Katie Kramer (1:57)

And the war for AI warfare, anthropic versus OpenAI versus the Pentagon, the politics.

Joe Kernen (2:05)

I can't help.

Andrew Ross Sorkin (2:06)

Okay.

Joe Kernen (2:07)

Gotta go out.

Andrew Ross Sorkin (2:07)

I can't help you either.

Katie Kramer (2:09)

It is Friday, March 6, 2026. Squawkpod begins right now.

Sean Maloney (2:15)

Stand Becky by in 3, 2, 1.

Joe Kernen (2:18)

Cuel, please.

Becky Quick (2:21)

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 and Andrew Ross Sorkin.

Mary Daly (2:31)

This chair doesn't go down.

Joe Kernen (2:33)

The chair won't go. They can't tell. We'll leave it like that. Unless they took a wide shot, they can't tell. But your chair.

Interviewer (2:40)

Yes, ma'.

Joe Kernen (2:40)

Am.

Mary Daly (2:41)

Andrew, we're like boys.

Joe Kernen (2:45)

Can I get you some coffee?

Becky Quick (2:46)

The chair's very high and it's stuck.

Andrew Ross Sorkin (2:47)

Great.

Joe Kernen (2:48)

Can I get you.

Becky Quick (2:50)

Yes, please. Snap to it.

Andrew Ross Sorkin (2:53)

Attacks across the Middle east on the seventh day now of the Iran war. Here's the latest. Iran's Revolutionary Guard saying they're targeting Tel Aviv with missiles. Israel struck Hezbollah's controlled southern Beirut suburbs in Lebanon after ordering residents to leave. The commander of CENTCOM saying ballistic missile attacks by Iran have fallen by 90% since the first day of the war. In an interview, Iran's Foreign Ministry said his country isn't seeking a cease fire from the US And Israel and doesn't see any reason why it should negotiate. Meanwhile, the House rejecting a resolution designed to curb President Trump's powers in that war. And President Trump telling several media outlets that he wants the US to be involved in helping to choose the next leader of Iran. This gets very much to the question we had with Michael Froman yesterday about really, you know, if Israel wants regime change. And now the president's out there saying he wants regime change, which he said before, but just whether they would ultimately split on that and what it means if in fact we are choosing that person. Do you have to have boots on the ground to get to that point?

Joe Kernen (3:55)

The House did pass a resolution saying that it's the biggest state sponsor of terrorism. And it was overwhelmingly passed it. But there are still 52 Democrats, the usual suspects. Ro Khanna voted against it. And I think Fetterman then, who has been very outspoken in recent days, said 30,000 of their own people dead in the last couple of months. Pretty big sponsor of terrorism. What was the other thing? I'll read this, then maybe I'll come up with it. On the energy front, President Trump teasing further action to reduce the price of oil, which has jumped as tankers have stopped moving through the Strait of Hormuz. A senior White House official told Reuters that the Treasury Department was considering using the oil futures market to combat rising prices. But Bloomberg later reported that move wasn't on the table right now. Meantime, Energy Secretary Chris Wright said that the current jump in US gasoline prices will be brief. They're up 34 cents a gallon in the past week. President Trump told Reuters, if prices at the pump rise, they rise. But he predicted that they would drop rapidly when the conflict with Iran is over. I know what I was thinking. I was thinking that the Iranian gentleman starting to remind me of Baghdad.

Andrew Ross Sorkin (5:09)

Bob.

Joe Kernen (5:10)

Nothing to see here. Things are awesome.

Becky Quick (5:12)

Nothing to negotiate.

Joe Kernen (5:13)

Yeah. While, you know, attacks on Israel down 90%. The most staggering Thing was a visual I saw yesterday showing which countries have gotten the most attacks, both drones and missiles. UAE far and away, like by a factor of ten more than Israel. Israel is way down here, and there's a lot of Americans, I guess, in Dubai. And it's a very Western.

Becky Quick (5:39)

There's 37,000 flights that have been canceled into and around the Middle east area. There are a lot of tourists who are still trying to get out. Some of them have gone across the border into Oman and tried to get private charters to get out. But this is a, it's, it's, it's made its name on being a Western enclave, Westernized enclave.

Joe Kernen (5:59)

What I don't understand is if you really wanted, you know, death to Israel, death to the United States, if you had aimed. I mean, they're aiming these things, right? Someone has decided. They sit around thinking, who are we going to aim these things at? And someone decided the uae. What if they had concentrated all of those on Israel with the Iron Dome?

Andrew Ross Sorkin (6:21)

Iron Dome would impact people.

Joe Kernen (6:24)

But it's being degraded, the Iron Dome, just like their issues are being degraded.

Andrew Ross Sorkin (6:28)

But I mean, I hate. Yeah, you don't want to say Dubai is a great target. Dubai is a great target because they

Joe Kernen (6:34)

don't have, they do intercept.

Andrew Ross Sorkin (6:35)

They don't have all the defense.

Joe Kernen (6:37)

They've intercepted 85%.

Andrew Ross Sorkin (6:38)

But. And they, but they also have one of the most popular airports in the world, meaning so many flights go through the West.

Joe Kernen (6:45)

The west all goes through Iran. Figures that, that, that will. Dubai, the UAE will pressure the United States to stop. I guess that's, that's. But we really do have to go back and figure out what are these, you know, trying to figure out a method in the madness. And can you ever really figure Iran out with the history of the last 47 years?

