Hugh Johnston (1:59)

Netflix would be an awfully big company at that point if the two came together. But if you look at what they're trying to do in a lot of ways, they're trying to do again what we already did, which was they have the distribution, they're trying to add more.

Andrew Ross Sorkin (2:12)

IP plus, it's Groundhog Day again. It is Monday, February 2, 2026. Squawk Pod begins right now.

Becky Quick (2:23)

Stand Becky by in three, two, one. Cue it, please.

Joe Kernan (2:29)

Good morning, everybody. Welcome to Squawk Box right here on cnbc. We're live from the NASDAQ market site in Times Square. I'm Becky Quick. Along with Joe Kernan and Andrew Ross Sorkin. Here we go. It's Monday morning. It was the last trading day of January on Friday, though, and the Dow is now up for nine months in a row after that month's performance. You got to check out gold and silver. This has been a story to watch every day. It seems like we've been talking about new highs until Friday when both of those metals saw their worst day since 1980. You got to go back to the eight to look at what was happening with the Hump Brothers trying to close in on the silver market to really see what we have seen recently. The chart tells you a little bit more of the story of what we've seen year to date. Still up by 8% but a significant drop off that we saw on Friday silver. I want to look at it, even the longer term chart if you can. This is year to date up 16%.

Mike Santoli (3:18)

80 is just insane.

Joe Kernan (3:21)

It was above 100.

Mike Santoli (3:22)

I know that.

Joe Kernan (3:23)

But it pulled. It's like there's the chart. There's a chart that shows you a little bit more over the one year. 153%. But yes, I realized I was trying to buy some silver jewelry that has not come back in stock since before the holidays.

Becky Quick (3:36)

Interesting.

Joe Kernan (3:37)

And I finally realized, oh, it's because they can't restock it. Prices have gone completely crazy with this.

Mike Santoli (3:42)

Is it asymptotic or hyperbolic or exponential? It's all those.

Joe Kernan (3:47)

Both logarithmic.

Mike Santoli (3:49)

One of them's down.

Joe Kernan (3:50)

Logarithmic is it has not been, it has not been pretty in the last few days. But again, people were taking profits. Look, they'll point to the nomination of Kevin Warsh as a reason for this because he's never been somebody who's liked a runaway currency. And so they'll say that's part of the reason.

Mike Santoli (4:06)

I think really it was just everything we're seeing. Bitcoin too is about wars. He likes a smaller balance sheet.

Joe Kernan (4:13)

Yes.

Mike Santoli (4:13)

So and he has, and he talked.

Becky Quick (4:16)

About selling it down.

Mike Santoli (4:17)

But by the way, the assets should be based on. So if you believe assets, all assets should actually be based on something like rather than liquidity Fed, you know, a big balance sheet momentum. If you think that he's probably not a guy you're going to like right away.

Becky Quick (4:32)

No, because ultimately there is a hawk, by the way, it is hawkish ultimately to be trying to reduce the balance sheet quickly. So even if he reduces the interest rate on the front end, if he.

Joe Kernan (4:43)

Can, it makes it tougher to you.

Jay Clayton (4:45)

Both at the same, you can't do.

Becky Quick (4:46)

Both at them or they basically, you know, even each other out. The other piece of this, by the way, is he's going to have to, and this is something that we haven't really talked about enough. The board of the Fed he require, he's going to require everybody to get to vote in favor of what he wants. He has been very critical of the, this, this Fed and these board members for the last several years. So the first job of the challenge that he's got is he's going to actually have to re befriend this group to try to get people on board. They were happier about having him in many ways than having, for example, Kevin Hassett. But life is relative. You're still walking into a bit of a hornet's nest and I think he can succeed. But I'm just saying on the front end of what he's going to have to do is going to have to be trying to figure out how do.

Mike Santoli (5:36)

You get everybody to. That's a long explanation. He does not like the profligacy that the Fed has enabled both fiscally and with its own balance sheet.

