think at 4.4 we are near full employment and we're seeing contraction in labour supply. So yes, I think one of the issues that worries people like me is the labor force participation at 62.4 I'd like to see it higher because there are parts of the economy that do not have the labor they need right now. But that is an issue of reskilling, retooling. It's a much deeper issue about the supply side of the labor market.
- [13:30]
B
So what do you think the Fed does?
- [13:31]
E
So I think the Fed does nothing.
- [13:33]
B
I think in January. But then what?
- [13:35]
E
I think we've probably saw the last cut in this 10 year for chair Powell. I think they will expect that. They will think that quote well positioned. You'll hear that phrase over and over. We're well positioned to wait and then the question becomes how much influence does the next Fed chair have and how.
- [13:53]
D
Quickly do you think we got? 10 year highest since basically Labor Day. Rick was just talking about the 4, 2 level. You think they're starting to test out as they normally do, new new potential chairs. Certainly a new chair once it comes.
- [14:08]
E
You know Carl, I been very surprised by how rangebound the 10 year has been. There's been so much going on, but it is rangebound and I think that has to do with policy, that people see policy effects on both sides and therefore they're frozen into this range bound Trading. We need to see something breaking. I cannot, I cannot stress enough how important next Tuesday's inflation number is. That is the focus now. The jobs report, as Sarah said, says, you know, the labor market is fine. It's not great, it's not bad, it's fine. How about inflation and the U mesh number where as Rick said it's stuck pretty high up there is really suggest that we should focus on this inflation number.
- [14:54]
D
Some of the estimates on I think year on year core are south of 3.
- [14:57]
A
Right.
- [14:58]
D
What are you looking for? Any ideas?
- [14:59]
E
Some are north of 3. A lot depends on what you do with, with housing. Look at services. The PMI number last week had the price component still well above 60. So it's the service sector that you really have to focus on.
- [15:15]
C
I'm a broken record on the impact of AI in the workplace. The longer term impact of course, which we don't know. When you talk about the diversion or an increase in margin slash productivity of businesses and whether the worker will benefit, what about if they're all losing their jobs? What are we going to do then?
- [15:31]
E
So David, I share not only your focus but your worry. And too many CEOs now think only of the labor displacement side of. I think of cost minimization. A few and I can name you Wal Mart, Accenture, Google. Think of the labor enhancing side. And if we are really to benefit from this revolution, which I think is so consequential, we've got to shift the focus more to labor displacement versus labor enhancement. Let's stop talking about those working on AI and let's talk more about those working with AI. Because unless we have a policy for those working with AI is going to harm labor in a major way.
- [16:14]
C
So how is that, how would that evolve then in terms of a policy and. Or the ability to actually impose it on business.
- [16:21]
E
So impose it is the wrong phrase. It's to formulate it in collaboration with business is to have a joint effort. You see it in other countries. We need it here in collaboration with business. Evolve and increase awareness. Awareness is really important. If you're not in the middle of this debate then AI seems to you all about cost minimization.
- [16:42]
B
I'm just looking at some. Sorry to change the topic but looking at some of these consumer discretionary names that are selling off like a Nike or a Mattel, we didn't get the Supreme Court decision. Maybe there was some hope or expectation that we would get it and that they would reverse the reciprocal tariffs. Do you expect this to have a. You know, everybody was Worried about the tariff impact on the economy, on inflation. It didn't bite as hard as feared. What do you think will be the economic impact of this Supreme Court decision when we get it?
- [17:10]
E
So I have strong views on one aspect and muddled views on another. The strong view on aspect at the macro level, it won't matter. Yeah, the administration will come with plan B if, if, if they reverse that, if they reverse it and we'll have a plan B and the trade system will not look any different. At the micro level, there may be huge legal debates by companies reclaiming something on an old law that is now illegal. And I don't know how that works out. So I think at the macro level, no, no big change at the micro level, it's going to play out in a very messy manner.