Becky Quick (7:04)

Look, even when you knew who was running the country, it was hard to fathom and hard to figure out at this point. There's mass confusion on top of all of that, Right?

Joe Kernen (7:12)

Well, I don't know. I would not want to be the. I wouldn't be raising my hand. Let me run this place at this point.

Becky Quick (7:20)

No. Reports say the Trump administration is planning to meet with top defense industry executives at the White House today. On the agenda, U.S. weapons. The wall Street Journal says that lawmakers are expecting a funding request from the Pentagon to rebuild stockpiles that have been drawn down over the last week of fighting. But Defense Secretary Pete Hegseth is pushing back as recently as yesterday on the idea that the US Ammunition is not at its full Capacity. We've talked about that. There are questions. It's been stretched thin not only by what we've been doing in the Middle east, but by years of helping support Ukraine, Ukraine as well, and the incursion from Russia.

Andrew Ross Sorkin (7:58)

Meantime, we had talked about those comments that Dario Amodei had made from Anthropic yesterday in that leaked memo. Well, now he's apologizing for what he's calling the tone of that memo criticizing the Trump administration. But he says that his company has no choice but to challenge its designation as a supply chain risk by the Defense Department. In a statement on Anthropic's website, Amadi made it clear that the company thinks the vast majority of its customers won't be affected by the supply chain risk label. He said the language from the Defense Department, quote, plainly applies only to the use of CLAUDE by customers as a direct part of contracts with the Department of War, not all use of CLAUDE by customers who have such contracts, which was a big worry for the company in terms of just how expansive other companies might consider whether they can or cannot use Anthropic. Meanwhile, Microsoft saying it's going to keep Anthropic's AI technology embedded in its products for its clients, and that excludes, though, the Pentagon. So this continue to play out. It seems at this point that the, these ongoing talks are no longer ongoing. If you really read through what he's saying, it sounds like there is now a genuine impasse that maybe up until a couple of days ago. And I think that the memo, the internally leaked memo obviously didn't help. He said it was. He said we didn't leak it and it was clearly not in our interest to leak it.

Joe Kernen (9:22)

To me, it was.

Andrew Ross Sorkin (9:23)

I have tds.

Joe Kernen (9:24)

I have tds. And even Sam Altman kind of bristled at what Amadei was saying about, you know, him and bending the knee and said that I just don't think you should base company decisions on not liking the person that's in, that's President of the United States. I don't think you should, you know, base your company's decisions.

Becky Quick (9:44)

Probably put it in context, though.

Joe Kernen (9:45)

But he also. What else did he say? He also said that the government, no one company or even collection of companies is more powerful than the government, which sounds like you can't fight city hall.

Becky Quick (9:56)

Right? That's all true, but probably put it in context of a CEO, a founder of a company who's very frustrated at the idea that his company could be taken down by, you know, refusing to go along with These things. Probably just thinking of it in that context of things, you can understand where he'd get heated.

Joe Kernen (10:13)

It was a mistake on a lot of levels, though. It's self defeating. Maybe you didn't know the memo would get leaked, but it's kind of self defeating when you're, you know, just picking a fight like that and being so over. Because we know that what Trump is capable and we know. Remember when, Remember when Biden didn't. Or when Biden didn't invite Elon to the EV summit because he didn't have unions. Or when the Biden administration decides none of these, these chip makers aren't going to get any money because they don't have dei, esg, childcare. I mean, administrations are powerful, are powerful and they use that power to.

Andrew Ross Sorkin (10:52)

Yeah, I would just say the, that Biden didn't end the government's contract. Oh, he did. Space X.

Joe Kernen (11:00)

Maybe not with SpaceX, but if you,

Andrew Ross Sorkin (11:01)

if you really go back and think about, or by the way, if you think about all of the subsidies that were given to Tesla during that period, there's a very big distinction about. You said, you said.

Joe Kernen (11:11)

I just think, I think there's plenty of instances of administrations pressuring companies using what they're able to do. And this is no different. And you should apply it equally or neither or no. But once again, nobody should be able to do it.

Andrew Ross Sorkin (11:26)

The idea that it's not being applied equally is the crazy part, though, that it's not being applied equally.

Becky Quick (11:31)

I don't think there's ever been an American company that's been designated a supply chain risk.

Joe Kernen (11:35)

Right.

Andrew Ross Sorkin (11:35)

This is. The Biden administration never did this. No other administration has ever done this.

Joe Kernen (11:39)

But then you're connecting it not to genuine concerns that they might have about not wanting those guardrails, to making it political, which I don't know why.

Andrew Ross Sorkin (11:50)

I'll tell you why. Because the Treasury Secretary came on this program and the Treasury Department has nothing to do with the Pentagon. And he said, why should we be in business with these people?

Joe Kernen (11:59)

That is, we ask, we ask him opinions on all kinds of things.

Andrew Ross Sorkin (12:02)

Sure. But he, but he literally said they were going to rip it out of the Treasury Department. The point is that is political. That is as, as, as patent. The mask is off the press political as it.

Joe Kernen (12:13)

Don't be naive about past administrations.

Andrew Ross Sorkin (12:16)

I don't understand.

Joe Kernen (12:17)

No worse this time.

Andrew Ross Sorkin (12:19)

And that's the distinction that I think we're going to, that you and I will disagree on. This is a different situation.

Joe Kernen (12:25)

It's always different for you. And it's never different for me.

