Fed Meeting Kickoff & Sen. John Fetterman (D-PA) 7/28/26

Summary

Squawk Pod: "Fed Meeting Kickoff & Sen. John Fetterman (D-PA)"

Date: July 28, 2026
Hosts: Joe Kernen, Becky Quick, Andrew Ross Sorkin

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Episode Overview

This episode of Squawk Pod centers around two major themes:

1. The kickoff of a pivotal Federal Reserve meeting under new chair Kevin Warsh, with in-depth commentary from former Fed governor Stephen Miron about the Fed’s evolving approach to monetary policy and money supply.
2. A candid, headline-making interview with Senator John Fetterman (D-PA), who discusses his dramatic change of heart on the Senate filibuster, intraparty divisions within the Democrats, and political extremism.
   The show also covers notable business headlines, including the Johnson & Johnson talc settlement, Cracker Barrel’s rebranding woes, the importance of "Love Island" in the streaming wars, city-run grocery store experiments, and more.

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Key Discussion Points & Insights

1. Federal Reserve Meeting & Monetary Policy Shift

Timestamps: [01:25], [04:12]–[06:56], [16:25]–[27:13]

• Context: The first major Fed meeting with new chair Kevin Warsh at the helm, amid uncertainty over potential interest rate moves and internal dissent on the Board.

• Fed Transparency & Approach:

  • Kevin Warsh pushes for institutional reforms and less “guidance,” signaling the Fed may surprise markets (rate hike/cut without advance hints) [06:10].
  • Warsh is likened to a consultant-CEO intent on cultural change [05:36].
  • “Kevin Warsh is coming in wanting to change the institution...These are changes that he wants to make at the institution of the Federal Reserve.” — Becky Quick [05:36]

• Monetary Policy Analysis (with Stephen Miron):

  • Monetarism lost favor after poor predictive performance in past decades, as money supply stats were mismeasured [18:45], [19:16].
  • New academic literature proposes focusing on “transactions-focused” (vs. “store of value” focused) monies for more accurate economic predictions [19:44].
  • Recent inflation is more likely to be transitory—not fundamentally driven by monetary or fiscal policy—so the Fed should stay “on hold” [21:39], [23:16].
  • “To the extent that we've had higher inflation readings in the last six, nine months… it’s much more likely to be transitory…because it's not driven by policy.” — Stephen Miron [15:05], [21:53]
  • The post-pandemic inflation surge was visible in money supply yet largely ignored—Miron cautions against repeating this mistake [20:49], [22:25].
  • Debate over interpreting CPI/PCE data, asserting much of the current “inversion” is statistical noise rather than actual inflation [25:20], [26:00].

• Policy Recommendation:

  • Miron sees “neutral” policy currently; tightening (rate hikes) is unnecessary unless long-run inflation expectations move up [24:09].
  • “Should monetary policy be restrictive? And to me, the answer...is no.” — Stephen Miron [25:20]

2. Johnson & Johnson Talc Settlement

Timestamp: [06:56]–[11:53]

• Details:

  • J&J will pay $5.5B to resolve nearly all remaining talc/ovarian cancer lawsuits (76,000 in total).
  • At least 95% of claimants must agree; J&J is confident, backed by 22 plaintiffs’ firms [07:56].
  • Previous, larger $8B attempt failed in bankruptcy court, but recent legal wins and weakening of plaintiffs’ experts improved J&J’s position.

• Market Impact/Analysis:

  • Settlement could finally remove a long-standing overhang on J&J’s stock, which rose on the news [09:38].

• Anecdote:

  • Andrew Sorkin recalls switching from baby powder to cornstarch decades ago—a personal note highlighting public awareness and trust issues [09:38].

3. Corporate & Streaming News

Timestamps: [11:54]–[14:40], [16:30]–[17:36]

• Cracker Barrel:

  • CEO Julie Messino to step down amid fallout from a controversial logo rebrand.
  • The new logo met immediate backlash, leading the company to reverse course (“not quite as bad as New Coke, but close” — Andrew Ross Sorkin [12:46]).
  • Stock tumbled after rebrand, but has since doubled after abandoning changes [12:40].

• Streaming: NBC/Peacock + YouTube Deal

  • Peacock will be included for YouTube Premium subscribers; highlights competition for content, especially around hit shows like “Love Island USA” [14:08].
  • “Love Island has been mentioned in several Comcast earnings reports.” — Becky Quick [14:08]
  • “It’s that important to it…” — Andrew Ross Sorkin [14:12]

• Sherwin Williams Earnings:

  • Paint company shares up after beating earnings/revenue estimates and raising guidance, despite cost pressures from supply chain disruptions and raw materials [16:30].

4. Urban Policy: City-Owned Grocery Stores

Timestamps: [30:07]–[32:27]

• NYC Plans:

  • Five city-owned grocery stores aim to cut prices by 30% on basics, but history of similar efforts is mixed (“History is not good. No, never worked.” — Andrew Ross Sorkin [30:51]).
  • Recent attempts in other cities often lose millions; single Atlanta example touted as a possible success, but with a public-private partnership [31:00].

• Debate:

  • Hosts question whether such stores can compete with private grocers or avoid persistent losses [31:52], [31:59].

5. Political Interview: Sen. John Fetterman (D-PA)

Timestamps: [01:47], [28:36]–[42:39]

• Key Topic:

  • Fetterman’s public reversal on abolishing the Senate filibuster, citing the urgency of countering political extremism in both parties.
  • “We were so, so wrong there as a party...if we were successful to eliminate the filibuster, imagine what the last 18 months would have been...the only thing [blocking bad policy] was the filibuster.” — Sen. Fetterman [28:36], [33:45]

• Intraparty Critique:

  • Fetterman denounces “the crazies” in the Democratic Party: calls out DSA (Democratic Socialists of America) and “abolish the border, abolish the prison, abolish the Senate” rhetoric as dangerous [35:03], [37:09].
  • “This is not a big tent…these are crazy people. And now they are electing people…It’s incumbent on us Republican and Democrat side to police your own ranks. So that’s what I’m willing to do.” — Sen. Fetterman [37:09]

• Political Evolution:

  • Fetterman maintains his core values but says only the filibuster protects against “our worst impulses”; praises Senators Sinema and Manchin for holding the line [35:29].

