Local Shopping, Macroeconomic Thinking 12/1/25

0:00Bring in show music please. Hi, I'm CNBC producer Katie Kramer. Today on Squawk Pod. Black Friday, Small Business Saturday, Cyber Monday, Travel Tuesday. Shopping season is in full swing. Small business owner Caroline Weaver operates the Locovore in New York. Local doesn't just mean cottage industry goods. It means actually manufactured things. And a big-picture conversation on the market and regulation themes of 2025 with economist Mohamed El-Aryan. We are captivated right now, understandably, by two things. Will they cut this month or not? And who will be the next Fed share? As important is how will this Fed be reformed?

0:44This Fed went to sleep. Plus, the rest of today's news. NVIDIA taking another$2 billion stake, this time in synopsis. Airbus says it has fixed all its planes affected by a safety alert, and a new Fed chair has been picked, but we still don't know who it is. Is it a Kevin? But Kevin is the male Karen, supposedly. Really? I just call the male versions Karen, too. Yeah. It's Monday, December 1st, 2025. Squawk Pod begins right now. Stand Becky by in 3, 2, 1. Cue it, please. Good morning, everybody. Welcome to Squawk Box right here on CNBC. I'm Becky Quick along with Joe Kernan. And this is Squawk Box.

1:28You could use mine. It's over there. Let's see. I'm Becky Quick along with Joe Kernan. Yeah. And Andrew's off today. Are we allowed to share the whole set? Yeah, I think so. No. Yes. Holy moly. Last week, things were so strong, in fact, that it actually moved both the S &P 500 and the Dow into positive territory, which was pretty impressive because for the month, it looked like they were going to be down pretty significantly. The Nasdaq was still down by about one and a half percent. How do you know that? Because, OK, I just take a shot of me. Take a shot of me and you can read my teleprompter, her teleprompter is down.

2:02Becky says November. So I'm going to do reaction shots. OK, and you read November. It was down. The Nasdaq was down by one and a half percent in November. It broke a seven month winning streak. Both the Dow and the S &P 500 posted small monthly gains. It was their seventh straight positive month. Seven. Seven in in a row. But again, they only pulled it off on Friday because as of Friday morning before trading started, both of those averages were down for the month as well. Thank you, Joe. What do you think the better way to do it would be? To pretend like nothing's wrong and no one knows anything.

2:37Probably. Like professionals? Or to bring people in to what we do or what our life is all about and to involve the viewer in issues like when you don't have a teleprompter. I mean, some people, if they don't have a teleprompter, they just stop. They have no idea. Right. Darren has that. I stop when I have a teleprompter because I don't like it. But I'm going to read this now. Mine's fine. Mine is fine. But yours looks like it's working. President Trump, as we said at the top of the show. Well played.

3:14Anyway, you know what I'm going to say. I'm finished. No, he says he's made his choice on the next Fed chair. Speaking with reporters on board Air Force One, the president said he knows who he's going to pick to succeed Jay Powell. Fed chair, are you any closer on that right now? I know who I'm going to pick. Is it Kevin Hassett? I'm not telling you. We'll be announcing it. Thank you very much. Is it Hassett? That seems to be the front runner at this point. Hassett was on over the weekend. There's a picture. I'm going to ask if his selection was Kevin Hassett, the National Economic Council director.

3:49The president said he wouldn't tell reporters that have put Hassett in the lead to succeed. Some reports have, Powell. Here's Hassett, though, on CBS's Face the Nation. That was yesterday. I'm really honored to be amongst a group of really great candidates. The thing that I was most impressed about this week with that story leaked was that really I think the news for markets was that President Trump is close to announcing a new person who's going to replace Jay Powell. And if you look at the market response to that, it was very, very positive. We had a great treasury auction, interest rates went down.

4:26And so I think that the American people could expect President Trump to pick somebody who's going to help them, you know, have cheaper car loans and easier access to mortgages at lower rates. And you're probably watching. Unfortunately, I never, you know, Besson was coming on. I really wanted to be here on Tuesday. I knew you were really sick because I knew there was no way you would call on sick. I never call on sick. I don't get flu shots. I don't know. I probably should. But midnight, Monday night, brutal. There's just no way. And I woke up Ann and everything. Because we had Besson on, I knew there was no way.