- [17:47]
D
But what we do know is even, even since Liberation Day, global trade is up. Today the EU announces a big free trade agreement with Latin America. I mean, the rest of the world.
- [17:57]
E
Is moving on, with one exception, China. So China has redirected its exports, so the 30% hit from the US has been offset. They had over a trillion trade surplus. And you're starting to sense the EU saying enough is is enough. We don't want to be flooded by the import. So it would not surprise me if this year we see EU restrictions on.
- [18:20]
D
China in autos and other things. We're just talking about, we were talking about. Yeah. The split between consumer choice and affordability versus your homegrown industry and destroying your.
- [18:32]
C
Industry and a key, key area of employment versus. Right. A $25,000 really nice automobile.
- [18:38]
B
But you also don't want to pick a fight with your biggest customer if you're a German automaker.
- [18:41]
E
So it's tough for them, but it's really hurting. It is really hurting right now. And they've got to do something about this. It's part of a much bigger effort that's required. You know, we are a year and a half from the Dragoon Report. The Dragoon Report for me is the best analysis of what's wrong with Europe and what it needs to do and implementation has been at most 10%. Europe is really lagging and if we talk. AI David, they are really lagging.
- [19:07]
C
I know people write their obituary all the time. Time, basically, in terms of an economy, I mean. Yeah.
- [19:12]
D
And that's a lot of good coverage. Thank you. Good to see you again.
- [19:15]
E
Thanks for having me.
- [19:15]
D
Mohammed El Area.
- [19:16]
F
Thanks.
- [19:17]
B
Here's our roadmap for the rest of the hour. We'll get Goldman Sachs. His first reaction to the jobs report. Chief Economist Jan Hodzius joins us here at Post 9 Plus.
- [19:24]
C
General Motors is the latest automaker to take a multibillion dollar hit this tied to scrapping its plans to produce EVs. We're going to talk about the fallout, what it means for competition and just.
- [19:34]
D
Got the news of course moments ago. SCOTUS will not issue a ruling today on those IA tariffs. We'll keep our eye on Consumer Discretionary Research. Head of Policy and Politics will join us to walk us through some of the potential outcome scenarios and big winners and losers as Walk on the street continues.
- [19:54]
A
This episode is brought to you by Schwab Market Update, an original podcast from Charles Schwab. Join host Keith Landsford 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@schwab.com MarketUpdatePodcast or find Schwab Market Update wherever you get your podcasts.
- [20:23]
B
At Capella University, we believe accessible education can make a difference. That's why we offer scholarship opportunities to all eligible students. Un futuro diferente estam mass serca de lo que cres Kunkappela University. Learn more at capella. Edu what made you confident that you could do something that hadn't been done before? I have no fear of failure. Trailblazing women, changing the game One of my favorite pieces of advice Think about what your boss's boss needs. Leadership can look in many, many different forms. It really does come down to just trusting yourself. Life is short and you just gotta think big to accomplish big things. Julia Boorstin hosts CNBC Changemakers and Power Players. New episodes every Tuesday, wherever you get your podcasts.
- [21:10]
D
Welcome back. Consumer Discretionary takes a leg lower today on news the Supreme Court will not issue a ruling on the President's tariffs today. Let's bring in Tobin Marcus, head of U.S. policy and politics at Wolf. Talk about some possible scenarios for when we eventually do get the ruling. Tobin, good to see you. Happy Friday, Carl.
- [21:27]
F
Thanks for having me.
- [21:28]
D
You know, some of the predictions about when we would get a decision date back to November or December. Does a elongated decision process tilt the scenario one way or the other?
- [21:40]
F
Yeah, I don't think that it is an incredibly strong signal about the likely outcome, but we've always thought that the longer this goes, the more that indicates difficult, conflicted deliberations. We've always thought that the justices in the middle, Robertson Barrett in particular, based on oral arguments are going to be cross pressure. They're not going to want to issue a sweeping rebuke of the President, even though they did seem sympathetic to the challenge. So I think they're looking for some kind of middle ground, and that's probably what they're working on.