• Clarifies Party Loyalty:

  • Reiterates commitment to Democratic Party, while rejecting both GOP and DSA directions:
    • “How could I be? I couldn't be a Republican.” — Sen. Fetterman [40:44]
    • “I would rather stand up to this extremism and just tell people, as a Democrat…here’s the truth where we are right now.” [41:20]
    • “I can't toe every line in the Democratic Party…but I'm always going to be proud to stand with Israel. And I also think we should have a secure border.” [41:20]

6. Notable Quotes & Memorable Moments

• On Monetary Policy:
  • "Should monetary policy be restrictive? And to me, the answer…is no." — Stephen Miron [25:20]
• On the Fed’s Institutional Change:
  • “Kevin Warsh is coming in wanting to change the institution...These are changes that he wants to make at the institution of the Federal Reserve.” — Becky Quick [05:36]
• On City-Run Grocery Stores:
  • “History is not good. No, never worked.” — Andrew Ross Sorkin [30:51]
• On Political Extremism:
  • “…the DSA, the abolish the border, abolish the prison, abolish the Senate…these are crazy people…incumbent on us Republican and Democrat side to police your own ranks.” — Sen. John Fetterman [37:09]
• On Party Loyalty:
  • “How could I be? I couldn't be a Republican.” — Senator Fetterman [40:44]

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Key Segment Timestamps

| Segment | Time Range | |---------------------------------|---------------| | Fed Meeting & Warsh’s Approach | 01:25–06:56 | | Money Supply Discussion w/Miron | 16:25–27:13 | | J&J Talc Lawsuit Settlement | 06:56–11:53 | | Cracker Barrel Rebranding | 11:54–14:08 | | NBC/Peacock–YouTube Streaming | 14:08–14:43 | | Paint & AI Earnings Humor | 16:30–17:39 | | City-Run Markets in NYC | 30:07–32:27 | | Senator Fetterman Interview | 28:36–42:39 |

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Conclusion

This episode blends sharp macroeconomic analysis with lively debate and unsparing political commentary. The discussion on the Fed’s future under Kevin Warsh demonstrates a possible paradigm shift toward transparency and data-driven decision-making, while the second half, featuring John Fetterman, exposes underlying fractures in Democratic Party unity and the persistent challenge of political extremism. The episode is both informative and provocative—essential listening for anyone tracking U.S. monetary policy, corporate headlines, and the shifting winds of American politics.

Transcript

[Keith Lansford]

This episode is brought to you by Schwab Market Update, an original podcast from Charles Schwab. Join host Keith Lansford for this information packed daily market Preview delivered in 10 minutes or less, including projected stock updates, monetary policy decisions and key results and statistics that may impact your trading. Download the latest episode and [e-mail] Market Update podcast or find Schwab Market Update wherever you get your podcasts.

[Joe Kernen]

Ever check different weather apps and get different forecasts? That's kind of what cloud transformation can feel like. Different priorities, different technologies, different opinions. That's why you need CDW's expert guidance and support every step of the way because your cloud strategy deserves clearer skies. And when your team feels calm, cool and cloud protected, that's when amazing things happen. We configure, optimize and deliver the tech that runs business. CDC CDW make amazing happen Bring in show music please. This is Squawkpod and I'm CNBC producer Cameron Costa. On today's episode, the new Federal Reserve under Kevin Warsh meets on interest rates. Is now the time to make a move. We talked to Stephen Miron, who President Trump named to the Fed's Board of Governors. He saw the central bank's recent leadership transition firsthand.

[Stephen Miron]

Should monetary policy be restrictive? And to me, the answer to that is no.

[Joe Kernen]

How to Study Money After a few

[Stephen Miron]

bad predictions, monetarism really lost a lot of its shine and eventually it eventually became disused and people stopped looking at the money supply and the Fed stopped monitoring it.

[Joe Kernen]

Then Senator John Fetterman can be a contrarian in his own Democratic Party.

[Andrew Ross Sorkin]

You're not going to become a Republican, are you? I've talked about that.

[Senator John Fetterman]

How could I be? I couldn't be a Republican.

[Andrew Ross Sorkin]

You can't be a Republican. You're a Democrat.

[Joe Kernen]

What he says he was wrong about.

[Senator John Fetterman]

I would rather stand up to this extremism and just tell people, as a Democrat, I think here's the truth where

[Joe Kernen]

we are right now, plus Cracker Barrel's branding nightmare, Johnson and Johnson's quarter century of legal troubles. And there can only be one like

[Andrew Ross Sorkin]

my favorite Love Island. Big watcher, Big watcher.

[Joe Kernen]

You are the popular show driving one streaming business.

[Andrew Ross Sorkin]

I mean, is there a lot of Is that what happens?

[Joe Kernen]

It is Tuesday, July 28, and Squawk Pod begins right now.

[Senator John Fetterman]

Stand Becky by in three, two, one. Fuel, please.