5:00Did he say hi to Joe? Something like that? He said he hopes you're feeling better. Okay. I was scheduled off Wednesday and Friday. Yeah. I'm not a sick, wimpy person that doesn't get out of bed. I was scheduled off. Yeah. I'm going to make that clear to viewers. Treasury Secretary Scott Besson, as I just said, told us last week he thinks there's a good chance that President Trump makes an announcement before Christmas. Yeah, when Hassett said when that news leaked. It didn't leak. I wish we knew. Yeah, he did. I wish we knew the top three. Who's your top three? Warsh is still in. I think Warsh is.

5:34I think the markets, honestly, I think the markets would almost do better on the initial, at first blush, if it was worse. I think the market would like to be guaranteed of another rate cut or two. Well, how bad? But the problem becomes, I feel like it's being run out of, if it's no longer an independent bet. That's what I mean. Is the market that, you know, addicted to easy money at whatever the cost, and it's going to rally on that? or is it going to rally on someone that might really reform the Fed and be tough when you need to be tough? I think the answer is both. I think that originally, initially, they want another rate cut or two, but I think they want somebody who is a strong, independent Fed leader.

6:19Or do they want someone? Because you don't want a situation where inflation rears back up again. Or do you want someone who goes to 1 % like boom? No. I don't think anybody wants that. So who's left? Is it Walsh, Hassett, Waller? Waller. Besant himself? Besant has said repeatedly he doesn't want to do that. So I would be shocked if it were actually Besant. Yeah, I would be shocked. Seems like it's going to be Hassett, probably. One of the Kevins. Safe money is right now? The two Kevins. Kevin is the... I don't think we're allowed... Do you know that the name Karen is dropped off the top ten? Shocker.

6:58Completely no one's... Probably dropped off the top thousand. No one is naming their daughters Karen. anymore. But Kevin is the male Karen, supposedly, right? Really? Yeah. Kevin. Kevin, you know. But I don't even think we're allowed to talk about what a Karen is, actually. But it in, right. So let's not. Okay. Nevermind. I just called the male versions Karen too. Yeah. So do I. If you look at my Twitter account, I get in trouble. People don't like that. They get mad. Call people Karen. All right. Bargain Hunter is looking for deals this Cyber Monday. which is today and lots of consumers actually turning to AI for help.

7:37Adobe Analytics says that U.S. shoppers spent a record$11.8 billion online on Black Friday. That's up more than 9 % from last year. According to MasterCard Spending Plus, e-commerce sales were up by 10.4%. MasterCard said overall spending, including or excluding auto, as I should say, was up by 4.1 % compared to last year. So still e-commerce growing at a faster pace than you see in traditional bricks and mortar. European plane giant Airbus says that the vast majority of about 6 ,000 A320 jets affected by a safety alert have now been fixed. Airbus said an examination of an October incident, this was a jet blue plane, experienced a sudden drop in altitude.

8:24It revealed that intense solar radiation could corrupt important data related to the flight controls on the A320. Thank you for fixing that. But airlines have been able to update their software faster than expected. Airbus says fewer than 100 planes still require work. You still look at that stock. It's off about 7.8 percent because that's kind of a shocking story. People sat up, paid attention to this. Americans said overnight that it had repaired all of its planes. What's rather a sudden gain in altitude would be better than a... Well, not if there's... Well, right. Neither one is... Nothing sudden.

9:05Yeah, anything sudden. Sudden and unexpected, I guess, would be a good thing. Sudden is one thing, but sudden and unexpected is different. But yeah, good news. But that stock's still under pressure today. In the meantime, the company that owns an Illinois data center that sparked a worldwide market problem on Friday says that it has beefed up temperature controls. Privately controlled Cyrus One told Bloomberg that it added additional redundancy to cooling systems at the facility, which is about 50 miles from Chicago. The massive amount of electronics and data centers can overheat if they're not properly cooled, and that was the issue on Friday.