Joe Kernan (5:47)

And there's a lot.

Mike Santoli (5:48)

And if you don't like that, which.

Joe Kernan (5:50)

Include reining in the Fed's mandates that they've done and the balance sheet is going to be able to do a lot of those things.

Mike Santoli (5:56)

Regulation over the banks he's talked many times about. Look, it'd be nice if all assets were actually trading at a point that was based on inherent value rather than liquidity and momentum. And there could be, I don't know whether that includes crypto or AI or NASDAQ or gold and silver or it's across the board.

Joe Kernan (6:16)

The pullback though has been pretty phenomenal, particularly with the precious metals and silver prices because we brought up brothers. Right. The run up that came first of all, it's used in solar panels. So there is a, you know, an.

Mike Santoli (6:27)

Industrial use and using solar panels.

Joe Kernan (6:28)

But it's, it's crazy.

Mike Santoli (6:30)

The whole solar panel craze is we're on the downside, we're not on the upside and it would have already gone up there. Something weird happened in both gold and silver.

Joe Kernan (6:38)

Well, when the Hump brothers did it back in the 80s, central bank of 50 bank $50 collapsed and didn't get back to that level for four decades afterwards. So you wonder if you're seeing a repeat on a lot of excuses. Dollar chart is sitting just above 97 or just at 97. 10 Bitcoin and other cryptocurrencies also hit over the weekend. As we mentioned. You can see bitcoin this morning is relatively flat, but it's trading at 7,000 77,000. Under 77,577 are just at that level. And energy prices also a huge pullback. And really what you want to watch here is natural gas. It's down 17 and a half percent. This was more because of the cold snap and the snow that we have seen across the east coast and much of the country. It ran up significantly last week. It's pulling back and then you've got WTI down by about 5%. It's still above $61 a barrel at 6186. A lot of questions about what's happening in Iran and we'll talk more about that a little later.

Mike Santoli (7:31)

The groundhog might not even come out today. Would you? I would stay.

Joe Kernan (7:35)

I'm not even bothering watching because I know we're getting another six weeks of winter.

Mike Santoli (7:38)

And if it's like this winter and you know what's bad? It's bad if the snow doesn't. We count on the snow to melt after you get a couple of feet. If it stays 12 degrees for a month, it's never melting and Mamdani is never going to get it out of here. And it's black and disgusting and unusual.

Becky Quick (7:55)

Here we are complaining about the fact that there's too much snow on this side. You know who's not getting enough snow if you're a skier.

Mike Santoli (8:01)

Is that true?

Becky Quick (8:02)

And you're in Colorado, you're in Utah, you're in Montreal. Terrible.

Joe Kernan (8:06)

I wish we could give them ours.

Becky Quick (8:07)

Terrible.

Mike Santoli (8:08)

What about by mid March?

Becky Quick (8:11)

Oh, is that where you're going? I don't. At this rate it's not good. It is not good. I mean it's a third, maybe in some cases half of what is typical. So it's a.

Mike Santoli (8:21)

If it's a zero sum game.

Becky Quick (8:22)

We know is they're begging. They're begging for more winter.

Mike Santoli (8:26)

If it's a zero sum game. We know where it is. It's in Manhattan.

Hugh Johnston (8:30)

Phil, Phil. Phil. Phil.

Becky Quick (8:32)

Welcome to Punxadani Welco Hog day.

Mike Santoli (8:40)

It's Punctsadani, Phil.

Joe Kernan (8:46)

Well, there's the groundhog. Punxsutawney Phil. He emerged and he saw his shadow. Which means six more weeks of this stupid winner.

Mike Santoli (8:57)

Stop the presses.

Joe Kernan (8:58)

Yeah, like I said, I knew it was going to happen before he came out. It's cold. It's even cold in here.

Mike Santoli (9:03)

It's single digit.