[Becky Quick]

Good morning, everybody. Welcome to Squawk Box right here on cnbc. We are live from the NASDAQ market site in Times Square. I'm Becky Quick along with Joe Kernan Andrew is out today. Day a down day for the Nasdaq yesterday as well. At this time yesterday, in fact, the futures were pointing to big gains for the Nasdaq. But the index closed in the red. You can see it was down by about 43 points. That came even as the Dow did close. Higher fears of overspending on AI pushed Nvidia shares down by 5%, allowing Apple to reclaim the world's most valuable company title for the first time in more than a year. SK Hynix's American shares slumped to a new low. Space X fell more than 1%. It has now lost the equivalent of a Tesla in market cap since its post IPO high last month. And you can see the losses there. SK Hynix was off by seven and a half percent. All of those technology fears spreading to Asian stocks today as well. You can see the Nikkei closed down by about 4% in South Korea, the Kospi down by 10.8%. And these are things that we're going to continue to watch. Energy prices this morning are lower once again. In fact, WTI is sitting just above $80 a barrel. $80.60. Brent is all the way down to 85.90. So we've continued to see those declines in oil prices and then treasury yields ahead of the Fed meeting that starts today with the press conference anticipated tomorrow. The ten year sitting at 462. The two year is now below 4.3% at 429.

[Keith Lansford]

Kevin's fantastic, but he's got a board and the board members are very political, I would say. So, you know, we fight our way through the race because we're doing so well. But no, he's got a board. He wants to do the right thing.

[Andrew Ross Sorkin]

I know what he wants to do. But you need the consent of some

[Keith Lansford]

people that have perhaps bad intentions.

[Andrew Ross Sorkin]

The Fed also set to kick off its latest meeting, as we were just saying. Speaking with reporters yesterday, President Trump backed new Fed Chair Kevin Warsh while also at the same time calling for lower interest rates. The President said that the US should have the lowest rates in the world. The CME's Fed Watch tool points to about a 1/3 chance that the Fed could hike tomorrow, which is fairly high really, I guess because of Kevin Warsh at this point and a lot of the, the main players, it's kind of an unknown what they're saying behind closed doors. A good family fight is what the Journal talks about that Kevin Warsh wants. And apparently there is some dissent and some back and forth. They Highlight a conversation with, I guess,

[Becky Quick]

Waller, which, you know, it's interesting. Waller sounds almost like somebody who's a

[Andrew Ross Sorkin]

little sour grapes with some of the does sound.

[Becky Quick]

But I will also say Kevin Warsh is coming in wanting to change the institution. It's almost like in a corporate situation where they bring in the consultants and they're going to bring in these outside advisors to say, here's the panels that are on it. Waller, I guess said, tell me who's on the panel and I will tell you what they're going to say of what comes along with some of these things. But this is, you know, a change that Kevin Warsh wants to make at the Fed. Forget about interest rates for the moment. These are changes that he wants to make at the institution of the Federal

[Andrew Ross Sorkin]

Reserve that a lot of people are,

[Becky Quick]

that he has talked about for a long time with some of these issues.

[Andrew Ross Sorkin]

Then other people have said they're a long time coming. Coming to.

[Becky Quick]

Yeah, when it comes to, when it comes to interest rates, Kevin Warsh has been very clear that he doesn't want to give guidance. So if the market gets surprised by a rate cut or a rate hike this week, that would really signal the new change about this guidance, that they're serious about it, that they're not going to tell you what's coming, but a lot for the market to anticipate.

[Andrew Ross Sorkin]

But he could, if he really is looking for credibility, you could think right out of the box I'm going to raise rates. But I don't see that. I don't really see that. Even as I think he wants to. I think he wants the big bazooka in his pocket. I think he wants people to think that that's something he might do, but

[Becky Quick]

he might have to do something at some point.

[Andrew Ross Sorkin]

But at this point, I think it's just going to be jawboning more than

[Becky Quick]

actually, I would be far less surprised to see it in September than to see it now, but I think the market's set up for that same situation. Let's talk about an individual stock company, Johnson and Johnson, reaching a settlement to resolve tens of thousands of lawsuits claiming that its baby powder and talc products cause ovarian cancer. The company will pay roughly five and a half billion dollars. That cash will settle nearly all of the remaining talc claims against Johnson and Johnson, about 76,000 in total. In order for this deal to go through, 95% of the claimants will have to accept the deal before it becomes final. And in a statement, Johnson and Johnson said, while we are Confident that the company would have ultimately prevailed with further litigation, as it has in the vast majority of cases tried to date. This resolution allows the company to put this matter behind it and remain focused on its mission to develop medicines and devices that saves lives. Now, I did speak to someone at the company yesterday, late last night, who talked about what this means. Again, in order for them to go through with this, they have to get at least 95% of the claimants to sign off on that. The company's pretty confident that it will get that because IT already has 22 plaintiffs firms representing more than 95% of those clients who have agreed with this and who have started putting out their own press releases talking about this as well. You may remember that back in 2024, the company had a deal that it thought it would go through in bankruptcy court. It proposed an $8 billion settlement versus the $5.5 billion that we're talking about now. They did get more than 75% of the claimants to sign off, which was what they needed. Ultimately, the judge decided not to go through with that. It got caught up in bank court, and at that point, Johnson and Johnson said that they were going to fight this on a case by case basis. They have been doing that since then. They have won almost all of those cases, either in the first or on the appeal of those cases that have gone through, which they said has given them a much stronger hand with the settlement that they're now offering. Again, it went from 8 billion in 2024 to 5 and a half billion. Now, 3 billion of that would be paid out in January of this coming year. If this is agreed to by the claimants that sign off on this, they got resolution on this. They did have just this last week, a couple a federal judge threw out two of the plaintiff's experts, withdrew two of their causation experts, and that weakened the plaintiff's case, which is probably why you're seeing this settlement today. The stock is up by about 2.5%, 2.25% right now. But remember, this has been a huge issue that has been an overhang on Johnson and Johnson stock for a very long time. They've been wanting to get this cleared up. There have been some analyst notes that have come out saying, okay, this finally clears the way for some of those things. So we'll see how the stock continues to perform from this point.

