Squawk on the Street SOTS 2nd Hour: Consumer Concerns, On The Home Front, and Berkshire’s Big Moves 5/16/25
May 16, 2025
The hosts dive into the latest stock market dynamics, highlighting a surprising drop in consumer sentiment amid rising consumer spending. Insights from JPMorgan reveal a complex financial landscape, while whispers of a potential nuclear deal with Iran spark interest in energy markets. The volatility within the housing market is explored, focusing on homebuilder confidence and mortgage rates. Additionally, Berkshire's strategic investments come under scrutiny, alongside discussions of a significant merger in the cable industry and proposed tax changes that could reshape estate taxes.
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Consumer Sentiment Divergence
- University of Michigan consumer sentiment fell to its second-lowest reading on record, indicating significant consumer pessimism.
- However, this sentiment drop contrasts with positive consumer earnings commentary and resilient hard economic data.
Consumer Resilience vs Business Hesitation
- Consumers remain resilient despite tariff-related uncertainty and low sentiment readings.
- Businesses' hesitancy to hire amid uncertainty may slow economic growth more than consumer behavior.
Watch Mortgage Rates for Housing
- Homebuilders should hold back on building until mortgage rates fall closer to 6%, improving affordability.
- Buyers typically return to the market when mortgage rates stabilize near 6%, supporting new and existing home sales.