Squawk on the Street – Hour 2 (Jan 12, 2026): Trump vs. Powell – Yellen Comments, Market Takeaways, & What Comes Next

Episode Overview

This explosive episode centers on the DOJ’s newly unveiled criminal investigation into Federal Reserve Chair Jerome Powell, reportedly over testimony regarding cost overruns at the Fed’s building project. With President Trump publicly critical of Powell and pushing for lower rates, the stakes are enormous: the Fed’s independence, market stability, and what it means for U.S. institutions. The team kicks off live from the NYSE with Sarah Eisen, Carl Quintanilla, David Faber, and expert voices, including former Treasury Secretary Janet Yellen, Truist CIO Keith Lerner, Shopify President Harley Finkelstein, economist Jason Furman, and others.

Key Discussion Points & Insights

1. Breaking: DOJ Investigation into Fed Chair Powell

[01:03–06:03]

• Sarah Eisen reveals her interview with Janet Yellen:
  Yellen called the DOJ’s investigation into Powell “very chilling for Federal Reserve independence.” She asserted, “the odds that he would have lied are zero,” and saw the investigation as politically motivated, intended to push Powell out of his seat.
• Yellen’s warning:
  She invoked international cautionary tales:

  “You have a president that says the Fed should be cutting rates to lower payments on the federal debt. She completely disagrees ... it is the road to a banana republic. … Argentina in the past, Turkey in the past, Venezuela ... the federal government ... has to rely on the central bank to monetize the debt. And then you get hyperinflation.”
  (Sarah Eisen quoting Janet Yellen, 02:30–03:08)

• Political dimensions:
  Senator Tillis’s statement opposing nominations until the matter is resolved encouraged Yellen: “He was willing to do so publicly ... is a strong statement” (03:30).

2. Market and Political Reaction

[04:01–09:58]

• Commentators noted Powell’s unusual and defiant video statement, voicing concern for future Fed nominees.

  “He has been verbally harassed and harangued by the President for lower interest rates for a long time now, and now taking it up a notch to get the DOJ to investigate … I think the administration is playing with fire.”
  (Sarah Eisen, 06:23)

• Eamon Javers in Washington summarized that subpoenas were about Powell’s congressional testimony last June. Trump denied involvement but maintained Powell is “not very good at the Fed.”
• Javers contextualized: “What did Powell say? Was that material and did he knowingly lie to Congress?” (08:55) But suggested the chances of conviction were remote, and political fallout for the administration could be high if the investigation stalls.

3. Broader U.S. Economic Policy Shifts

[10:50–13:15]

• David Faber and Eamon Javers discussed Trump’s expanding assertions of authority over credit card rates, defense sector buybacks, and corporate ownership of homes—moves described as historically unprecedented:

  “The president … believes he has the ability and the responsibility to really direct all aspects of national life. … You’re seeing that here with this sharp populist turn … They’re asserting enormous authority over vast swaths of the US Economy.”
  (Eamon Javers, 11:47–12:23)

• Noted risk: “All of that is stuff that he says he has the authority to do… but it’s not backed up by legislation and some of it might be challenged in court.” (Eamon Javers, 12:54)
• Analyst comment: “The institutions will push back on a lot of it. But by pushing on all these fronts simultaneously, [Trump] is expanding that scope of authority ... and looking for places where there's no pushback.” (Eamon Javers, 13:04)

4. Market Takeaways: Fed Independence and Investor Reaction

[13:45–17:27]

• Keith Lerner (Truist):
  “We've had ... a carousel of concerns … staying away from the political side, you know, Fed independence is important … Our view is still warranted to have at least a modest [gold] position in portfolios ... all the kind of headlines we're talking about geopolitical uncertainty.”
  (Keith Lerner, 14:46–16:48)
• Despite the drama, the dollar’s dip (–0.3%) and gold’s jump (+2%) were seen as measured, with Lerner noting the muted market reaction due to a year of headline “noise” and adaptation.