[Andrew Ross Sorkin]

This goes back years and years because I had some personal experience with it. I always used to recount those stories about baby powder. I used to like baby Powder. I don't use it anymore. And I'm not really sure why, but I switched to cornstarch 25 years ago. There's no way I'd put. And there are other companies that still use talc. I think Gold Bond or. I don't want to speak out of him, but there's still talc around. And not only can supposedly, I think it can have traces of asbestos in the talc from how it's manufactured. But also I think the chemical composition of talc is in some respects similar chemically to certain carcinogenic things in the past.

[Becky Quick]

Now you sound like one of the experts for the plaintiffs lawyers.

[Andrew Ross Sorkin]

25 years ago, I stopped using cornstarch. And you don't want to stop using talcum. I stopped using. And, you know, sometimes it was like ovarian. And I didn't want it on any part of me to give it to. You know where you'd be.

[Becky Quick]

This is what the company has been fighting this entire time.

[Andrew Ross Sorkin]

And this goes into our discussion yesterday about how great it would be if AI replaced all the lawyers because they've had a field day over the years with this. But there are times, obviously, where you need lawyers. You need a good plaintiff, you need a good. I guess you need a good Sawyer from time to time. I mean, this goes back. I mean, think of the Johnson and Johnson CEOs. Remember Ralph? And you remember the guy that came out. Ralph was the most famous one. Yeah, you'll remember him if I bring it up.

[Becky Quick]

What was the last name?

[Andrew Ross Sorkin]

So many years ago, but he was a longtime CEO. And then came the next guy who got hammered in terms of Ralph Larson. Ralph Larson. And then who came after Ralph because then they had started having all kinds of issues with quality control at a lot of their manufacturing plants, both abroad and here. William something. Anyway, Weldon. Weldon. Bill Weldon. Right.

[Becky Quick]

Yeah.

[Andrew Ross Sorkin]

No, you look like a CEO just performed very well. According to some change, Cracker Barrel is replacing its CEO about a year after that controversy over the restaurant chain's logo. Julie Messino will step down next month and be replaced by former Bloomin Brands CEO. I think that's outback David Dino. He's a restaurant industry veteran who also held senior positions at Yum Brands. You might recall last August, Cracker Barrel unveiled a new, less lame logo. They were calling it Sleeker. It was boring. It was less. I don't know. People said it was more PC and less woke and.

[Stephen Miron]

I don't know.

[Andrew Ross Sorkin]

But it. I don't know what an old Cracker

[Stephen Miron]

Wood barrel is

[Andrew Ross Sorkin]

for whatever reason, she thought that was a good idea. It was going to cost millions of dollars to change everything and it immediately got hit with with such a backlash that it prompted the company to abandon its update plans. It's not quite as bad as New Coke, but close Cracker Barrel shares Bud Light comes in mind Cracker Barrel shares fell more than 50 Bud Light back in the back in news again, isn't it that whole sitch anyway. But the shares have doubled this year. A major video platform and streaming services as they're building up NBC Universal and YouTube, bundling up have agreed to a deal to embed Peacock in the video platform for Premium subscribers, and YouTube will add all Peacock content to its platform starting early next year. Eligible YouTube Premium subscribers in the US will also gain access to the ad supported Peacock premium subscription. Peacock's content includes live sports like NFL Universal films and original shows like My Favorite Love Island USA big watcher, big watcher you are, yeah. YouTube said additional details and launch dates will be shared over the coming months.

[Becky Quick]

Love island has been mentioned in several Comcast earnings reports.

[Andrew Ross Sorkin]

Because it's that important.

[Becky Quick]

It's that important to it. And I will say all the young women in my house and beyond that, I know watch it.

[Andrew Ross Sorkin]

I mean, is there a lot of is that what happens?

[Becky Quick]

I don't, I haven't watched it. I don't think it's that. I think it's the matching up and the breakup.

[Andrew Ross Sorkin]

But if you hook up, I'll guarantee you that you're hooked up. If you're on an island, I don't

[Becky Quick]

think they're showing up.

[Andrew Ross Sorkin]

I'm not saying they're showing it, but I'm sure they talk about it.

[Becky Quick]

Well, sure, it's the drama. Who's with who, who trades up?

[Andrew Ross Sorkin]

You're right. I'm not watching.

[Becky Quick]

Like talking about somebody is. It's important enough to make the earnings releases.

[Stephen Miron]

Teas will be next.

[Joe Kernen]

Coming up on Squawkpod, the Worth of Money Former Fed Governor Stephen Myren is looking at how the supply of money impacts policy from rate setting to reining in higher prices to the extent that

[Stephen Miron]

we've had higher inflation readings in the last six, nine months.

[Andrew Ross Sorkin]

Might be persistent, might be temporary, actually

[Stephen Miron]

transitory this time it's much more likely to be transitory. It's much more likely to be temporary this time because it's not driven by policy.

[Joe Kernen]

We'll be right back. If you, your parent or spouse served in the military, you could join our family. Our members saved an average of $70 a month on auto insurance when they switched tap the banner or visit usaa.com join today to check your eligibility restrictions apply.

[Andrew Ross Sorkin]

My mom inspired me to dream big and work hard.

[Stephen Miron]

Tyler Adams,

[Andrew Ross Sorkin]

what would you like the power to do?

[Becky Quick]

Bank of America Proud to be the Official bank of US Soccer and FIFA World Cup 2026 bank of America NA

[Keith Lansford]

Member FDSE this episode is brought to you by Schwab Market Update, an original podcast from Charles Schwab. Join host Keith Lansford for this information packed daily market Preview delivered in 10 minutes or less, including projected stock updates, monetary policy decisions and key results and statistics that may impact your trading. Download the latest episode and [e-mail] MarketUpdatePodcast or find Schwab Market Update wherever you get your podcasts.

[Joe Kernen]

Welcome back to Squawk Pod Today with Joe Kernan and Becky Quick.