Becky Quick (9:04)

It was below east coast cold. But I go back to my friends who like to ski who think this.

Mike Santoli (9:10)

Is great, but I don't like it.

Joe Kernan (9:13)

Me neither.

Becky Quick (9:16)

House Speaker Mike Johnson saying he thinks he has the votes to end a partial government shutdown by tomorrow. The House Rules Committee now scheduled to meet today on that. That would be the first step in the reopening process. The government partially shut down on Saturday morning, this after the Congress failed to approve a spending package. Now what's going to happen next? Senate Democrats demanding changes to the plan that the House originally passed after two US Citizens were shot and killed by federal immigration agents in Minnesota. Now the Department of Homeland Security funding was stripped out of the package and replaced with a two week stopgap funding that has to be reapproved by the House. Now Johnson says he's not counting on Democratic support to help fast track the plan.

Mike Santoli (10:00)

They're going to separate the Department of Homeland Security bill. Our intention is by Tuesday to fund all agencies of the federal government except for that one. And then we'll have two weeks of good faith negotiations to figure it out.

Becky Quick (10:11)

So a whole bunch of moving pieces there.

Mike Santoli (10:16)

Now it seems like Disney theme park, said Josh d' Amaro is close to getting the nod from the company's board to become Disney's next CEO. Bloomberg reports as Disney directors are set to vote this week on who will succeed Bob Iger as head of the entertainment giant. Late last week, the Wall Street Journal reported Iger told Confidence that he confidants that he plans to step down before his contract expires at the end of the year. The report said Iger wants to give up the daily responsibilities of being CEO and that he was frustrated over the drama at ABC when Jimmy Kimmel was briefly suspended last year. Probably frustrated with that right there. $112 it was. I don't know when Disney plus was going to take over the world. I forget how high we got, well above 200. We're going to speak with Hugh Johnston.

Joe Kernan (11:09)

And Nvidia CEO Jensen Huang says that his company's potential $100 billion investment in OpenAI was never meant as a commitment and that his company will make its funding decisions one at a time. Wang made those comments to reporters over the weekend in Taiwan. A report on Friday in the Wall street journal said that Nvidia's $100 billion agreement with OpenAI to help the startup train its models has hit roadblocks. The article says that talks between the two companies have stalled in the early stages, and Wang has privately criticized what he believes is a lack of discipline in OpenAI's business. He also flagged competition that it faces from Google and Anthropic, though in separate remarks over the weekend, Wang denied that he was unhappy with Open Air and said Nvidia plans to make what he called a huge investment in the startup. Wang is going to be joining Jim Cramer in a Mad Money exclusive tomorrow night at 6pm Eastern time.

Becky Quick (12:04)

So this one I think is a complicated one, by the way, so many people talking about it, about what's going to happen next in all of this. By the way, for those who are trying to play in the public markets, the open air valuation in the private markets, you can look at the stock of SoftBank right now, which is down this morning, I think a little three, maybe 4%. By the way, Microsoft, which is also used to some degree, it's a different animal as sort of a backdoor way into Open Air. But the idea that, that Jensen and Sam, if you remember, came on our air. Yeah, talk about to announce this $100 billion deal. It's the first, it was the first of the deals that people said looked like a round trip deal. There was always this argument being made, I think privately that, you know, Nvidia was basically saying we're going to put give $10 billion, then we'll give 20, then we'll give 30 based on a performance metric. And so now the question is, what's really even happening to that money? Is it possible that in this next round they put in 10, 20, even $30 billion? Sure. That I think is directionally where this is going. Will they ultimately get to 100? Maybe, but I think that part's a lot less clear.

Joe Kernan (13:16)

But we'll get some answers from Jensen himself when he speaks with Jim tomorrow.

Becky Quick (13:23)

He's will be next.