9:40It led to one of the longest outages for exchange operator CME in years. Trading across stocks, bonds, futures, commodities, and currencies was halted. And it wasn't just overnight. It was while we were on Squawk Box 2, so continued right up to about 8.30 in the morning for some of those contracts. LSEG showed that the outage lasted more than 11 hours. A Bloomberg report said that the CME's disaster recovery plan calls for a move to a data center in the New York area, but that the exchange opted against switching to a backup facility because it believed that the outage would be brief. It's Rick Greeter still.

10:16in the running. I always liked him as a name for that. I like him, but I mean, BlackRock. Would he have to, would Larry tell him you got to think about climate change? I don't think Larry would tell him anything. Why not? Rick Reeder would be his own man. You have to think about climate change before you cut rates. It's going to get cold in December. I'm so confused. Why Sage? I'm going to use some of that cold in the data center on Friday. Open the doors. It's supposed to be very cold in December. But that, You know why it's going to be cold? Climate change. Global warming. No, no, climate change.

10:51That's why they changed that. Yeah. It's going to be cold because it's warm. Here's the breaking news. NVIDIA announcing a partnership with Synopsys to revolutionize the design and engineering of something called CUDA and other GPU accelerated computing and revolutionizing the design. Synopsys is a leader in engineering solutions from silicon to systems, and it helps customers innovate AI-powered products. CUDA is their NVIDIA's proprietary parallel computing platform and programming stuff. That's a pretty big deal to hear innovations to CUDA coming. And it's, yeah, an expanded strategic partnership.

11:37So it's not. NVIDIA invested, let's see, two billion dollars at a purchase price of four hundred and fourteen dollars a share into Synopsys. I don't know when that was. This expanded partnership will integrate the strength engineering. In addition, I think that's new. In addition, NVIDIA invested into Synopsys two billion dollars. You can see how Synopsys is reacting to this expanded partnership. pretty nice pretty nice this is a little different than a lot of the other ideals that we've talked about that seem circular yeah this is something where these are two real companies working together to to strengthen things that they've already done together at this point to be able to flesh all of the details out as they do talk about exactly what it's going to allow or what what the goals are between between the two companies but it gets pretty arcane Cheese will be next.

12:37Coming up on Squawk Pod, shopping local but thinking big. Owner of the Locavore store in New York, Caroline Weaver, only stocks locally made goods. But issues on a citywide and a global scale still affect her business. All of my things are local, but almost none of those things are made entirely of American parts. For example, a lot of it is packaging. So much of the packaging that my vendors use does not come from America.

13:06This is Squawk Pod. Here's Becky Quick. The Locavore Variety Store here in New York City prides itself on stocking its shelves with locally sourced goods. It's one of many small businesses that help form the heart of the city's economy. Joining us right now is Caroline Weaver. She's the founder of the Locavore Guide. That's a directory to the city's independent businesses. She's also the owner of the Locavore Variety Store. And Caroline, thank you for coming in today. Welcome. Thank you for having me. Let's talk about what locavore means. First of all, that's local carnivore. Basically, you're only consuming things that are made within 100 miles from where you are.

13:44That's right. It's a term used to describe people who consume locally. And what are you finding just in terms of this being a trend of more people looking for something like this? I think currently people are a lot more conscious of where the goods that they buy on an everyday basis come from. And so my shop stands to demonstrate that local doesn't just mean cottage industry goods. It means actually manufactured things. Now, what type of things do you sell? Oh, we sell everything from hand-blown glass to toothpaste and wiffle ball. We sell nail clippers. We sell screwdrivers. It's truly almost everything.

14:19And where do you find these things? Where did you come up with the idea to begin with? I have only ever been a shopkeeper. I used to own a stationery shop, and as a New Yorker, we have so many wonderful things that are made in our own backyards that people just don't know about. And I grew tired of ordering things online to be shipped to my apartment from Brooklyn, and I thought, how wonderful would it be to have a place where you could find all of these things in one store. I would guess that maybe the tariffs are helping with that, too. Maybe things that are made locally used to be more expensive than things made overseas and shipped here.