Andrew Ross Sorkin (12:28)

I don't even understand that. When you can look factually and empirically at the fact.

Joe Kernen (12:32)

Oh, there you go. The factual, empirical. Your facts and empiricals are different than mind. You know what? I'm not going to be.

Andrew Ross Sorkin (12:37)

Becky just made the point. No other company in America has been described as a supply chain.

Joe Kernen (12:41)

I am not going to be able to calm you down on this. And I can't. I get. I'm exhausted.

Andrew Ross Sorkin (12:46)

Okay.

Joe Kernen (12:46)

So. It's just. You're going to have to. A lot of times when Becky doesn't get involved, I think you're. You just are exhausted. You may feel one way or the other, but it's not a feeling. It's about facts. No, it is for me. It's tiresome. I can't.

Interviewer (12:58)

I can't.

Andrew Ross Sorkin (12:58)

I'm sorry that you're so tired at six o' clock in the morning. I don't understand. It's Friday.

Joe Kernen (13:02)

I. I can't help you.

Andrew Ross Sorkin (13:04)

Okay.

Joe Kernen (13:04)

You got to go.

Andrew Ross Sorkin (13:05)

I can't help you either.

Joe Kernen (13:06)

Okay.

Becky Quick (13:06)

Unfortunately, both major points coming up.

Joe Kernen (13:09)

Gauging market risk from the Iran.

Andrew Ross Sorkin (13:10)

We can talk about Kristi Noem.

Joe Kernen (13:12)

Kristi. Kristi. Three big reasons why that happened.

Sean Maloney (13:18)

CHEESE will be next.

Katie Kramer (13:20)

Coming up on Squawk Pot, a potentially concerning monthly jobs report. What does it mean for the health of the economy? Mary Daly, San Francisco Fed President, is our special guest.

Mary Daly (13:31)

The piece I'm worried about is the labor market's maybe a little weaker than we have seen so far.

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Mary Daly (14:21)

What?

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Can't you visit Capella. Edu to learn more?

Joe Kernen (14:24)

What made you confident that you could

Becky Quick (14:26)

do something that hadn't been done before? I have no fear of failure.

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Trailblazing women, Changing the game.

Mary Daly (14:33)

One of my favorite pieces of advice. Think about what your boss's boss needs.

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Leadership can look in many, many different forms. It really does come down to just trusting yourself.

Mary Daly (14:43)

Life is short and you just gotta think big to accomplish big things.

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JULIE Media Boorstin hosts CNBC Changemakers and Power Players New episodes every Tuesday, wherever you get your podcasts.

Katie Kramer (14:59)

Welcome back to Squawk Pod Markets on Edge this Friday after an unexpected decline in U.S. jobs data. The monthly employment report from the labor department showed about 92,000 job losses for the month of February. Expectations were for 52,000 on the plus side, but this February number is the third time in the past five months that payrolls have declined. The national unemployment rate ticked slightly higher to 4.4%. Softness in the labor market could spread across the economy. And the jobs number is one of the key data points for the Federal Reserve to consider when setting monetary policy. We were joined today by San Francisco Fed President Mary Daly. She was on set with Joe, Becky, Andrew and our own Steve Liesman.

Interviewer (15:49)

Mary Daly, thank you for joining us.

Mary Daly (15:50)

Oh, my pleasure.

Interviewer (15:51)

At an incredible time in terms of what's going on, let's focus right now on what's, what's the data? We just got down 92,000. The market says you're all of a sudden ready to cut again. Is that, is that, where, is that how you read this number?

Mary Daly (16:04)

I think it's really important to step back. No, one month of data is a decisional month of data. I think it just tells us that, you know, the hopes that the labor market was studying, maybe, maybe that was too much. And we really have to keep our eye on the labor market. But we also have inflation printing above target and oil prices rising. How long they last, we don't know. But both of our goals are in our risks now and we have to keep our eye on both.

Interviewer (16:28)

So what's the way to think about this? A blockbuster number in January and now a blockbuster negative number in February. Average the two.

Mary Daly (16:36)

Average, average the two and keep watching because there was always going to be. Well, first we had a strike, we had snow. We have population changes benchmark.

Interviewer (16:46)

Just to be clear, you didn't have snow in San Francisco?

Mary Daly (16:49)

No, we did.

Interviewer (16:50)

We had a very jealous of the weather.

Mary Daly (16:52)

We had a tiny little bit of snow on, on Mount Diablo and everybody celebrate it. And then we went back to wearing shorts. So that's how it works. But, but seriously, you know, the job numbers were, they're not a clear read of what's happening, but they are also not a wrong read. You know, if you look at the sentiment surveys of workers, if you look at Florida firms, they don't say they're hiring. And so the job market is in this low hiring, low firing state, which makes it vulnerable to any changes, including just the ones that come on regular basis.

Interviewer (17:22)

Do you feel in general as if the monetary policy should respond to that low fire, low hire situation in the job market by helping it by being less restrictive?

Mary Daly (17:34)

It's a very different universe than when we have inflation below our target. If this was 2019, if you recall, we did a couple of cuts because we thought there were headwinds and we cut the rate in order to make sure the labor market is support it doesn't fall below. But right now we have inflation printing above target. It's been printing above target for some time. So it's really a balance of risks calculation. And I had hoped the 75 basis points we did last year would put a floor under underneath the labor market. But this jobs market report has got my attention and I've long been worried about it.