Andrew Ross Sorkin (13:24)

Coming up on Squawk Pod, one of Wall Street's most entertaining questions. Who will be the next leader of Disney, the company reporting quarterly results today? Chief Financial Officer Hugh Johnston joins us next. And if he knows he's not sharing.

Hugh Johnston (13:39)

Whomever the new CEO is, they're getting a business that has a lot of momentum.

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Keith Landsford (14:47)

Restriction Supply 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, monitoring monetary policy decisions and key results and statistics that may impact your trading. Download the latest episode and subscribe@schwab.com MarketUpdatePodcast or find Schwab Market Update Wherever you get your podcasts.

Andrew Ross Sorkin (15:22)

You're listening to Squawkpod from cnbc. Here's Andrew Ross Sorkin.

Becky Quick (15:28)

We're learning more about the cryptocurrency business connected to President Trump's family. The Wall Street Journal reporting saying that lieutenants to a top government official and member of the United Arab Emirates royal family reached a deal literally just days before President Trump's second inauguration last year to buy a half billion dollar stake in the Trump family's crypto business, World Liberty Financial. This comes months before the Trump administration approved the sale of advanced AI chips to the uae and if you remember, the prior administration would not sell those chips to the UAE. The Journal says that deal resulted in close to $190 million flowing to Trump family entities. The White House didn't immediately respond to a CNBC request for comment, but it told the Journal there were no conflicts of interest surrounding the deal. A World Liberty spokesman also told the Journal that President Trump had no involvement in the deal. But again, there's a question about when you have private enterprise and you're in the government, what the role of all this should be. Clearly, obviously the president's kids have this business, but President Trump is part of that business. And then of course, and specifically, just to make one point on this, the issue is when you have foreign governments effectively making investments in your company, it's different if I mean to some extent maybe different or at least the conflict.

Mike Santoli (16:55)

Is less this guy, did he do it severe in as a representative of the government or personally or what the gentleman?

Becky Quick (17:01)

No, it's the government fund, it's the sovereign fund, it's the government making an investment in because the way that the.

Mike Santoli (17:08)

Story was written, a lieutenant to a top government official and a member of the United Arab Emirates royal family.

Becky Quick (17:17)

He was the one who negotiated the deal.

Mike Santoli (17:19)

Right.

Becky Quick (17:19)

On behalf.

Mike Santoli (17:19)

He made the investment. Oh he, he made the investment for the country.

Becky Quick (17:24)

I believe it's a sovereign. It was the sovereign wealth fund that made the investment. I don't want to misspeak about this but you know the Wall Street Journal reporting was that and then the question is the should that be disclosed? Especially then when you're making separate deals about chips and other things and other.

Mike Santoli (17:41)

Then you're going to you know, you'd have to find the quid pro quo smoking gun probably like all these things that's, that's.

Becky Quick (17:47)

They would say that had a real. They would say that is the. They would say that is the quid pro quo. Well that is.

Mike Santoli (17:55)

They would say the government and the Trump White House says no had nothing to do with that. Right. Is what they said that there was no conflict of interest surrounding the deal. I thought the latest thing was $4 billion of crypto wealth is accrued. Suppose so this is the.

Joe Kernan (18:10)

I mean another whether you can find a smoking gum or not, there's the appearance of impropriety and that's been the problem with all of these things all.

Mike Santoli (18:16)

Along and we won't do any. What about isms?

Becky Quick (18:25)

Disney shares trading higher following quarterly results. The company benefiting from stronger than expected streaming profits. I want to talk about that and so much more. Hugh Johnson, Disney's CFO good morning to you.

Mike Santoli (18:35)

Good morning.

Becky Quick (18:36)

We got to talk earnings which will do. And we also have to talk a little bit about the succession planning. I don't know how much you can comment on that but that's in the news right now about who may take Bob Iger's job. But let's start with the earnings piece of this. So the streaming piece. Very, very positive.

Hugh Johnston (18:53)

Exactly.