14:53But now with the tariffs, maybe that offsets some of that differential? A little bit. And I think that the consumer perspective is changing a little bit. People are seeking out locally made goods because they're aware of the tariff situation. But even for me, all of my things are local, but almost none of those things are made entirely of American parts. And so, for example, a lot of it is packaging. So much of the packaging that my vendors use does not come from America. So what have you found with your vendors? It's not just packaging. I would assume it's a lot of the other things that go into their goods, too, that they have to buy from overseas.

15:25Yeah, and a lot of them are very smart, and they stockpiled when they had the chance. And so I don't think we're seeing the full effects of those price increases quite yet. They were all preparing for a Christmas season, for a relatively normal Christmas season. And so I don't know that we've seen the effects of that quite yet. My prices, if they have increased, have increased about 10 % to 15%, but I'm not as immune to it as people assume I am. How have, I mean, just to begin with, made locally, I would assume it costs more money than buying something from overseas traditionally? It very often does.

15:56The cost of shipping things overseas, even without tariffs, sometimes makes it easier to manufacture locally. But I think there are a lot of misconceptions that local necessarily means more expensive. A lot of the brands that I sell, or all of them actually, are independently owned. They are also small businesses. and they're not padding their margins the same way that big businesses do because they don't have shareholders to pay. They don't have enormous marketing expenses. So it's just priced differently. What do you, oh, go ahead. Did you watch the election closely? I did, yeah. And? The election here in New York City?

16:30Yes. And do you want to know who I voted for? No, you don't need to tell me that, but things could change a little. You know, I'm torn. We had eight years of de Blasio and nothing really happened. I don't know about Eric Adams, but I wouldn't be as bullish as being a local sorcerer in New York City with a communist or a socialist. Oh, I feel differently. I think affordability and safety in New York City has so much to do with what is in our storefronts. But the solutions to those two issues are solutions that have never worked in the history of the world. Well, clearly whatever's happening right now also isn't working.

17:14So as a small business owner, I'm open to something new. Well, capitalism isn't working. You think socialism might be something to try out? I think something has to change. And it's a really, really challenging climate for independent retail and for small business owners right now. And I think a lot of us are fed up with the way that things have been working and we are open to something new. What are the biggest problems that you face as a small business owner? We kind of are marginalized because we exist on the fringes of a lot of these capitalist systems. And with the tariff thing, a lot of what's happening for small businesses is that they're not able to get the goods that they need because manufacturers who are already stretched when it comes to the supply chain are prioritizing larger manufacturers.

17:59manufacturers and so for small business especially at Christmas time during a time of economic volatility if we can't get the inventory that we need to sell to pay our rent to pay our employees a living wage to pay our health insurance expenses we can't exist. How was Small Business Saturday at your store or some of the others that you see around? In my store it was it was great we had a really busy weekend I think Small Business Saturday should be either the weekend before the weekend after because a lot of people are in town but what we're seeing and what a lot of my other colleagues are seeing is that people are starting to shop earlier this year.

18:31We saw it start a full month earlier than what we're used to because I think consumers are a little bit anxious about supply. They're a little bit anxious about pricing and they're trying to be strategic about their shopping. Caroline, thank you. We appreciate it. Thank you for having me. Up next on Squawk Pod, Wharton professor Mohamed El-Aryan addresses market and political failures of 2025 as well as the health of the economy this holiday season. The consumer somehow keeps on going, but there's concern. There's concern about the labor market decoupling from GDP. Remember, this is just a demand transition to the productivity impact of AI.

19:06We'll be right back.

19:13Welcome back to Squawk Pod from CNBC. Today with Joe Kernan and Becky Quick. Stand by Joe. Here's Mike. Thank you. You are watching Squawk Box on CNBC. I'm Joe Kernan, along with Becky Quick. Andrew's off the day. Joining us right now is Mohamed El-Erian from the University of Pennsylvania's Wharton School of Business. He's also chief economic advisor at Allianz. And Mohamed, welcome. There have been some interesting trends in the market lately. What have you made of all these AI trends that looked so concerning two weeks ago and then looked pretty good last week? I actually have been encouraged because I think that AI trade has become more differentiated.