Joe Kernen (18:07)

It was printing above inflation before $85 oil too.

Mary Daly (18:11)

Right. They think the thing with the oil is how long will that last? Right. Consumers feel it immediately at the gas.

Joe Kernen (18:17)

You don't use transitory anymore for a word, do you?

Mary Daly (18:19)

I don't think it was ever a good word and it's certainly not one I'll reintroduce. Why do you bring that up?

Joe Kernen (18:25)

I'm sorry, I'm sorry. Here you are, you know, joining us, which we really appreciate. And I have to say that Rick made a big point about the, the participation rate and you made a point off camera and I just want to do it on camera. So when people feel crappy about the job market, they may leave the inflate, the participation rate goes down.

Mary Daly (18:47)

Absolutely. They get discouraged about their prospects and so they just don't search. And so whether you, you find those workers in the unemployment rate because they're getting, you know, they're searching actively or they're just sitting on the sidelines waiting until things apply, prove those are both signals that the labor market little.

Joe Kernen (19:02)

So it's even worse than you can't say, oh, not so it's down 90 and a 62.

Mary Daly (19:08)

I don't think you can look through this report, but I also don't think you should make more of it than one month of data. You know, I like Steve's place of let's average and we're about at zero. If you think the benchmark, the level we're supposed to achieve is 30,000. We're below 30,000. But again it's only a couple of months of Data.

Joe Kernen (19:27)

Go ahead. Do you not like income? I guess four, 10. I was, I told Steve, wouldn't it be great if we had 4% instead of 3.6 in terms of wage increases? Do you worry about it too? Because it's inflationary.

Mary Daly (19:40)

So I want to make sure that in that, that wages are inflation plus productivity growth. So the piece that's really important and we haven't talked about is productivity growth is higher. So if firm I'm still making value because my worker is giving me more benefits for every hour that he or she shows up. So I don't think this wage growth that we're seeing is outsized. But you know, so I don't think it's a sign of frothiness in the labor market or too much strength right now. I think the piece I'm worried about is the labor markets may be a little weaker than we have seen so far. And so I've got to keep. But I've been worried about that since last summer.

Becky Quick (20:16)

Well, that's what I want to focus in on. You're very measured. I appreciate that because I think that's probably realistically looking at what we're facing on these. But if you had to put your finger on one of the mandates or the other, which one would you say, say is a higher concern level for you right now?

Mary Daly (20:29)

You know, I think at this point we have two sided risks. I'm not being just balanced here as much as it's an accuracy. Right. The oil price shock, depending on how long it lasts, is a real thing. Consumers will feel that that can be injurious to or challenging for firms because they've got to find workarounds. But it also can cause consumers to pull back on other spending. And if they pull back on other spending, consumers, consumer spending has been a strength of the economy. So I just want to monitor both and I think it's important that we keep our eye on both. The labor market of course gives me some concern, but again, strikes, snow and some population benchmarkings that just make it a harder report to interpret.

Interviewer (21:12)

Tell me one of the things that's been out there is. Well, obviously you have the situation of a war and you have AI going on at the same time. Let's just talk briefly about how the lessons that we took from the 70s when it comes to oil price hikes is the idea that you just be very careful. You may not hike in the face of it, but you wouldn't. It would be something that would stay your hand until it worked through the system. In terms of cutting, wouldn't it?

Mary Daly (21:39)

So I think that's the point that everyone's talking about. It really depends on how long the elevated oil prices continue. If the conflict or the war settles quickly and the oil disruption that people are worrying about doesn't transpire and doesn't live for a long time, well, then we just see those things come back and we'd be back to a normal place. You don't want to act aggressively when you don't actually know that part. I think the important thing is that it's really hard to hike right now in a world where the labor market isn't very. We don't have any evidence that it's quite steady. So I think we just need more time. And it's why we're going to have to decide as we have an upcoming meeting.

Andrew Ross Sorkin (22:18)

You know, we're going to. Kevin Warsher is going to have this job soon, running this whole operation.

Joe Kernen (22:23)

Well, we'll see likely whether it's soon or not.

Interviewer (22:25)

Have they nominated him while I was away?

Joe Kernen (22:28)

You missed that.

Becky Quick (22:29)

Formally nominated.

Joe Kernen (22:29)

Formally nominated.

Andrew Ross Sorkin (22:30)

And part of his argument is that we are going to have extraordinary amount of productivity as it relates to AI and things, things like that. And that is not going to have an inflationary. In fact, it's actually going to be potentially deflationary. Do you believe that? Do you buy into that argument?

Mary Daly (22:45)

So, you know, for the last, I'd say since 2022, when chatbot was first announced, I've been, We've been focused on how can I transform the economy. And I was an early. My first job was in 96 with the Fed and Chair Greenspan at the time. He's 100 today, by the way.

Andrew Ross Sorkin (23:03)

Oh, I didn't know that.

Mary Daly (23:04)

Today. So happy birthday. Happy birthday. Happy birthday, Alan. But the, but seriously, we were out in the field touring factories, asking CEOs, what are you doing with computers and the Internet? And you could see the famous phrase transpire. We can see productivity growth everywhere except in the data. So I'm a little more optimistic that this productivity growth we're seeing will go beyond just simple cost cutting and rebalancing and will be driven by not all kinds of technology. But AI gives us benefits. But what we learned in the 90s is you can't just reflexively say it's coming. You've got to go dig for the information, see if it happens, and then make the policy decisions. And we're in a different world. We have an oil price shock. We have a labor market that looks vulnerable, and we have productivity growth.