- [22:04]
D
Any thoughts on whether or not whatever we get. Let's say they. Let's say they rule against some portion of it. Would it involve some kind of remedies, Refunds? I mean, where are you on that?
- [22:16]
F
Yeah, that's the big question. I would say there is a lot of investor skepticism, based on our conversations and our survey work, about the notion that refunds are actually going to go out, not for any legal reason, but just because the logistics of it kind of boggle the mind. You know, the normally legally indicated course would be that if these tariffs were collected unlawfully, they should be refunded. But I think that is probably one of the places where that sort of middle block and the court would be looking for, you know, can we send a signal that this is not a legal use of IPA going forward, but not cost the taxpayer $130 billion and antagonize the administration that way? So I probably lean against it, but that's the biggest source of uncertainty.
- [22:53]
B
What other sort of, you said middle ground decisions. What else do you have in mind? What else could happen here?
- [22:59]
F
So, you know, I think that that idea of only applying it prospectively is probably the clearest type of middle ground. There's different ways you could do that. You know, you could outright say that IPA is illegal and the tariffs need to be totally reconstituted, but just preclude refunds. Or you could say, you know, they're legally defective, but we're going to give you a chance to sort of cure that legal defect. Justice Alito at oral argument said, which I agree with, that you could have used another tool called section 338 to do substantially everything they've done so far. So maybe you say you just sort of need to fix the legal grounding of this, but not throw them out entirely. There's also a school of thought that I don't agree with, that they might distinguish between the different tranches of IEVA tariffs. So throw out the reciprocal tariffs, but keep the fentanyl tariffs on Canada, Mexico and China based on the idea that that's a real emergency. I think that's not where they're going to want to land. I really do not think they want to be looking over the president's shoulder, making Factual second guessing determinations about what is and is not a bona fide emergency.
- [23:53]
B
I mean, we know that the administration has a backup plan and that they're just going to implement the tariffs through other, other avenues and other routes that are, that are legal. And Mohamed El Erian just said he doesn't expect a macro impact. So what, what is the ultimate upshot of this going to be? Is it a political impact for the administration?
- [24:10]
F
Yeah, I basically agree with that. We've always thought that they're going to end up very close to where they are now once they reconstitute these. There are some questions about exactly what's that, what those look like. But you know, I think the long term picture looks fairly clear there. You know, some investors I think have been speculating that they might be looking for an off ramp, that they'd use this as an excuse to ease up on tariffs. I don't think that's right. I think President Trump believes in what he's doing and believes that it's gone very well. So in my mind, you know, I think that the refund question is the most macroeconomic place significant question in 2026, pumping $130 billion into the economy, even if the multipliers are relatively low, as that sits on company balance sheets, you know, that's half a percentage point of GDP worth of fiscal expansion. I think you have to think that has some kind of an effect, you know, going forward. Go ahead.
- [24:54]
D
I was going to say if they did have to get more creative and do some workarounds, would that broaden the spectrum of sectors that are exposed beyond staples and discretionary?
- [25:05]
F
No, I think that they're going to end up with a very similar tariff base to what they have now. Again, there are some sort of nuanced legal questions about this immediate fallback option. We think is probably a thing called section 122. It's the law is written in a way that's intended to apply very uniformly across products and companies. But I think they're going to find ways to narrow the base to match the current base for reciprocal tariffs. I don't think that we're going to get, you know, sort of accidental expansion of tariffs on the extensive margin to cover USMCA compliant Mexican imports or goods that are currently exempt. So I think the winners and losers are, you know, look very similar to who's already been hit.
- [25:41]
D
Well, it's more speculation, at least for now. Toby, appreciate the help. Good to see you. Have a good weekend.