5. Tech & Innovation: The Future of Commerce

[17:30–24:33]

• Shopify/Google AI Partnership:
  Shopify President Harley Finkelstein debuted new AI-driven retail features, saying:

  “…it feels like 2026 is the year that commerce breaks through the sound barrier. … AI is the biggest shift in commerce probably since Internet … there's probably going to be more billion dollar brands born in the next decade than in the last century."
  (Harley Finkelstein, 17:52–18:30)

• New open standards (UCP) will allow agents/AI to connect merchants and drive “merit-based” discovery (not simply ad spend):
  “It’s democratization of commerce because it’s no longer about who’s spending more on ads and it’s really more about who has the merit to deliver that product to the consumer.” (Finkelstein, 20:54–21:59)
• Shopify opened their tech to all merchants, highlighting a retail landscape increasingly shaped by AI agents, consumer intentionality, and new AI-powered experiences.

6. Continued Fallout: Former Fed Chairs and Economists Speak Out

[34:11–40:22]

• Jason Furman (former CEA Chair), on a rare joint statement from Yellen, Bernanke, Greenspan and others:

  “This is how monetary policy is made in emerging markets with weak institutions, with highly negative consequences for inflation and for the functioning of their economies more broadly.” (David Faber quoting statement, 34:32)

  • “I’d like to see them drop this investigation. … I’d like to see whoever [the President] picks for Fed chair be someone who really will protect and defend the institution the way that Jay Powell has done.” (Jason Furman, 35:01)
• On the strategy:
  “I think this move has been counterproductive … it actually makes it more likely Powell will stay on the board, more likely other FOMC members will not want to look like they’re giving in by cutting interest rates ... this is a very dangerous threat. If the president was successful … I think the market is correctly betting that he will not be successful.” (Furman, 35:31)
• On next Fed chair:
  “Once you walk in to the Fed building, all of a sudden you’re breathing almost a different type of air ... The Fed and its independence has not faced more danger and more peril in decades than it is right now. I think it’s going to win, but I wish I could say I know it’s going to win.” (Furman, 37:29–38:06)

7. Energy Markets Watch: Iran Unrest

[47:14–48:48]

• Pippa Stevens: Iran unrest is closely watched, but with most Iranian oil going to China, the global oil market remains “oversupplied and so far no oil infrastructure has been impacted.” She notes the high alert for possible spillover through the Strait of Hormuz but little immediate impact on energy prices.

Notable Quotes & Memorable Moments

• Janet Yellen on Fed independence:
  “You have a president that says the Fed should be cutting rates to lower payments on the federal debt. That's the road to a banana republic.” (02:40)
• Eamon Javers on Trump’s style:
  “He believes he has the ability and the responsibility to really direct all aspects of national life. … some of it might be challenged in court." (12:00)
• Jason Furman on joint Fed statement:
  "This is how monetary policy is made in emerging markets with weak institutions ... I’d like to see them drop this investigation." (34:32, 35:01)
• Harley Finkelstein (Shopify):
  "AI is the biggest shift in commerce probably since Internet. … there’s probably going to be more billion dollar brands born in the next decade than in the last century." (18:30)

Important Segment Timestamps

| Segment | Speaker(s) | Timestamp | |-----------------------------------------------|----------------------|-------------| | DOJ investigation breaking news & Yellen | Sarah Eisen, Yellen | 01:03–06:03 | | Powell’s video, White House motives | Panel | 06:03–07:32 | | Eamon Javers in Washington on subpoena details| Eamon Javers | 07:32–09:34 | | Trump’s broad policy assertiveness | E. Javers, D. Faber | 10:50–13:15 | | Market reaction, gold, dollar, risk | Keith Lerner | 13:45–17:27 | | Shopify/Google AI commerce rollout | Harley Finkelstein | 17:30–24:33 | | Jason Furman on Fed independence | Jason Furman | 34:11–40:22 | | Iran unrest and energy risk | Pippa Stevens | 47:14–48:48 |

Tone & Takeaway

The panel maintained an urgent and grave tone when covering the DOJ investigation—concerned about the precedent for democratic institutions and Fed independence—with experts citing risks of political pressure reminiscent of “banana republic” governance. Yet, the market’s muted reaction was met with a shrug, attributed to a year desensitized by constant drama. The outlook on commerce and payments was futuristic and confident, as AI-driven retail transformation and sector deals (Shopify-Google, Global Payments-Worldpay) signaled optimism at the tech frontier. The episode concludes with a sense that all eyes remain glued to the evolving institutional showdown at the core of American economic leadership.