Andrew Ross Sorkin (23:51)

So therefore when you think about lowering interest rates, how does that play into your thinking?

Mary Daly (23:56)

Well, there's another alternative that is also a policy decision which is to hold them steady while we collect the information. And I think for now it's about, you know, do we, do we? I'm certainly not in a, in a position to think we should be hiking interest rates, but I think there's a real issue about whether we should meet immediately, urgently act on the labor market or whether we should wait to think through the data.

Interviewer (24:20)

May we get to lot about inflation? What's your expectation in terms of Getting down to 2%? Are your contacts telling you that the tariff price pass alongs are done?

Mary Daly (24:30)

They are more or less saying that the tariff is, is just coming through and will end at the end of the year, you know, the sort of the middle half of next year. But they do expect that we'll have some run up in inflation for the next couple of months while all the tariffs fully go through, but then come back down. So that's less of a pressure. I think their pressure now is, is now what do they do with oil? We just had our meetings for our boards and councils last week and certainly oil's on their mind but much like I've said, they're like, don't get over your skis, don't go too fast and then it goes away. So we just have to be studying the boat. That was their language. I like that language. Study in the boat while we collect more information.

Joe Kernen (25:09)

Speaking of Greenspan, they said, you know, they'll be quick. They wanted someone that could let the economy run hot like Greenspan because maybe it won't be inflationary and it's going to run hot. Do you accept any of those things? Does the economy run hot? Can it run hot without worrying about inflation?

Mary Daly (25:25)

I have not seen an example that the economy is running hot right now. What we have is extremely solid growth and a labor market with low hiring, low firing that doesn't feel hot to workers. And with inflation printing above target, I don't think it really feels comforting to consumers.

Interviewer (25:44)

This was a great interview. On this side of the coast. I think you talk a little faster, a little more assertively. Perhaps you're more laid back.

Mary Daly (25:50)

I'm laid back.

Interviewer (25:51)

San Francisco. The dead shows were different in the middle of the night. So I would come here and they would.

Andrew Ross Sorkin (25:58)

Nice.

Becky Quick (25:59)

Mary, thank you.

Interviewer (26:00)

Thanks for coming.

Mary Daly (26:00)

Thank you very much. My pleasure.

Katie Kramer (26:04)

Coming up on squawk pod, the latest on President Trump's firing of Homeland Security Secretary Kristi Noem and lawmakers moving to regulate prediction markets. We are joined by former congressman and CEO of the Prediction Markets Coalition, Sean Maloney right after this.

Sean Maloney (26:21)

I don't think there's anything wrong with having a derivative based model that has good federal regulation because we understand those markets and they work.

Schwab Announcer (26:32)

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Joe Kernen (27:30)

What made you confident that you could

Becky Quick (27:32)

do something that hadn't been done before? I have no fear of failure.

Capella University Announcer (27:37)

Trailblazing women, changing the game.

Mary Daly (27:39)

One of my favorite pieces of advice, Think about what your boss's boss needs.

Katie Kramer (27:44)

Leadership can look in many, many different forms. It really does come down to just trusting yourself.

Mary Daly (27:49)

Life is short and you just gotta

Becky Quick (27:50)

think big to accomplish big things.

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Julia Boorstin hosts CNBC Changemakers and Power Players. New episodes every Tuesday, wherever you get your podcasts.

Katie Kramer (28:03)

And we're back. This is Squonk pod stand Andrew by

Sean Maloney (28:08)

3, 2, 1, up and Andrew Q is Mike.

Andrew Ross Sorkin (28:12)

You're watching Squawk Box right here on cnbc. I'm Andrew Osrkin along with Joe Kernan and Becky Quick. A lot going on on this Friday

Joe Kernen (28:18)

morning and President Trump is replacing Homeland Security Secretary Kristi Noem with Oklahoma Republican Senator Mark Wayne Mullen. On his social media account, the president said Noem had served the country well and would be moving to a new security initiative. But Ms. Now reports that President Trump fired Noem largely because of her claim to a Senate panel earlier this week that the president president had personally approved a more than $200 million ad campaign about DHS immigration enforcement. The campaign prominently featured Noem who at one point was shown on horseback with Mount Rushmore in the background. We talked about this, I think a little bit already. We have not talked about Mark Wayne Mullen.

Andrew Ross Sorkin (29:04)

I think that on the broadcast.

Joe Kernen (29:05)

Yeah, he was just on. When I was down in Washington, you know, am I allowed to. I like him personally. I don't know if I like everything, but I like him a lot personally. And I just think it's cool that he was a MMA undefeated MMA fighter. Never, never lost as a mixed martial arts fighter. And we remember. See, I'm not a fighter. You know that. Why would I. I probably lose that physical fighter. No, I'm not.

Interviewer (29:28)

Verbal.

Joe Kernen (29:29)

Verbal. No, I'm not. No, I'm not. I am a. I'm not a physical. When he was in that argument with Shawn Fain on the floor where he was going to really come over his desk and take a. He started taking off his ring because you don't want to. You know, I'd like five rings on each hand. You know, they're called brass knuckles. But he was at least not going to. Why. To not leave a mark, I guess.

Andrew Ross Sorkin (29:55)

But who's going to take his role?