Becky Quick (18:54)

Let's talk about that. But let's also talk about what you're seeing at the parks because that seemed like a bit of a more complicated story.

Hugh Johnston (19:02)

Complicated but strong numbers overall the company really has a lot of momentum right now and that what is what I think is most encouraging about the quarter and I think that's what you're seeing In Pre Market 5% revenue growth is a terrific number and it's pretty broad based parks streaming even total Entertainment grew revenue 7% so certainly feel good about that. The two big monetization engines streaming and experiences both growing profit strongly and well ahead of consensus. And in addition to that the balance of the business is actually performing nicely. So and on top of that, the creative engines are working well with the $3 billion movies that we had last year.

Becky Quick (19:40)

To the extent that Disney is an interesting barometer of the consumer. The reason I even was pointing out or saying it seemed more complicated, the park story.

Mike Santoli (19:49)

Right.

Becky Quick (19:50)

Seemed on the domestic park story that that was that internationally great.

Hugh Johnston (19:54)

Yeah.

Becky Quick (19:54)

Domestic seemed a little bit slower and I was trying to just understand what's going on.

Hugh Johnston (19:58)

Well, revenue was up about the same, domestic and international. So we certainly feel good about that. In terms of the operating income, there's a little bit of choppiness, but that's largely because the investments that we're making in those businesses. So keep in mind, we launched the ship in Q1 and we still grew revenue, or we still grew profit, 6% in the quarter and experiences. We're going to launch another ship now in, in Q2 and we're opening up Disneyland Paris, the world of Frozen and a lot of other attractions. There's a one time cost attached to that. So the back half is going to be stronger for sure. But the fact is the business has.

Becky Quick (20:33)

Good momentum right now in terms of the streaming piece of this streaming versus linear right now. That's the other big sort of question.

Hugh Johnston (20:41)

Right.

Becky Quick (20:41)

You've. You guys have always argued you need the linear piece to drive some of the content that lives in streaming.

Hugh Johnston (20:47)

Yeah.

Becky Quick (20:48)

Does is that still hold?

Hugh Johnston (20:49)

Yeah, very much. I tend to think of it as just two distribution channels for large, the same content. So consumers are going to shift as they choose to shift and when they do that, we'll be there to catch them. So whichever way they want to go. I don't. I know you all are a subject of the split. We don't.

Becky Quick (21:07)

But it's an interesting one because Warner Brothers is doing the same thing right now.

Hugh Johnston (21:11)

Yeah, yeah, they are. So now we feel good about, about the integration that we have. And you don't think Warner Brothers may or may not do that depending on.

Becky Quick (21:18)

How the piece is a drag on the business or.

Hugh Johnston (21:20)

No, I just think of it as one. One channel and as consumers are making the shift. Obviously it affects the numbers, but in totality we feel good about it.

Joe Kernan (21:28)

You said it doesn't make sense for Disney. Do you think it makes sense for Comcast and Versant? Does this make sense for Warner Brothers?

Hugh Johnston (21:35)

Yeah, I mean, I'm not going to try to comment on what everybody else's strategy is. I like where we sit. I like the hand that we've played. Even if you look at some of the evolutions that are happening in The. The business right now with Warner Brothers on. On the market. We really did that back in 2018 when we did the Fox deal and before that, Pixar and Lucas and all of the acquisitions.

Becky Quick (21:57)

Do you have a perspective on. On the buyer, though, of Warner and what that ultimately means to the film business, for example, meaning the theater business and the like. Would you prefer Paramount as a buyer? Would you prefer Netflix as a buyer?

Hugh Johnston (22:11)

I wouldn't say we have a strong preference one way or the other. That said, I do think the government is going to weigh in pretty heavily.

Becky Quick (22:18)

But the Department of Justice is going to call you.

Hugh Johnston (22:20)

Yeah.

Becky Quick (22:20)

And they're going to ask you to weigh in and say, do you think that one is better than the other for your business?