- [25:49]
B
Delta, come on the show. Goldman's first reaction to this morning's jobs report. Chief economist Jan Hatzius joins us. As always on jobs day here at post 9/GM, the latest automaker to take a multibillion dollar hit as they throw in the towel on EV plans. The fallout and who could see pain next? But first, Metta making a big bet on nuclear power, sending shares of its new partners surging today. What investors need to know in just a moment.
- [26:17]
A
Hey Fidelity. Can I get a second opinion on stocks in the Fidelity app?
- [26:22]
B
With Fidelity, it's easy to get an outside opinion from independent experts in a single score. And then when you're ready, trade US stocks and ETFs with no commissions.
- [26:32]
A
That's right.
- [26:33]
B
I am always right.
- [26:35]
D
Investing involves risk, including risk of loss.
- [26:37]
F
Online US equity trades and ETFs and.
- [26:38]
D
A retail Fidelity account sell order assessment fee not included, some account types and securities excluded. Details@fidelity.com commissions Fidelity Brokerage Services, LLC member.
- [26:44]
E
NYSE SIPC.
- [26:47]
B
Is it time to reimagine your future? The right business skills may make a difference in your career. At Capella University, we offer a relevant education that's designed to focus on what you need to know in the business world. We'll teach professional skills to help you pursue your goals like business management, strategic planning and effective communication. And you can apply these skills right away. A different future is closer than you think with Capella University. Learn more at capella. Edu.
- [27:17]
G
What made you confident that you could.
- [27:19]
B
Do something that hadn't been done before? I have no fear of failure. Trailblazing women, changing the game One of my favorite pieces of advice Think about what your boss's boss needs. Leadership can look in many, many different forms. It really does come down to just trusting yourself. Life is short and you just gotta think big to accomplish big things. Julia Boorstin hosts CNBC Changemakers and Power Players. New episodes every Tuesday, wherever you get your podcasts. About 30 minutes here into the hour, here are three big movers. We're watching housing related stocks seeing a bump this morning after President Trump outlined a plan for the government to buy $200 billion in mortgage bonds, claiming it will make homeownership more affordable. He's going to do that through Fannie and Freddie. London listed share of Miner Glencore jumping on news of a possible $260 billion merger with Rio Tinto that's back on the table in a deal that would create the world's largest mining company. And then news out of Metta on the nuclear front. The company announcing a 20 year agreement to buy nuclear power from three US plants operated by Vistra, covering sites in Ohio and Pennsylvania in a move to secure long term power as AI and data centers drive exponential demand for new energy. The company will also help develop small modular nuclear reactors with OKLO sending those shares surging. It's a company we've been all over on this show and we'll talk to the CEO on Monday to discuss this news. This latest deal with Metta that's going to be on Money Mover.
- [28:49]
A
All right.
- [28:50]
C
Let's get a CNBC news update. Sima Modi has that for us.
- [28:53]
B
David here the stories are watching at this hour. The man accused of shooting and killing UnitedHealthcare CEO Brian Thompson on a Manhattan street is back in court today for a crucial hearing in his federal case. Luigi Mangione's lawyers are asking a judge to bar the Justice Department from seeking the death penalty in the case. Maggione also faces nine counts in a state case. He has pleaded not guilty. Russia said today it used its latest nuclear capable hypersonic missile against Ukraine for the second time in nearly four year, four year old war. The move sends a warning to Kiev and its Western allies as peace talks enter a new stage. Kiev did not report any casualties from the latest strike. And Elon Musk's AI chatbot Grok is limiting users ability to generate images as it faces backlash over sexualized AI pictures that some say have appeared to depict children at times. Brock responding to requests on X today with a message that the feature is currently limited to paying subscribers. The European Commission, UK and other government entities have opened investigations. Carl, back to you.
- [29:55]
D
Thanks so much. Still to come this morning, the implications of this morning's jobs number. We'll talk to Goldman's chief economist Jan Hodzius first after a break.
