Squawk on the Street – 2nd Hour: More Powell Probe Fallout, CPI Market Impact & Bank Earnings Breakdown

Date: January 13, 2026
Hosts: Sarah Eisen, Carl Quintanilla, David Faber
Notable Guests: Julian Emanuel (Evercore), Leslie Picker (CNBC), Bob Diamond (Atlas Merchant/Barclays), Brad Smith (Microsoft), Michael Rubin (Fanatics), Michael Ratner (OBB Media)

Episode Overview

This action-packed hour of CNBC’s “Squawk on the Street” focuses on a flurry of market-moving stories:

• Fallout from the DOJ’s criminal probe into Fed Chair Jay Powell and the rising bipartisan pushback
• Market reaction to new inflation and housing data
• Dissection of early big bank earnings, with insider insights
• Exclusive interviews with Microsoft President Brad Smith (on AI data center costs), banking veteran Bob Diamond, and Fanatics CEO Michael Rubin (on launching Fanatics Studios)

The hosts navigate through breaking data, political intrigue, and sector shifts, offering real-time analysis and engaging conversations with top industry figures.

Key Discussion Points & Insights

1. New Economic Data: Mixed Housing and CPI Signals

[01:43–06:19]

• Diana Olek recaps just-released October new home sales data:
  • Sales above expectations (737,000 vs 718,000) and up YoY by 18.7%
  • For-sale inventory remains high (7.9 months supply); median sales price down 8% YoY, reflecting builder price cuts
  • Mortgage rates steady at 6.2–6.4% during this period
  • Housing starts and permits down YoY, suggesting future softening
• Analysis: New home sales beat is positive in short term; overall, data is a “mixed picture” for homebuilders given softening on starts and permits

2. Federal Reserve Chair Powell Criminal Probe: Political Backlash and Market Implications

[05:52–08:19]

• The DOJ probe into Chair Powell, initiated by Judge Jeanine Pirro, is causing turmoil:
  • Both Democrats and Republicans are uniting in opposition
  • Judge Pirro walks back rhetoric, clarifies: “No one is above the law,” but “no indictment”
• Sarah Eisen’s read:

  “I think the developments in the last 24 hours have showed that the strategy is backfiring … There was so much condemnation on both sides … maybe it looks like the President won’t be able to carry this further and the strategy looks like it is not working.” [05:51]

• Market rally seen as evidence the strategy is losing steam, but technical analysts warn not to be complacent, as further action “could create some real problems for the markets” (citing Matt Maly, Miller Tabak)
• Some banks are holding calls on “Fed independence”; legal uncertainties may endanger the administration's ability to replace Powell or affect rate policy

“JP Morgan and some of these other banks are holding conference calls on the subject of Fed independence, talking to lawyers about what the outcomes could look like here … it undermines the credibility for whoever he picks as Fed chair as well.” — Sarah Eisen [07:50]

3. Julian Emanuel (Evercore): Market Outlook, Risks, and Volatility

[08:29–14:25] Key Views:

• Emanuel's S&P 500 target: 7,750 for year-end, bull case 9,000 if an AI “bubble” forms
• Market is resilient despite news “tape bomb” — expects 3 Fed rate cuts (vs market's 2)
• Warning: “Biggest issue … is a lack of fear … too much complacency.” [09:10]

Segments:

• AI & Tech: This is the “prove-it year” for corporates adopting AI; risk is on those that fall behind
• CPI: “Another surprisingly weak report … core CPI coming in on a monthly basis and a yearly basis less than expected. Usually, the market would be celebrating that.” — Sarah Eisen [10:23]
  • Emanuel: Market is focused on resilient growth (Atlanta Fed GDPNow at 5.1%), not ready for rate cuts until June
• Earnings Growth: 14% consensus for earnings growth “might be a little aggressive” — expects high single digits
• Geopolitics: “There will be things that will disturb the flow of the market … probably going to get surprised by something at least every day.” — Emanuel [12:15]
• Small Caps & Gold: Small caps may see episodic outperformance, but leadership remains in mega-cap “AI-centric” sectors; gold’s strength is tied to liquidity and geopolitics, not a direct red flag

4. Big Bank Earnings Breakdown (JP Morgan, BNY Mellon)

[16:24–19:16]

• JP Morgan:
  • Shares down ~3% post-earnings, impacted by acquisition of Apple’s credit card portfolio and “multibillion dollar reserve build”
  • Beats on top and bottom line (ex-reserve build), led by markets (especially equities)
  • Investment banking fees down/missed estimates
  • Guidance: Expenses at $105B for 2026; net interest income projected at $103B (above Street)
  • CFO Barnum: Proposed credit card interest rate caps would be “very, very negative for consumers” as they could restrict access to credit
  • CEO Jamie Dimon:

    “Anything that chips away at Fed independence is probably not a great idea and it will have the reverse consequences … raise inflation expectations and increase rates over time.” [16:58]

• BNY Mellon:
  • Lifts targets for efficiency return and margins; reports record revenue & income
• Analyst take: Investors cautious about guidance; loan growth prospects uncertain—driven more by credit cards and non-bank financial institutions than classic consumer loans