Hugh Johnston (22:27)

Yeah. And when they call, we'll share that news with them.

Becky Quick (22:30)

But. So you do have a preference?

Hugh Johnston (22:32)

Well, we'll take a point of view at the time. I would say this Netflix would be an awfully big, big company at that point if the two came together. But if you look at what they're trying to do, in a lot of ways, they're trying to do again, what we already did, which was they have the distribution, they're trying to add more ip, which is something they said they didn't need.

Becky Quick (22:52)

Right.

Hugh Johnston (22:52)

But evidently they do.

Becky Quick (22:53)

In terms of your spending on entertainment versus on the streaming side versus sports rights, how do you see that going forward?

Hugh Johnston (23:02)

I think we'll probably continue to see and escalation slowly in both. We're at about the right levels. Sports are going to continue to get marginally more expensive, although I think we're through the worst of the inflation in sports. And then from a streaming perspective, I think you'll see us internationally continue to invest a little bit more in the U.S. i think we have plenty of content. I think we're in a good spot.

Becky Quick (23:26)

Can we talk succession?

Hugh Johnston (23:28)

I'm not going to offer much. I mean, if we can keep it between the four of us.

Becky Quick (23:32)

Just, just. Well, look, look, the news reports suggest that a Bob, as in Bob Iger, may want to step down earlier than the contract is finished, effectively. Which means something will happen sooner and that Josh is the likely successor.

Hugh Johnston (23:50)

Yes, I've seen all those news reports as well.

Becky Quick (23:52)

And the Dana is not. For whatever reason, I'm just reporting what they.

Mike Santoli (23:56)

What the report said.

Becky Quick (23:56)

Very good.

Mike Santoli (23:57)

Tell me. That's a very good summary, Andrew.

Hugh Johnston (24:00)

It is an excellent summary of what's been reported in the news. Here's what I would say, Andrew. I think the board has really been very transparent about this process. I also think they've been very diligent. James Gorman and the entire board, I think, have spent an enormous amount of time on this. They previously said they would make a decision in the first quarter and they. They're going through in my issue this. One thing I do want to add though is whomever the new CEO is, they're getting a business that has a lot of momentum. If you go back to what Bob said a couple of years ago in terms of the studios and turbocharging the parks and making streaming profitable, all that stuff has happened. And that's why you see the good results right now.

Becky Quick (24:41)

Maybe I can put it in this context, given now that, look, you were at Pepsi, you're now at Disney. You understand the skill sets that effectively require to run a business in this magnitude. When you look, just take the names off the table. You know, there was a view that if you knew new theme parks, you didn't know the entertainment business. This was what people used to say, and if you knew entertainment, you might not know the theme parks in the same way age. What do you think of people who say that? And B, when you think long term about whatever you think Disney looks like, which of these businesses is ultimately going to be powering the company?

Hugh Johnston (25:24)

I think they're both really important businesses. And the reality of it is when you have a new CEO, they rarely have all of it anyway. So I think we're fortunate that we've got a couple of really terrific candidates. And whatever the board chooses, I think the team will actually rally around that person and the company will continue to.

Mike Santoli (25:43)

Say, I mean, if you got a really good theme park guy, if he ascends to the head of the company, you gotta find a really good theme park guy. You already had a really good theme park guy. Who knows if he any good at running all the other stuff. So I don't know. It's tough. I wouldn't think about it, Joe.

Hugh Johnston (26:00)

That's true in almost any company, unless they have a theme park has anything.

Mike Santoli (26:03)

To do with all the other.

Joe Kernan (26:07)

Synergies with us.

Mike Santoli (26:09)

I mean, I understand, you know, you create content and then you make a ride based on it or something.

Hugh Johnston (26:13)

But that's, you know, it's pretty powerful actually. That's what drives all. The upside is all that.

Becky Quick (26:18)

Let me tell you.

Joe Kernan (26:19)

Let me ask about the theme park very quickly though. There is a question about attendance there. It was down in the September quarter.