[Becky Quick]

Sherwin Williams adding around 150 points to the Dow this morning. Look at that. The Stock's up by 6.6%, a gain of $21.63. It came after the company reported earnings of $3.70 a share. That beat estimates of $3.52. Revenue came in at $6.8 billion, which was also ahead of expectations. And Sherwin Williams is raising its earnings and revenue guidance for the full year above what the street was expecting. You could check it out. Those gains are better than the gains for the full year to this point, which were up by 3.8%.

[Andrew Ross Sorkin]

Paint? Paint? Like for data centers or something or.

[Becky Quick]

That's a good question.

[Andrew Ross Sorkin]

Do you need to paint semiconductors?

[Becky Quick]

Let me find. No, you don't paint them, but maybe the buildings you're building.

[Andrew Ross Sorkin]

So it really is just paint. Is it AI paint? What about AI paint?

[Becky Quick]

I don't see any.

[Andrew Ross Sorkin]

Is it paint itself?

[Becky Quick]

It said the company would increase prices at its paint Store group segment by 8%.

[Andrew Ross Sorkin]

There's no tie in in response to

[Becky Quick]

inflation across raw material, energy, logistics and packaging.

[Andrew Ross Sorkin]

But no pure tie to AI in any way and yet?

[Joe Kernen]

No.

[Becky Quick]

And the company did say that the US Israeli war on Iran has led to supply chain disruptions and pushed up costs for raw materials, energy and logistics. But they're raising their prices and think that.

[Andrew Ross Sorkin]

I think there's an AI play here picking out the color for you. If you don't know. The Fed set to kick off its two day policy. Media have been paying attention because it is and as a result, Stephen Myron here, he's a former Fed governor, currently senior strategist at Hudson Bay Capital, also former Council of Economic Advisers Chair. So, you know, a lot of the thinking of President Trump on a lot of different matters, I hesitate to lead a segment with money supply because it's so arcane. We just want to talk about what Warsh is going to do, was and company will do tomorrow. But and I think it's important because it might inform us on what to do. And in the old days, all market players watched the money supply and aggregate money growth in your work, which you're bringing back. I think because Warsh pays attention to it, we're at neutral right now.

[Stephen Miron]

Yeah, I think that's the takeaway from our work. First of all, thanks for having me. It's been very clear from Chairman Marsh's statements and writings over the course of decades that he cares about the money supply. And so what I did with my colleagues at Hudson Bay, Noor Roubini and also Peter Ireland, a professor at Boston College, we delved into the literature on this to look where to look at the state of the academic field on it. And money supply and monetarism more broadly used to be super influential in the setting of monetary policy. As you said, everyone looked at it every week, right?

[Andrew Ross Sorkin]

Every week.

[Stephen Miron]

And then after a few bad predictions, monetarism really lost a lot of its shine and it eventually became disused and people stopped looking at the money supply and the Fed stopped monitoring it. What we find in the paper as we surveyed the literature is that a lot of the reason why people stopped paying attention to money supply is because they just weren't measuring it correctly. As financial innovation occurs, as new types of money become invented, some of those types of money are more for store value than for transactions. And so if your goal is to predict transactions, the economy and money supply is growing for store value purposes, like a money market fund, you're going to make bad predictions. So what some of the modern literature that's developed over the last 10, 12 years has done has been to try to measure money supply better by looking at different types of money and how transactions focused they are versus how store of value focused they are. And when you try and weight them like that, in the same way when you look at inflation, you weight shelter, you weight housing more highly than you weight video games, because people spend more money on housing than they do on video games. When you weight money supply based on how transactions focused the type of money is, you get much, much better predictions. And that addresses a lot of the problems that money supply has had for use for usability in monetary policy. When you do it this way, you correctly capture the deflationary pressure after the global financial crisis, which is something that, if you remember the endless op eds and columns that M2 is exploding because of QE, there's going to be hyperinflation that didn't pan out and we still had sustained deflation.

[Andrew Ross Sorkin]

Right, right.

[Stephen Miron]

You measure money correctly, you get that. Right.

[Andrew Ross Sorkin]

And then after the pandemic, you can totally see what happened.

[Stephen Miron]

Absolutely. After the pandemic, even the most cursory look at money would have told you, hey, this inflation is going to be big, it's going to be persistent. You better get ahead of it and do something.

[Becky Quick]

There are so many more forms of money to be used as transaction than there used to be. Even in 2008, you think about new forms now, how do you keep track of, keep measuring those things? What did you have to do to feel like you really had your hands around it?

[Stephen Miron]

Yeah, so, so fortunately we didn't, we didn't actually do the measurement ourselves because there's other, there's other researchers out there, other academics who do the measurements we use there. There's a Center for Financial, center for Financial Stability, which does a lot of the measuring of these things. And we use their data they generously make available. But we reported on the studies and we, and we modernized and updated the studies for today's data. And as Joe said before, what we finally do, this is right now, you

[Andrew Ross Sorkin]

know, monetary policy, like post pandemic, it's

[Stephen Miron]

not all, it's not like it at all. Right now, through, through this lens, monetary policy looks pretty neutral, which tells you that to the extent that we've had higher inflation readings in the last six,

[Andrew Ross Sorkin]

nine months, persistent, might be temporary, actually

[Stephen Miron]

transitory this time it's much more likely to be transitory. It's much more likely to be temporary this time because it's not driven by policy, it's not driven by monetary policy, it's not driven by fiscal policy. And so as a result of that, because it's. Because that would show up in money also. Right. The money supply doesn't care what the origin of the money is, whether the money originates at the Fed, originates from treasury or internationally.

[Keith Lansford]

Right.

[Stephen Miron]

If it were policy driven, it would be showing up in the money supply. And that's not happening. And so this is telling you higher inflation right now is much more likely to be transitory than it was after the pandemic.