Joe Kernen (29:57)

That's a good question.

Becky Quick (29:59)

As a center of honor, I saw Governor replaces the.

Joe Kernen (30:03)

Yeah. And I saw yesterday on a different network that might be more amenable to that side of things, they said Oklahoma and you've lived in Broken Arrow is filled with conservative people that can step into that role and that in some elections they were disappointed at. Like Lankford from Oklahoma, who was negotiating with Democrats about that. Like amnesty. Yeah. A Republican who in their view was not a great. Out of all the talent in Oklahoma for that size, it's. What is it? Red by +24 or something like that.

Andrew Ross Sorkin (30:42)

What do you make of the president keeping Kristi Noem inside the tent? So it's interesting. I think I was looking at this last night. Nobody that was on the cabinet or anyone in his team that's ever been fired this time. This time is being pushed out completely. And I think part of that is the last time people would get pushed out and then. And then there'd be articles. But when you're sort of like still sort of part of the thing, I

Becky Quick (31:09)

think that might be Susie Wiles, I would anticipate too, just trying to give this, you know, united front that they put on with these things. Christine Noem was the first one to be removed.

Joe Kernen (31:20)

There's a difference between Been. You could say that waltz was also pushed down and has done a great job where he is now. And also that I don't know if you've noticed, we followed this gentleman, President Trump for a while, not big on saying that was wrong of me to pick someone.

Andrew Ross Sorkin (31:40)

And so if in fact this sort

Joe Kernen (31:41)

of says she's the border's closed. And in her defense, and I don't want to pile on, but in her defense, if you just look at what she was supposed to do, I mean, things obviously the way.

Andrew Ross Sorkin (31:52)

So it's done. And I actually, the way the border was unlikely to actually even continue. I mean, I think some of the. I think one of the things he said was I'm trying to learn from some of the things that didn't go right. That was, by the way, the right kind of language to his credit.

Joe Kernen (32:05)

And they all say Tom Homan had to be called in to clean things up in Minnesota. And so I'm not saying that there weren't mistakes there. I'm saying that the border, I don't know whether that was done, but maybe

Andrew Ross Sorkin (32:20)

the advertising thing and then this potentially perjury thing.

Joe Kernen (32:24)

Is there a real situation whether he did or did. But you know, Tom Homan had said again and again the worst go first. And that wasn't necessarily the case. The criminals are the ones that we're going to look. We're not going to be just overall great. But I don't know what this new shield thing is. It has something to do with drugs coming from other countries.

Becky Quick (32:43)

Latin America, I think.

Joe Kernen (32:44)

Yeah, yeah, yeah. Pile on. But I did not like those. I didn't like the ads and I don't like that she shot that dog right there. Disqualifying for me. You shoot a dog, there's no bad dogs. There's only bad owners. Lawmakers are introducing a bill to ban the president, vice president and members of Congress from creating prediction market contracts after controversial bets on global events put companies like Kalshi and Polymarket under scrutiny. Joining us now is former Congressman Sean Maloney. He is the CEO of the Coalition for Prediction Markets.

Andrew Ross Sorkin (33:25)

And I love this guy.

Joe Kernen (33:27)

As we. You do.

Andrew Ross Sorkin (33:28)

I love this guy.

Sean Maloney (33:29)

See, we should stop right here.

Joe Kernen (33:31)

We should. You guys want to leave or something? CNBC and Koshi have a commerce. Not that there's any wrong with that. Have a commercial relationship that includes a CNBC minority investment. It's good to see you.

Sean Maloney (33:43)

Good to be here.

Joe Kernen (33:43)

Your stakes, your major point, I think is a lot of these things that raise an eyebrow are offshore markets that there's already some regulation. Yeah. Marketing.

Sean Maloney (33:53)

Thank you for noticing.

Joe Kernen (33:54)

Yeah.

Sean Maloney (33:54)

Because I listened to Chris Christie, sit on this set and say that an onshore, responsible, regulated company brought you the Maduro trade. And that's BS that that is an offshore player, you know, that is, that is not subject to U.S. regulation. And the reason we don't have those kind of abuses on it, on the, on, on the guys doing it the right way here is because you know who it was because we ban insider trading already and we've got know your customer rules. And so there's an important conversation going on and these are serious issues and their coalition exists to be part of that conversation.

Joe Kernen (34:28)

You also are of the opinion that it's not like a casino, it kind of looks like betting, but you're saying it's actually a derivative and that it can be used to hedge different things. You actually must have killed you. But you point out that Trump probably had a pretty good idea he was going to win from the prediction markets where on the polls that look like he.

Sean Maloney (34:47)

Well, as a political nerd, I will tell you it is unusual that Zoran Mamdani and Donald Trump are both bragging about their calciads, right? And everybody I know running for office sends me their cowshi odds now, not, you know, a poll. So. And you know you were quoting Kalsheet data on this program a few minutes ago, right? Why you guys use that data? Because it's very cool forecasting technology and we know the markets can, can derive interesting information. But, but I tell you what I do think, I do think there are scientific serious issues that we need to contend with. And, and, and we applaud lawmakers for getting in the conversation.

Andrew Ross Sorkin (35:21)

When you say serious issues, what are the issues that you think need to be contended with?

Sean Maloney (35:25)

I think it's really good that the CFTC has started the process of doing a rulemaking in this space. I think there are novel aspects of these markets. Even though, as you point out, markets have always been accused of being a form of gambling and speculating has always been seen as, as gambling. We know, however, that specific speculation provides liquidity in markets. What we want is good rules, good regulation, transparency.