- [30:08]
B
Welcome back. This morning's jobs report showing nonfarm payrolls up for December 50,000. That was less than economists were expecting. But the unemployment rate came down 4.4%, rounded up with November's unemployment figure, also Revised down from 4.6 to 4.5%. Let's bring in Goldman Sachs chief economist Jan Hatzius. Was there more good news in this report or bad news or kind of neutral? What do you think?
- [30:31]
H
I thought it was certainly not a strong report. If you look at the employment numbers, that's true for the latest 50,000, a little bit less than expected and the downward revisions. So if you look at the last six months, we've created like 15,000 jobs per month. That's obviously quite weak and that probably will be revised down because the benchmark revisions are likely to take another chunk out of that. On the other hand, the unemployment rate news was better. Not only a drop on the month, but also a downward revision. So the increase in the unemployment rate that we've seen over the last 6 to 12 months looks somewhat less concerning now. And I think if, if I'm the Federal Reserve, that's probably what I'm going to be more focused on really the balance between demand and supply, especially given the uncertainty around the break even rate of payroll growth.
- [31:26]
B
Well, the other thing they're going to be talking about, which sort of all investors and economists are scratching their heads over, is this, is this boom we're seeing in the economy and in productivity and it's just, it's not really leading to a boom in job creation. And I guess the question is why is it AI, is it that we're at full employment? Is it that labor supply is just way down because of immigration policies? Policies?
- [31:50]
D
What's the.
- [31:50]
H
I'd say a couple of things. One, there is quite a lot of uncertainty about how quickly GDP is actually growing. We still don't have a lot of the monthly source data. We've had a lot of noise in the GDP numbers because of tariff front loading because of the shutdown. So I would withhold judgment a little bit on just how much GDP growth we're seeing. What is clear though is that we've seen an acceleration in productivity growth over the last five years relative to the 10, 15 years before that. And that of course means the speed limit for the economy is different from from what it was. In the near term I would put more weight, especially from the Fed's perspective, on the job market numbers. We're now actually sort of caught up in terms of having a full slate of inflation information. The as far as the jobs numbers are concerned, the shutdowns in the rearview mirror we have the information, but that's not yet true for GDP.
- [32:50]
D
What's your stance on CPI?
- [32:53]
H
Well, I think in the, in 2026 as a whole, I'm in the disinflationary camp because the sideways move in core inflation that we had in 2025 was related to tariff pass through. We're estimating about 50 basis points of contribution. So you need to take that out of the underlying rate. So the underlying rate was still coming down, wage growth is still trending down, rent inflation is still trending down. So I think by the end of the year when the tariff impact will have sort of cycled through the year on Year comparisons to a significant, significant degree I think will be not too far from the 2% target.
- [33:36]
D
Are we by year end?
- [33:37]
H
By year end we're at 2.1, 2.2 percent one.
- [33:40]
D
Are we through the fat as part of the tariff pass through?
- [33:43]
H
I think best guess. And of course a lot of that is going to depend on what happens to tariffs, you know, when we get a Supreme Court decision, what will be replaced, etc. But under our baseline assumptions where through 50 basis points and have another 30 or 40 basis points to go, does.
- [34:01]
D
The move on GSEs, can they meaningfully compress the spread for mortgages?
- [34:07]
H
I mean, I do think there is a good case for mortgage rates to, you know, come down somewhat. The spreads have been very elevated and I think market dynamics are already pushing in the direction of bringing that down somewhat. And if the GSEs increase, increase, increase support, I think that that will reinforce that. With that said, longer term yields I don't think are going to come down a lot as you know, over the next several years. I think the term premium at the longer end of the curve is probably going to edge higher. We still have a very large budget imbalance or the debt to GDP ratio is increasing, but the spread I think can compress.