[Becky Quick]

And after the pandemic, when you looked at it at these, it showed that there really was a serious increase. And we should have noticed that that it was not going to be transitory.

[Stephen Miron]

Absolutely. These would have been, you know, five alarm fires and people that say that

[Andrew Ross Sorkin]

all it was was supply chain disruptions, that no one could have controlled the cause of inflation, that this puts that notion to rest.

[Stephen Miron]

Yeah, I think this, this type of analysis is heavily indicative that, that the supply chain analysis was not the major driver of the inflation that we had. Or even if you really think that the supply chain problems we had were a major driver, that they were the type of driver that monetary policy had a responsibility to counteract.

[Andrew Ross Sorkin]

I see. So either, either way there were, there were mistakes at the Fed. So then did the case you just make, made make us think that the Fed stays on hold tomorrow?

[Stephen Miron]

Well, so that's my, that's my read, is that the Fed should stay on hold based on this, but also based on everything else that's going on in the economy. I mean, look at it this way. In June you had a unanimous vote to hold rates constant. Since June the inflation data have been very favorable. Right. We had a marginally negative core CPI month on month print. So I don't know what type of reaction function would say in June I thought it was appropriate to hold rates steady, but then I had a negative core CPI print and that's what pushed me over the edge to think I have to hike.

[Andrew Ross Sorkin]

Right.

[Stephen Miron]

I don't. I have a hard time imagining what type of reaction function would say core CPI being negative is what pushed me over the edge to hike.

[Becky Quick]

Okay, how about the argument that people come up with that for five years the Fed has been above its anticipated range of inflation. How and when do you have to deal with that?

[Stephen Miron]

So credibility is important, but the way that credibility manifests in monetary policy is through inflation expectations. And if inflation expectations started peaking upwards beyond the one year horizon, that is beyond anything transitory, that's when you have to really get concerned. And if inflation expectations beyond the one year horizon in the forward space started moving up, even I, as one of the most dovish people from the Fed would say, would get absolutely hawkish and say this is, this is the time to tighten. And indeed when I thought that tightening was appropriate after the pandemic, it was in part because inflation expectations were moving, were moving higher. So credibility is not really endangered until you start to see inflation expectations slip. And they've been very well behaved lately.

[Andrew Ross Sorkin]

How can more strikes get to 2% without hiking rates? Is there anything in monetary theory that would allow him to do that? That's what we're trying to figure out. Short of slowing down the economy. It'd be nice to let the economy run hot and still be able to cut rates. But we think that's the only tool that the Fed has to keep inflation at bay. Is there a way to do it with monetary supply, with money supply?

[Stephen Miron]

Well, so money supply would tell you that policy is about neutral right now, right? If you want to, if you wanted policy to be restrictive, you would want to sort of curtail that, that money supply. However, the question that you're asking is should monetary policy be restrictive? And to me the answer, the answer to that is no, in part because I view the elevated inflation prints as likely, as likely to pass out, as likely to pass out of the data. So when inflation's running high or low, you need to ask yourself why. And right now we have a situation in which the CPI PCE relationship is heavily distorted. Normally CPI, the consumer price index, runs about 30 to 40 basis points above the PC price index, which is what the Fed formerly targets. The reason CPI is biased upward is because of differences in the weighting methods. But right now that relationship is inverted by about a full percentage point. So you have to ask yourself what's, what's driving that? Because if you just looked at core cpi, you'd feel much more comfortable. So you'd have to ask yourself, I think what's going on with PC inflation that's moving it so much higher? To me the answer is, is in large part measurement error. You've got these things like portfolio management prices that are causing 40 basis points of upward bias to PC, helping to explain that. That one line alone explains 40% about of the gap and it's all measurement error. Portfolio management prices have been in deflation for decades. Every year there's new article, ETF investors fees go from 5 basis points to 4 basis points. That's 20% deflation, right? Instead we've got a 40 basis point contribution. There's also noise in the software component. So the question is, why is the PC CPI relationship so disjointed? You need to ask yourself, is that actual inflation or is it a statistical. Statistical aberration? To me most of that inversion is just statistical noise. And that to me doesn't justify moving policy into restrictive.

[Andrew Ross Sorkin]

I wish we could talk tariffs because a month ago you wrote something we don't have time. You got to come back and talk. Because you say zero tariffs probably isn't the best case scenario. Historically, a low amount or at least some monitoring what other countries are doing to us is something we need to do. And can actually help the tax situation. Right?

[Stephen Miron]

Absolutely. Look, you know, the, the economic costs of any type of tax increase a lot. The higher you boost the tax. Now with tariffs, the actual economic benefits start to be positive up to a certain amount. If you're starting from zero. And that's because. That's because some of the costs of a tariff are borne by foreigners.

[Andrew Ross Sorkin]

Right. What are you doing tomorrow? No, but come back and we'll talk. Can we talk about that next time?

[Stephen Miron]

Absolutely.

[Andrew Ross Sorkin]

I want to delve into that as well. Stephen. Thank you.

[Stephen Miron]

Thanks for having me.

[Andrew Ross Sorkin]

Okay. And say hi to Roubini. They have in a party soon, the jacuzzi party.

[Stephen Miron]

I'll get you an invite.

[Andrew Ross Sorkin]

Get me an invite. I never got one. I never got an invite to that.

[Joe Kernen]

Wild.

[Becky Quick]

Because they don't want to see you in your speed.

[Andrew Ross Sorkin]

Nobody does.

[Joe Kernen]

Yeah. Up next, the latest in the political fractures shaking up the legacy parties. Pennsylvania Senator John Fetterman has a new stand on the filibuster. The 60 vote threshold in the Senate that requires a super majority to pass legislation.

[Senator John Fetterman]

We were so, so wrong there as a party. And that became like the brass ring that we like. We gotta get rid of the filibuster. Kill a filibuster.