Andrew Ross Sorkin (35:47)

Let's just understand what that means. So I can see, I can see how this could work in the context of politics, meaning understanding an election. And I think there's probably great value in that and to the degree that it's pretty hard to have inside information in advance of it that may make, that may be something that may make sense in terms of hedging and all the other things you're talking about. The thing that I think we've all talked about at this table is there, it feels like in this idea that you can bet on anything at any given moment, that it changes people's fiduciary duty, the amount of inside information that can be in the system. That, that, that piece of it makes it very complicated when, when you can bet on what you are about to say, like next.

Sean Maloney (36:29)

Yes.

Andrew Ross Sorkin (36:29)

I think if in fact that was a opportunity, you know, if somebody said Sean's coming on, someone could put up a bet about what you're going to say, that could not be a great situation.

Sean Maloney (36:39)

Yes. I don't think the world where I'm that important exists. But I appreciate the example, I think, but it's a serious question you're asking and I think this is exactly what I'm talking about, which is that you've got a chairman of CFTC who is the cop on the beat and a good regulator who has said we're going to do a rulemaking on this and to the extent that we need to clarify these kinds of issues in these kinds of markets, because some of those contracts are different even though they're derivative contracts on a financial market where we've got a century of experience regulating them. Right. And we understand markets and we understand manipulation. We know, we understand it's wrong to use material non public information. Insider trading is illegal. It's been illegal, it's going to stay illegal.

Becky Quick (37:19)

Co op people who don't play by those rules, I'm sorry, you can't co op people who aren't beholden to those rules. You can do it in the financial markets because every publicly traded company has to follow the rules. Should you be allowed to bet on things where players are never going to have to follow those rules? It's not their responsibility to do it. We used the example before. Knowing what's going to happen at the super bowl in terms of the super bowl halftime show, knowing what's coming next, it's not those people's responsibilities to protect that information. And so therefore it's very hard to say that there's not some edge that somebody has and that's not a fair trading market.

Sean Maloney (37:53)

Right. And these are novel questions and you're right to ask them them. And my, my point to you is, is that we've got an experienced cop on the beat who's going to do a rulemaking process. We support that. But what clarify which piece of it are you advocating for for some of these markets?

Andrew Ross Sorkin (38:06)

For example, use the, the bad bunny example. Do you think that people should be able to bet on what is the first song Bad Bunny is going to play at the Super Bowl. Does that seem like a reasonable thing for you or not? Because I assume it's not just that you're asking the CFTC to create some guardrails. I imagine you want them. You have a view about what those guardrails actually look like.

Sean Maloney (38:31)

Right? And I have a view on what books you should read and which ones have value and which don't. We don't generally. No, I'm going to answer your question. We don't generally get in the business of telling human beings what they can transact on and what's interesting to them any more than I would say your book on the market crash is less where.

Becky Quick (38:50)

But whether somebody's going to die or not, whether the toll is.

Sean Maloney (38:53)

We don't allow those transactions on US based platforms. The CFTC has clear core principles that would prevent that. So no, they should not. However, if you want to understand there are important hedging strategies around a change in government, I think that's a perfectly legitimate thing to hedge and there are huge economic implications for that. And a responsible company doesn't allow people to transact on death and that's the right way to go. But on your case, in fact, what I'm trying to tell you is, is that, you know, we have a referee to call balls and strikes on things like that and to clarify what people's responsibilities are and what they aren't.

Joe Kernen (39:29)

Right.

Andrew Ross Sorkin (39:29)

But everybody's. But, but I assume you are talking to the referee, telling the referee what you think the rules should be. And so what I'm asking you very specifically is what should the rule, you know, should. If Taylor Swift's going to have a concert, should her song, whatever she's going to do, or if Brian Armstrong is going to do a conference call and is going to talk about something or not talk about something, should that be something that is permissible to bet on? And I'm not talking about the specifics, I'm talking about the concept of effectively betting on things that are happening in the happening outside of maybe the financial markets.

Sean Maloney (40:07)

Well, let's take a step back. The reason that millions of Americans are excited about these products and the reason this network uses Calci data is because your viewers find it useful that, that when you aggregate that market information with people with skin in the game, you learn important insights. And you may care about the Grammys or not, you may care about the sales of a song or not. Some people clearly do and they can transact on that the question?

Andrew Ross Sorkin (40:32)

I think I'm asking a different question. It's not, not about who's going to win the Grammys, which might be a fair thing to bet on, assuming that you think that Price Waterhouse or whoever's doing the accounting is not going to share that information. Prior. But you know, whoever that musician is that's going to win, what they're going to say during their speech, and I'm asking you, are you saying that what they're going to say during their speech, for example, that kind of thing would be something you think should be permissible? It sounds like you do.

Sean Maloney (40:59)

What, what. Now look, what I'm saying is that, is that the market will determine what people want to trade on and it's the job of a good regulator to say when things cross a line.

Andrew Ross Sorkin (41:09)

And I'm asking you, are you suggesting that things like that do cross the line or they don't cross the line?

Sean Maloney (41:13)

I don't, I don't think there's anything wrong with people transacting on things where they have expertise or where they have economic risk they want to hedge. I don't think there's anything wrong with having a derivative based model that has good federal regulation because we understand those markets and they work. I think if your point is, is that I should, I should be picking what's meritorious and what's not. I think it's far better what's meritorious.