- [34:48]
B
Okay, wait, I just want to dig into this a little. So you're talking about the announcement from President Trump yesterday that Fannie and Freddie are going to be buying mortgage backed securities in the market to try to lower interest rates. It's interesting timing because it's at a time where the Federal Reserve has been letting those roll off of its balance sheet. Right. They're not outright selling, but they're letting them roll off and reinvesting in Treasuries. So is there, is there an offset impact here where Fannie and Freddie are buying and they're rolling it off?
- [35:14]
H
Yeah, talk about that. I think there, I think there is an offset and of course a lot of the moves in the market are ultimately offsetting. So I tend to look more at the, at the fundamentals. For me, the fundamentals are that long term treasury yields I think are going to be around the current levels and maybe edge higher over time because of a widening of the term premium. But at the same time the spread between mortgage backed securities and Treasuries has been relatively wide and I think that can come in over, over time.
- [35:49]
C
Back to the, to sort of end on the jobs report. Manufacturing jobs down 75,000 year over year. Another 8,000 lost in December. I'm just curious as to whether that surprises you.
- [35:59]
E
At all.
- [35:59]
C
John, given the trade policies were designed to bring manufacturing jobs going higher.
- [36:04]
H
I mean, it doesn't surprise you me really relative to the other information that we've seen about the manufacturing sector, including the employment components of the various business surveys. Those have continued to point to, you know, stagnant or declining employment growth in the, in the manufacturing sector. And I don't expect that to change quickly. We do have somewhat faster GDP growth, underlying GDP growth in the first half of this year and some of that is driven by tax support and full expensing of of capital equipment and plants that could give you some support. But I don't think it's going to change dramatically.
- [36:49]
B
Kay on really good to have you as always on a jobs day. Great to be on Janss from Goldman Sachs.
- [36:55]
D
When we come back, the co president of one of the largest owners of single family homes in the U.S. we'll get his take on this plan to ban institutional investors from buying some single family. Steven Schur will join us next hour on Money Movers. First, though, GM under some pressure today as the company becomes the latest to take a hit from scrapped EV plans. Although nice little price target bump for GM out of Mizuho today. We'll talk about what comes next after the break.
- [37:22]
C
Welcome back to Squawk on the Street. General Motors shares, you can see down over 33% this morning after news the company is set to take a multibillion dollar charge tied to scrapping many of its plans around the production of EVs. Philippeau has a lot more on this story, of course.
- [37:36]
G
Phil David, this charge, which was announced in a 8K the company dropped after the bell yesterday. It is a pre tax impairment charge on the company's EV assets and investments. And we know that there there's been one in the third quarter. There will be more in 2026. Here's what it comes out to. $6 billion will be written off by General Motors. That will impact the net income. But EBITDA is not going to be impacted by this. Q3 they wrote off $1.6 billion. And again the company has announced it expects more of these. They said it again yesterday. More of these charges are expected in 2026 for General Motors. Its fourth quarter EV sales were down 43%. Had a big surge at the end of the EV incentives which ended in September. Q3 numbers were big. Now we're seeing the slowdown in EV demand in this country, down 43% in the fourth quarter for General Motors. Overall, EVs made up just about 7.8% of total sales in the United States last year. Hybrids coming in at just over 14%. And there you see internal combustion engine vehicles now down under 80% of the vehicles sold last year in this country at 77.8%. If you take a look at shares of General Motors, keep in mind that this company will be reporting its Q4 financials on January 27th. No doubt, guys. They'll talk more extensively about the adjustments they've already announced when it comes to EV production and what they expect to for 2026 in terms of both EV production as well as the market overall. Remember, they were down. EV sales, I should say, were up just 7% for the whole country in 2025. We'll see what happens as we see the end of those EV incentives. We'll see where it comes in for 2026.
- [39:26]
C
Yeah, and obviously a lot of that, I think 7.8% is made up of Tesla. Bigger picture here for me, Phil, was only a couple of weeks ago, a few weeks ago, Ford announced what, 19 and a half billion dollars in charges for its EV plan. So what are we going to be getting when it comes to EVs from Ford and GM in 2026 and 27? What are they actually going to be producing?
