5 Must-Knows Before Wednesday’s Stock Market Open

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## Morning Squawk: Inflation Cools, Retailer Files Bankruptcy, and Meta Pivots to AI

Stock futures are signaling a downbeat start to Wednesday’s trading session, following a losing day for the major indexes. Investors are dissecting the latest inflation data, a retail giant’s dramatic filing for bankruptcy protection, and significant shifts in tech sector priorities.

Here’s what’s moving the markets:

### 1. Inflation’s Double-Edged Sword

Yesterday’s December Consumer Price Index (CPI) report offered a glimmer of hope for consumers, with the “core” inflation rate—which excludes volatile food and energy prices—coming in below economists’ expectations. The monthly core CPI rose 0.2%, and the annual rate stood at 2.6%, both trailing the 0.3% and 2.7% forecasts, respectively. This cooler-than-anticipated reading, driven in part by persistent price pressures in categories like coffee and lettuce, presents a complex scenario for policymakers.

While welcome news for household budgets, the tempered inflation figures are unlikely to sway the Federal Reserve towards an immediate interest rate cut at its upcoming policy meeting. Market participants are now keenly awaiting the Producer Price Index (PPI) report, scheduled for release this morning, which will offer insights into wholesale cost pressures.

The ongoing debate surrounding President Trump’s tariffs and their inflationary impact continues, with a potential Supreme Court decision on the legality of these levies looming. The outcome could have ripple effects across various sectors, influencing import costs and supply chain dynamics.

### 2. Retail Icon Files for Bankruptcy

In a stunning development, Saks Global, the storied luxury retailer, has filed for Chapter 11 bankruptcy protection, citing a critical lack of liquidity. The 159-year-old company is now seeking to reorganize its operations, address its debt obligations, and potentially secure a buyer.

The company announced that Geoffroy van Raemdonck, formerly CEO of Neiman Marcus, will assume leadership as CEO, succeeding Richard Baker, who held the position for a mere two weeks. To navigate its restructuring, Saks Global has secured a financing commitment of approximately $1.75 billion, a crucial lifeline after previous reports indicated struggles in obtaining a $1 billion debtor-in-possession loan. This move underscores the significant challenges facing traditional brick-and-mortar retail in an increasingly competitive and digitally-driven landscape, where adapting to evolving consumer behavior and managing omnichannel strategies are paramount.

### 3. Geopolitical Tensions and Oil Prices

President Trump announced yesterday via social media that he has “canceled all meetings” with Iranian officials amid the ongoing crackdown on anti-government protests in the Middle Eastern nation. He stated that discussions would not resume until the “senseless killing of protesters” ceases, adding that those responsible would “pay a big price.”

This heightened geopolitical tension has directly impacted energy markets. U.S. crude and Brent crude oil prices each surged over 2% yesterday and continued their upward trajectory this morning. The instability in the region and potential supply disruptions are key factors contributing to the sustained rise in oil prices, a development that could have broader inflationary consequences and impact global economic growth.

### 4. Meta’s Strategic Pivot: From Metaverse to AI

Meta Platforms, the social media giant, is undergoing another significant strategic realignment, shifting its focus from the metaverse to the burgeoning field of artificial intelligence (AI). This pivot is reflected in substantial staff reductions within its Reality Labs division, which spearheads its virtual reality and metaverse initiatives.

Sources indicate that approximately 10% of Reality Labs’ workforce, translating to over 1,000 employees, will be impacted. The company is also reportedly closing several of its VR development studios. While Meta is not entirely abandoning its metaverse ambitions—seeking to attract Roblox developers to its Horizon Worlds platform—the accelerated investment in AI signals a clear prioritization of technologies poised for rapid advancement and broader market adoption. This strategic shift highlights the intense competition within the tech industry and the constant need for companies to adapt to emerging technological frontiers and investor expectations.

### The Daily Dividend: Buffett’s Fortune

In an exclusive interview, CNBC’s Becky Quick sat down with Warren Buffett’s three children to discuss their plans for the eventual distribution of the Oracle of Omaha’s estimated $150 billion fortune. The conversation offered a rare glimpse into the philanthropic strategies and legacy planning of one of the world’s most influential investors.