Andrew Ross Sorkin (41:36)

There's a certain kind of schema where there's a large possibility for inside information to be used to bet on, which is different than other kind of. I put in sort of two different kind of schema. That would be my.

Sean Maloney (41:51)

Well, now he's just using big words.

Joe Kernen (41:53)

But even though it's only two syllables.

Sean Maloney (41:55)

I mean, I went to a state school, man.

Andrew Ross Sorkin (41:56)

But, but, but, but you know what I'm talking about. You know what I'm talking about.

Mary Daly (41:59)

We all know.

Joe Kernen (42:00)

And schema.

Becky Quick (42:01)

I mean.

Sean Maloney (42:01)

All right, look, look, look, I'm taking your point seriously. But what I'm telling you is, is that the way this works best, right, is when, when, when companies like Kalshi can, can offer contracts that, that their users find useful. And, and, and if it's working right, they know there are guardrails and, and there's a cop on the beat that's enforcing those. And by the way, we have not seen the high publicized abuses that people have heard about on US Based markets that are federally regulated. We see them on offshore platforms where people are acting like cowboys. And that is exactly where you're going to drive people if you don't have good federal regulation here. So my point to you is your concerns are valid and some of these questions are new and we need guidance on some of them from the COPPA doing individual work. We want that.

Joe Kernen (42:45)

That sounds like scene but I but

Mary Daly (42:47)

it doesn't sound like a drill.

Joe Kernen (42:49)

Doesn't sound. I bet on all these English words during the Super Bowl. I lost my ass. Not a single, not a halftime. I bet on none. Nothing.

Sean Maloney (43:00)

I don't know what to tell you but I would probably have the same outcome. But I think that millions of Americans find these tools useful and this network

Becky Quick (43:11)

finds it and they are, they are in certain instances.

Joe Kernen (43:12)

But some of the it sounds like betting on an individual free throw, making that or so that's a bet betting on someone coming out with a word. And Andrew's right. I mean if you could guy can know what he's going to say. Right. Couldn't he be.

Becky Quick (43:23)

Yeah. The coinbase CEO did. He was following the odds and then said at the end like threw all the words in just to do it. And it's. I understand the usefulness and I do understand it in certain cases. I do think that there need to be some serious. There's conversations around what is legit and what is not and what is just a flat out bet.

Sean Maloney (43:43)

I really like the way you said that and I, and I'm. And we're joking around but, but we agree and that is exactly what the coalition exists to do. And if you want to know why we are here but there's not much

Becky Quick (43:53)

self policing taking place. This is like we're going to throw.

Sean Maloney (43:57)

Well no, let's be fair, let's be fair. If you're talking about the US based federally regulated guys they spent four years doing it the right way going through the front door.

Becky Quick (44:05)

I do appreciate them doing that and making sure that they are following US regulations on some of these things. I also know the regular take a very long time to catch up and there's just what happened over the weekend

Sean Maloney (44:16)

but you don't see us saying $10

Becky Quick (44:17)

was kind of frozen because of what happened on those bets about the Ayatollah being taken out.

Andrew Ross Sorkin (44:22)

Right.

Sean Maloney (44:22)

And let's take that example because that's a good example of an American based company responding correctly saying no no, no, we don't have contracts where that pay out on a death and made a lot of users upset, set refunded. Right. Lost millions of dollars to do it the right way. Right. And took some heat. But that's what a responsible company does. Compare that to folks who are, who act like nothing is wrong. And what I'm telling you is, is the is these markets exist. They're very useful. That's why you guys use the data.

Joe Kernen (44:54)

Yeah.

Sean Maloney (44:54)

The thing we should all do is focus on having a good cop in the beat, having companies here in the US So that we get the value of these things. And just like every market, police the potential abuses. And there's some new questions that we're all getting our head around.

Becky Quick (45:06)

I just don't think they're all derivatives. I don't think every bet that's being

Joe Kernen (45:09)

made on that point on any given day, you can bet Andrew's going to say Trump is bad and I'm going to say Biden was bad.

Andrew Ross Sorkin (45:14)

Well, if you.

Joe Kernen (45:15)

That's not true.

Andrew Ross Sorkin (45:16)

That is not true.

Sean Maloney (45:18)

Yeah.

Andrew Ross Sorkin (45:18)

Here's where you will say Biden is bad, and I will critique something that might have happened.

Joe Kernen (45:23)

Now here he comes with the alternative facts.

Andrew Ross Sorkin (45:25)

Just saying.

Joe Kernen (45:26)

Okay, all right. I mean, Biden was bad.

Katie Kramer (45:31)

Okay. Thank you to Sean Maloney for joining us at the table. We're all in a hurry to get through Friday. That is Squawk Pod for today and for the week. Thanks for listening to this podcast. Squawk Box is hosted by Joe Kernan, Becky Quick and Andrew Ross Sorkin. Wasn't it great to have them all back together again? Tune in to the show weekday mornings on CNBC at 6 Eastern. Or get the smartest takes and analysis the best interviews and conversations right into your ears when you follow Squawk Pod. Wherever you get your podcasts, we'll meet you right back here on Monday. Have a great weekend.

Sean Maloney (46:06)

We are clear.

Andrew Ross Sorkin (46:08)

Thanks, guys.

Schwab Announcer (46:18)

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