[Becky Quick]

Soccer teaches us lessons we can take with us long after we leave the field. That's why bank of America and US Soccer are committed to helping bring soccer to every school. Raise your hand to helpofa.com soccer@schools.

[Keith Lansford]

This episode is brought to you by Schwab Market Update, an original podcast from Charles Schwab. Join host Keith Landsford for this information packed daily market Preview delivered in 10 minutes or less, including projected stock updates, monetary policy decisions and key results and statistics that may impact your trading. Download the latest episode and [e-mail] MarketUpdatePodcast or find Schwab Market Update. Wherever you get your podcasts,

[Joe Kernen]

something amazing is happening in animation. Studios are processing data faster. That's because CDW showed them new ways to maximize their infrastructure, then built a flexible Dell Technologies data solution. More automation led to reduced maintenance times and greater efficiency. So that creativity stays the star of the show. Dell technologies and CDW make amazing happen. Learn [e-mail] DellDataCenter. You're listening to Squawk Pod Papa and Becky Q.

[Becky Quick]

New York City Mayor Zoran Mamdani unveiling plans for five city owned grocery stores. He said that the stores would cut prices by 30% on a core basket of basic items while selling other products at market rates. The discounted items include produce, pasta, meat, seafood, bread, yogurt, rice, beans and more. Those five stores will set prices for the core set of goods each month with no price fluctuations between months. The grocery stores won't sell cigarettes, alcohol, lottery tickets or hot food to avoid competing with neighborhood bodegas. But the first location is expected to open in the Bronx next year with all five city owned stores expected to be open by 2029.

[Andrew Ross Sorkin]

It's tough. History is not good. No, never worked.

[Becky Quick]

What happens if you lose money on that?

[Andrew Ross Sorkin]

Well, okay, Kansas City's Sun Fresh, they kept it going. From 2018 to last year they racked up 17 million plus in taxpayer. This was not city operated directly, it was a non profit run. And there's a couple others where small towns took over some groceries that were going to close and they eventually had to go back to private companies. There's one in Atlanta that people say is working called Azalea Fresh. Been open since September of last year, but it's actually a public private partnership and it seems to be working. They got, I guess it's not purely city run like Kansas City. The structure of the city gets the investment backing, but private operational partners run the stores.

[Becky Quick]

And do they run intentionally at a, I mean sell things 30% below.

[Andrew Ross Sorkin]

I'm not sure how, how they operate it, but it's, it's not a new, it's not an idea that hasn't been tried. Well, it's going to be experiment. There's going to be five. We'll see how it works. I thought it was funny that they said we're not going to sell any of the alcohol, cigarettes, lottery tickets because

[Becky Quick]

we don't want to compete with the bodegas. I thought it was going to be because we don't think so.

[Andrew Ross Sorkin]

People are still going to be blowing their money on that stuff. But I don't know, I didn't realize

[Becky Quick]

it was to not compete. I thought it was to sell a healthier product.

[Andrew Ross Sorkin]

Right. Separately and more great moves by the new mayor. His administration published a database of city properties that could fall under that pied A terror tax. And that made the addresses of thousands of wealthy New Yorkers publicly available and searchable with their names and everything. It's awesome. The administration says the list covers all unoccupied non primary residences in the five boroughs worth more than a million dollars. And the New York Post went crazy on this Pieta terror because it's basically doxing people that have money and big section in it. I mean, okay, it's Rupert Murdoch. So Sue Me. Well, I don't know if it's so rare. I'm sure he admits mistakes in a rare admission of what he says was an error. Pennsylvania Democrat Senator John Fetterman wrote a white Washington Post op ed about why he changed his mind about the Senate filibuster and why he now views it as an essential shield against political extremism. Senator Fetterman joins us now this morning. It says it was a rare admission, Senator. I changed that for you. I don't. We all admit we're wrong at different times, do we not?

[Senator John Fetterman]

I think we were so, so wrong there as a party. And that became like the brass ring that we like we got to get rid of the filibust, kill a filibuster. And I said that in my op ed that history has vindicated Senator Cinnamon and Manchin, and they held a hard line against that. And for every Democrat, both here in our caucus or anyone nationally, if we were successful to eliminate the filibuster, imagine what the last 18 months would have been in terms of the policies enacted. Because, you know, Democrats, we haven't stopped any kinds of thing really. The only thing that has was the filibuster. And now on our side now we have more and more crazies, you know, the dsa, the abolish the border, abolish the prison, abolish the Senate, you know, crazies. Now they're at the gate here in my party. And I would warn people, the kind of extremism now that's, you know, incredibly dangerous. And if we eliminate the filibuster, we're essentially a smaller version of the House and will be governed by these bizarre, extreme fixations on, you know, that's coming down to anti American things coming on

[Andrew Ross Sorkin]

the Democratic side, anti Israel, anti American. You've been outspoken. It's been interesting to watch your, the evolution, Senator, because I don't think it's something that you planned or really had to add up. You know, the Ben Franklin closed, the positive and minus. You're almost forced into this position by a party that kind of left you. Is that fair to say?

[Senator John Fetterman]

I mean, there really hasn't been an evolution. My, my core values essentially haven't changed. But what I'm saying, when something was so, so wrong, that was that. Now, at least I think I'm the only Democrat that would remind us that all, all of us, every Democrat wanted to eliminate the filibuster back then. And In January of 2025, we all loved it, love filibuster right now. And we are averting some of our worst impulses and talking about the DSA people. And I don't see them really calling out the kinds of crazies that are getting elected that are running right now. That's what I'm saying. How necessary the filibuster is to protect the minority and from the extremism that now is continuing to reign in our primaries and our political system.