- [39:49]
G
Well, it's going to be dramatically lower than what we've seen in the past couple of years, but they will. They've both been very clear about this, David. They still plan to sell electric vehicles. Ford is pivoting away. Let's give an example here. The F150 lightning, that's going away, the pure electric one. What they do plan to build in the future will be in an extended range electric vehicle, which, as you know, it has essentially a generator on board. You fuel that, that then provides power to the electric motors so you get greater range there. But it's not pure electric. And for General Motors, it will still sell pure electric vehicles, but it's already made a decision on its Orion plant in Michigan to pivot away from EV production at that plant to internal combustion engine production. So essentially shifting more towards either internal combustion engine vehicle production or hybrid production.
- [40:45]
B
Got it. All right, thank you, Phil. Phil, GM shares down 3%. We are just a few hours away from a key meeting with oil executives at the White House to discuss the developments in Venezuela. We'll bring you live to Washington for details on what to expect here. And do not forget, you can catch Squawk on the street anytime, anywhere. Listen to and follow the Squawk on the street podcast. We're Back in just a moment. The capital of the energy world is in Washington today. President Trump scheduled to meet with the CEOs and executives from oil and gas companies at the White House with a key focus on what's next in Venezuela. Brian Sullivan joins us now. It's going to be so interesting, Brian, if we get any information about what their appetite is and what, what sort of demands or requests they have for the administration to go in there.
- [41:28]
I
Yeah, I have reporting on all that, Sarah, thank you very much. Yeah, we're here in D.C. we're going to be heading to the White House very soon for that 2pm Eastern Time meeting. Both sides are looking for something. Okay. The White House is looking for some commitments, whether it's just a verbal commitment or preferably a financial commitment, as the president kind of put out on social media last night, saying really hoping that there's $100 billion of investment that's coming. That's a big number. We'll find out. The president would like verbal or financial commitments that some Western, not just us but Western oil companies will go or go back In Exxon and ConocoPhillips case, go back into Venezuela, help rebuild their oil infrastructure and their oil output. What the oil companies are going to be looking for, number one, is some kind of security guarantee. This is still an unstable, dangerous country, Sarah. They're not going to put their employees down there in any harm's way. They need to hear that first. Then of course, you've got the financials, whether that is going to be tax breaks or if you're ConocoPhillips trucks on Mobil. They're both owed billions of dollars, Conoco about nine plus billion dollars owed from the nation of Venezuela as part of a legal victory that they had a number of years ago. They have still yet to be paid. So there might be some payment plans as an inducement or as an enticement for a ConocoPhillips and an ExxonMobil to go back in. I can report this, that as of right now, not one company, whether it's here or in Europe, that I have talked to and I've talked to all of them in the last 24 hours has given me any commitment that they will be going back to Venezuela anytime soon. But that commitment, Sarah, is what the president and his team, including Secretary of State Rubio, Secretary of Energy Rice and Secretary of Interior Doug Burgum, they're all hoping to accomplish and get from the oil and gas industry. And like I said, not just us, any of Italy is going to be there. Repsol Spain and others.
- [43:24]
B
Well, the President usually gets what he wants from the private sector with these meetings. So assuming they give them what they need, the tools they need or the security guarantees, that sort of thing, what then does that look like going into Venezuela?