19:51People have understood that vertical integration matters. They have understood that multiple sources of revenues matter. So we're starting to see AI being much more fundamentally driven than hype driven. Explain that. I don't get that because it seems like every time there's a deal, both companies tend to go up. Whatever two deals, whatever two companies are there. How are we differentiating between what works and what doesn't? So let's start with Gemini. I think Gemini 3 was a significant change in the landscape. I think it made people realize that if you are going to be a winner in this arms race, because it is an arms race, you have to have certain attributes that not all the companies have.

20:29So you started seeing Google outperform other companies. Now you're starting to see much more consideration of how you're funding yourself. Are you funding yourself mainly from revenue or are you funding yourself from circular financing? That's all good because you didn't want the bubble phase to get carried away too much because otherwise there would have been a lot more damage than there would be otherwise. The idea of data centers being pretty fully booked at this point. I heard one person describing this as saying we're not in the same situation we were back with Lucent or Cisco or some of those companies back in the early days of the last big tech bubble because these data centers are still fully booked.

21:11So you're not building out empty demand at this point. Correct. And there's a perception that maybe even a waiting list, if you like, for use of these data centers. I think it's so good we're having them now because if we didn't have that on the demand side, if we didn't have AI-related activities drive GDP, we'd be talking about store speed. Because the rest of the economy is having a harder time. So we have this transition. Because those resources have been all devoted to AI, and they would be resources that could be deployed somewhere else if it weren't for that? No, I think it's because AI has proven to be such a powerful driver.

21:49And on the other side, we're dealing with legacy. We've talked a lot about affordability. The consumer somehow keeps on going, but there's concern. There's concern about the labor market decoupling from GDP. So there's concern about the labor market on there. But if it weren't for AI related, we would be talking about store speed. So it's a really good thing. And remember, this is just a demand transition to the productivity impact of AI. You think about some of the stocks, though, that have been front and center for this, those companies like Microsoft, so many of these companies that for a very long time, Oracle and others, that were able to bring in a lot of profitability because they did not have a lot of CapEx that they were spending.

22:27You know, these were very asset-like companies. That's not the case with this. Do you think the profitability will follow the money that's being spent here? I do, but a lot will depend on adoption. So what do we always talk about? We're fascinated by those who are working on AI, the builders, the exciting new foundational models. But we don't talk enough, Becky, about those working with AI. And that's going to be critical because adoption is going to be important. If you step back, we do need an adoption policy. We don't have that right now. And that's why we risk falling behind China. Accenture, I think, is number three on the S &P 500 list of gainers this morning.

23:03It's up pretty sharply after announcing a deal with OpenAI that it's going to be using its ChatGPT with its clients, with kind of putting that out there so that they can get using them and seeing that as an enterprise book. It's up by about 2.8 percent right now. That's all fine and well, but when does the disintermediation show up in terms of, as Joe pointed out, do you need a consultant to put you in touch with ChatGPT? Or are these just going to be tools that make them more efficient at their work? You will need. I mean, Accenture is a perfect example of a company that has understood. So it talks about reinventors.

23:39It's reinventing itself. It talks about it having to upscale its own labor force so that it could help others. And I think Julie Swede, the CEO, is leading in a very visionary manner. If you talk to others, you'll find a wide dispersion. There are those who are ready to adopt. There are those who say, our databases don't speak to each other. We can't even go anywhere near that. So you're going to need help with a lot of the distribution when it comes to adoption. And I think Accenture has taken the lead on this, but it has understood that the first step is to reinvent yourself. And that's exactly what they've done.

24:12So what are you watching outside of this AI trade? Obviously, that's leading the market, has been for a while. But there's a lot of other things that are happening, Federal Reserve and beyond. We are captivated right now, understandably, by two things. Will they cut this month or not? and who will be the next Fed share. As important is how will this Fed be reformed. This Fed went to sleep. Yes, we made mistakes. Yes, we have to talk about our forecasting. We have to think about scenario analyses, not point estimates. We have got to be better at the supply side, and most importantly, the compliance culture has to improve.