[Andrew Ross Sorkin]

Senator, you need a Senate to have a Senate filibuster. And there's some of the people in the party at this point, and especially on the DSA side of things, that want to eliminate the Senate. They want to eliminate the Senate. They want to defund ice. They want to. They want to close down prisons. When you see all this happening, do you think that this is it? I hear it's a big tent. When we have mainstream Democrats on, they don't really say that. They don't reject a lot of these things. They just kind of say, oh, you know, the DSA will be the dsa. We don't, you know, it's a big tent. We like a lot of ideas. They don't reject some of the most insane ideas that. And I'm sure that that's what you're getting at here. It's insanity.

[Senator John Fetterman]

I agree. That's my point. It's like I said that on my own socials, I'm like, this is not a big tent. Kind of like, well, you know, like, you know, abolish prisons, abolish the border, abolish the presidency, abolish the Pentagon. I mean, this, these are crazy people. And now they are electing people across our country, you know, Colorado, even in my own state, definitely in New York City right now. And some of those people, like Mandemi, are doing dangerous things. Could you imagine if I just announced that, you know, I'm going to arrest so and so in Pennsylvania or you're not welcome here in my state. You know, he's a clown. And now he's putting the list of people that owns homes in New York, you know, don't put people on lists. They haven't done anything wrong. And they're behaving in truly bizarre ways. And that seems like what the DSA wants more and more. And now why aren't more Democrats? Isn't it it's incumbent on us Republican and Democrat side to police your own ranks? So that's what I'm willing to do. And I'm reminding people, yeah, the filibuster, you know, wasn't that long. We wanted to kill it and now we're so grateful that it is still here right now. And the people that had the courage to stand up and say that where we're punished, and now they're not with us anymore politically.

[Andrew Ross Sorkin]

Senator, I, you can comment on the Michigan individual. I didn't even understand what that meant. Ogre on a pipe. I think you've kind of embraced the whole Shrek analogy. Kind of laugh at that. But I think what he was saying was that they need to make an example out of you that a Democrat who was elected as a Democrat shouldn't be able to say the things you're saying because you were supposedly elected with Democrat values that you need to stick to. But since when did some of these Democrat values include some of the things you just, you just talked about? So I don't even understand the point that this gentleman was making.

[Senator John Fetterman]

Yeah, I mean, I was never, I never worked out in male modeling, you know. Yeah, I mean, you know, call me Senator Shrek, whatever, but this guy is really the Pontiac Platner, and now he's really running to be, be the head of our emerging pro Hamas wing here in the party. So, so for me, politically, some of the things that he said are done are unacceptable to me. I'm not really sure what I've really done or voted for that, that has offended the little guy so much. But, but, but, but overall, right now, this is a serious game that we're engaging in. And these same people, like Bernie Sanders and other people created the Platner disaster. He was asked just this Sunday, he, He has no regrets. Yeah, I'm, I have no regrets supporting an accused rapist. I have no regrets supporting a guy with a Nazi tattoo on his chest and a guy that roughed up his ex girlfriends. There's a level of arrogance and they believe, they feel like they have some weird mandate and I'll stop this now, call it out. And that's what I'm willing to do as a committed Democrat. So I think that's pretty reasonable, and I think it's more necessary if more people is willing to do that.

[Andrew Ross Sorkin]

Well, that's a key term there, committed Democrat. You're not going to become a Republican, are you? I mean, I've talked about that.

[Senator John Fetterman]

How could I be? I couldn't be a Republican.

[Andrew Ross Sorkin]

You can't be a Republican. You're a Democrat and you're a pretty liberal Democrat at the time. But, but where that party go is

[Senator John Fetterman]

at this point, yeah, look, I mean, Trump and they're putting down legit, great conservative senators. You know, they're taking, you know, those guys out to the wood, the woodshed. Where's, where's, you know, like, where would you do with like a pro choice, you know, pro, etc. Etc. Kind of a Democrat now, what's that leave with the president?

[Andrew Ross Sorkin]

You're going to get primary, but what does that leave for you, Senator? Sure.

[Senator John Fetterman]

I mean, definitely, like, I would, I would rather be honest. I would rather stand up to this extremism and just tell people, as a Democrat, I think here's the truth where we are right now and, you know, logic, you know, like the misinformation is substantial. So I would, I sleep, I sleep great, you know, because I just couldn't lie or pretend. Some of these things that are in front of us right now. I can't toe every line in the Democratic Party, but I do, I do have the same core values when I was elected, but I'm always going to be proud to stand with Israel. And I also think we should have a secure border. And I think it's, it's lunacy, you know, the emerging part of the Democratic Party with whatever that DSA is, they are dangerous. And this is why we have a tool like the filibuster here in the Senate. And that's why I was willing to be front and center. And yeah, I take a lot of heat.

[Andrew Ross Sorkin]

Well, you drive people crazy when you almost make sense that not everyone has to be the way what we're seeing in the Democratic Party right now, I think that drives people crazy to see that you don't have to be that way. Anyway, Senator Fetterman, I appreciate it. Thanks for your time today.

[Senator John Fetterman]

Well, thank you for having me on.

[Andrew Ross Sorkin]

You're welcome.

[Joe Kernen]

And that does it for Squawkpod today. Thank you for, for listening both today and any other day that you tune in. Squawk Box is hosted by Joe Kernan, Becky Quick and Andrew Ross Sorkin. You can catch them live for three hours every weekday morning on CNBC starting at 6am Eastern. To get the best of that TV show right into your ears, follow Squawk Pod wherever you get your podcasts. We'll meet you right back here tomorrow. Have a great day.

[Senator John Fetterman]

We we are clear. Thanks guys so much.

[Keith Lansford]

This episode is brought to you by Schwab Market Update, an original podcast from Charles Schwab. Join host Keith Lansford for this information packed daily market Preview delivered in 10 minutes or less, including projected stock updates, monetary policy decisions and key results and statistics that may impact your trading. Download the latest episode and [e-mail] Market Update podcast or find Schwab Market Update wherever you get your podcasts.