- [43:37]
I
It looks very slowly and here's some, here's some new reporting I've not put on the air yet. There is an American oil and gas company in Venezuela right now called Global Oil Terminals and it's a privately held small company. They actually take oil out of the ground. Chevron is a partner with pay to base of the Venezuelan oil company. What I'm hearing from three sources is that if there is some framework of a Venezuela deal announced, it would be the smaller private players. There are some smaller private companies that are going to this meeting as well. Hill Corp. Not small, but they're private. And some others. And that maybe larger companies would partner with the smaller companies, provide capital, know how, expertise, etc. Marketing, selling ability. But the smaller companies might be the first ones to dip their toes back in because this is not, Sarah, going to be a situation where you can just go into Venezuela, throw a couple dollars around and start pumping about another million barrels a day of oil, say multi year or decade long rebuilding of an oil infrastructure which has been left to rot for the last 20 years, literally and figuratively is rotting.
- [44:54]
C
Yeah, you know, I, and your reporting on this has been great, Brian. Of course I've been hearing same from those who've been there at least and have seen it. And then not, not, not too long ago, I think, you know, on 2024, when there was a small delegation that went down there, do we think there could be a trade mission in the future perhaps including some, some of these CEOs and the like, at the very least that go down there and take a look at things.
- [45:20]
I
See, I feel like David Faber might have done some reporting on this as well because yes, what I'm hearing is that there will need to be exploratory trips. By the way, I'd be happy to be on one of those exploratory trips down to the reason to see it firsthand. Okay, so Those are the CEOs that are going. You wonder where Chevron is. The CEO of Chevron, Mike Wirth, reportedly recovering from I think knee surgery. If that's wrong, Mike, I apologize, but that's why he is not there. It's kind of a notable thing. David, let me ask you this because you've been to Ghana, you had that amazing documentary on ExxonMobil at that point, Hess and now Chevron. How far away is it? Because the other, the other theory is that Exxon being in the region wouldn't have that much of a shift. I have not been down there. You have.
- [46:09]
C
Oh, it's close. It's fairly close. And of course as you know it's similar, similar reservoirs or same, I mean, you know, you're talking about the same, I guess geology. And I don't want to go too far here given my lack of knowledge, Brian, but there's no doubt that it is close by. Remember we can remember not that long ago when there were threats from Venezuela in terms of to Guyana itself and taking control, so to speak of their oil which is going to approach what, a million barrels a day at some point. Right. Far, I mean which would exceed that from Venezuela which is so much bigger in terms of the country.
- [46:43]
I
And Brazil's now at 4 million barrels a day vis a vis Petrobras. One thing finally guys know we're going to head to the White House. Watch Iran. The protests that are there don't have a lot of information. Iranian oil is all come the same company Nayak National Iranian Oil Company. If there is some kind of meaningful change in Iran, it's going to involve oil that's 3.2 million barrels a day. Watch Iran. That may factor into some of these negotiations and discussions today as well.
- [47:10]
D
Yeah. As we get closer and closer. Brian to a six handle on West Texas. Pretty interesting. Brian Sullivan in D.C. when we come back next hour. Can't miss interview former Goldman cfo now turned single family home investor Stephen Scherz with us. We'll talk about the President's plan to keep institutional investors from buying single family when Money Movers begins.
- [47:32]
C
You've been listening to the opening hour of CNBC's Squawk on the Street.
- [47:36]
B
All opinions expressed by the Squawk on the street participants are solely their opinions and do not reflect the opinions of CNBC, NBCUniversal or their parent company or affiliates and may have been previously disseminated by them on television, radio, Internet or another medium. You should not treat any opinion expressed on this podcast as a specific inducement to make a particular investment or follow a particular strategy, but only as an expression of an opinion. Such opinions are based upon information Squawk on the street participants consider reliable, but neither CNBC nor its affiliates and or subsidiaries warrant its completeness or accuracy and it should not be relied upon as such. To view the full Squawk on the street DISCLAIMER Please visit cnbc.com squawkonthestreetdisclaimer Introducing.
- [48:16]
C
Fidelity Trader plus with customizable tools and charts you can access across all your devices, try our most powerful trading platform yet@fidelity.com trader+ investing involves risk, including risk of loss.
- [48:28]
B
Fidelity Brokerage Services, LLC Member nyse SIPC.