5. Bob Diamond (Atlas Merchant/Barclays): Global Banking Perspectives

[19:16–26:56]

• Optimistic about big US banks' outlook in 2026, citing balanced policy, likely rate cuts, pro-dealmaking administration
• “It’s a very confident group … performing extremely well … just flat out a really good environment for the banks.” [20:30]
• Key risks: Policy surprises (e.g., sudden credit card rate cap); Congress needed for some measures
• Emphasized the “under-the-radar” opportunity in regional/community bank M&A (over 4,500 banks in the US)
• European banks lag US due to weaker growth; slow post-2008 recovery, but improving. Calls for cross-border mergers in Europe
• AI & Efficiency: Predicts AI will boost bank productivity, especially outside the US where labor costs higher
• Layoffs: Not expecting mass layoffs, but more “surgical” headcount reductions in support/back-office roles
• Fed Independence:

  “Fed independence is not just sacrosanct, it’s one of the great attributes of the United States … separation of powers is really, really important.” [25:03]

6. Microsoft’s AI Data Center Initiative—Exclusive Interview: Brad Smith

[30:45–35:59]

• Microsoft pledges its new AI/data center buildouts will not increase local energy prices, rolling out “five principles” covering electricity, water, jobs, taxes, and skills for every site
• Brad Smith:

  “What we pledge today is five things addressing five issues important to local communities: electricity, water, jobs, taxes, and skills.” [31:18]

• “We have to be civically responsible, be a good neighbor,” — responding to rising concerns about data center impact on local communities [32:06]
• Ongoing policy dialogue with the White House; “We rely on their leadership … but they are also quite properly pushing the tech sector … to ensure we pay for our electricity costs and don’t leave consumers picking up the tab.” [33:03]
• US vs China in AI: Smith argues China leads outside the West, particularly in Africa and the “global south”, with the US advantage in Nvidia chips potentially shrinking
• Policy ask: Broader US strategy for export controls, and international development support to counter Chinese data center subsidies

7. Fanatics Studios Launch: Michael Rubin & Michael Ratner

[36:46–43:49]

• Fanatics teams with OBB Media to form Fanatics Studios—content arm for “live events, movies, documentaries” built around sports
• Already launching projects with ESPN, 2028 LA Olympics, Tom Brady, WWE, Fox Sports
• Michael Rubin:

  “People keep asking us … why are we not in the content business? There’s not a more strategic business for us … to create content synergistic with our commerce, gaming, and collectibles businesses.” [37:25]

• Goal: Enhance fan experience, build multi-platform content directly tied to sports partnerships and merchandising ecosystem
• Ratner emphasizes convergence of “content, commerce, community” with opportunities ranging from “official Olympic filme” to global live events
• Rubin on industry ties:

  “When we went out with this idea … they all said you’re a partner we have a big relationship with, we trust. We know it’s very strategic, much more than the money.” [42:25]

Notable Quotes & Memorable Moments

• Sarah Eisen, on Powell probe:

  “… so much condemnation on both sides of the aisle … maybe it looks like the President won’t be able to carry this further … strategy looks like it is not working.” [05:51]

• Julian Emanuel, on market risk:

  “The biggest issue … is a lack of fear if there’s too much complacency …” [09:10]

• Jamie Dimon, JP Morgan:

  “… anything that chips away at Fed independence is, quote, probably not a great idea and it will have the, quote, reverse consequences. … it will raise inflation expectations and increase rates over time.” [16:58]

• Bob Diamond, on Fed independence:

  “Fed independence is not just sacrosanct, it’s one of the great attributes of the United States.” [25:03]

• Brad Smith, Microsoft:

  “When we go to local communities … people do have questions. What does this mean for our electricity price? … I think it’s incumbent on us … to raise the bar, lean in, show people what we’re going to do and ensure our deeds match our words.” [32:25]

Timestamps for Critical Segments

• [01:43] — Diana Olek details new home sales & housing data
• [05:52] — Political fallout from Powell/DOJ probe, bipartisan reactions
• [08:29] — Evercore’s Julian Emanuel on market, risks, inflation, AI, small caps
• [16:24] — Leslie Picker on JP Morgan & BNY Mellon earnings, credit cap policy
• [19:16] — Bob Diamond on bank sector outlook, M&A, Fed, global differences
• [30:45] — Brad Smith (Microsoft) on AI data centers and community impact
• [36:46] — Fanatics Studios reveal: Rubin/Ratner on new sports content platform

Tone and Style

The episode features CNBC’s fast-paced, direct, data-first tone, blending sharp market commentary, real-time breaking news, and candid interviews. Expert guests inject both optimism and caution, grounding ambitious sector projections with lessons from recent volatility and political turbulence.

Summary

This hour covers the rapidly evolving political drama around Fed Chair Powell, delivers actionable analysis on market-moving data, and provides rare insider commentary on both the banking and tech sectors. The exclusive interviews not only clarify company strategies (Microsoft’s AI impact, Fanatics’ content push) but highlight the shifting sands between Wall Street, Washington, and Silicon Valley in 2026.