Hugh Johnston (26:25)

Right.

Joe Kernan (26:26)

Is that.

Hugh Johnston (26:26)

But up in the previous. The quarter we just ended.

Joe Kernan (26:28)

Right, but is that a reflection of New theme parks from Universal and others down there. Is that a reflection of the American consumer? Where do you see people?

Hugh Johnston (26:38)

I don't think it's much about the American consumer. Becky. We talked about Epic, the new, the new park down there and it's a good park and frankly we, we plan for it to have a bit of an impact and it's playing out pretty much exactly the way we expected. So from that standpoint, no particular surprise. The American consumer. I would characterize it as the upper six deciles, which are the ones that are kind of most relevant to coming to Disney parks are still doing quite well and they're still spending on those types of things. It is and it isn't though. Compare it to going to a Knicks game and that's a couple of hour event. Even compared to going to the movies right now it's a few thousand dollars, but it's a, it's a week long vacation. So from that perspective, I think the value is actually pretty good. And the fact is the feedback we get from the people who go, they, they love it. And the people who go to the cruises, it's 28 degrees, they really love it.

Mike Santoli (27:29)

28 degrees in Reliance. Right. Let me ask you.

Hugh Johnston (27:33)

That doesn't help.

Mike Santoli (27:34)

Let me look at the California.

Becky Quick (27:37)

So let me ask you a different question about the consumer right now. There is a big question mark right now about employment in this country and whether we are about to hit some kind of inflection point with unemployment.

Hugh Johnston (27:47)

Yeah.

Becky Quick (27:47)

Whether you think it's AI or something else. We talk about AI as well.

Hugh Johnston (27:51)

Right.

Becky Quick (27:52)

Do you fear that? I mean you saw the number of companies even in the last week that were laying off employees.

Hugh Johnston (27:58)

Yeah.

Becky Quick (27:58)

And what you think that portends for either folks buying the streaming service, going to the theaters, going to the parks. What does that look like to you over the next 12 months?

Hugh Johnston (28:10)

Yeah, I mean what we've seen is Disney tends to power through those things reasonably well because the priority in terms of a vacation is something obviously if you're out of work for an extended period, period of time, that that's a challenge. But for most people, they will prioritize A vacation, and particularly a Disney vacation is a high priority for families. And let's face it, once you tell the kids you're going to Disney, you're.

Becky Quick (28:33)

Probably not think that you're going to see more moving around. On streaming, for example.

Hugh Johnston (28:38)

No, I actually don't. Streaming is still a relatively good bargain in my estimation compared to what people used to pay for cable. So if you think about cable, when you think about having three or four television sets in your house, the cost of that relative to the cost of a couple of streaming services. Streaming is cheaper and it's actually better because you get to choose what you want to watch and when you want to watch.

Becky Quick (28:59)

And then let me ask you, since I mentioned some people think that that is powering or at least adding to some of this unemployment. Question.

Hugh Johnston (29:08)

Yeah.

Becky Quick (29:08)

When you think about the next year and hiring and how you guys are using AI, what does that look like like to you?

Hugh Johnston (29:14)

It hasn't affected hiring at all so far. I would tell you that in addition to that, the way we think about AI is basically making our people more productive and actually more creative and building more, more and better products. Not really about employment at this point. And honestly, I do think right now there's a lot of talk about AI connectivity to jobs. I'm not sure that's exactly true yet. I think it may be more the fact that people are hiding a little bit behind AI for some of the things that are going on in the job market. You know, if you go back to the old statement, technology tends to get over overrated in two years and underrated in 10 years. I may fall into that bucket.

Becky Quick (29:51)

Is there a model that you're using over Disney right now?

Hugh Johnston (29:54)

We're thinking about it from five perspectives. Number one is managing the streaming product. Number two is managing the guest experience. Number three in the parks. Number three is managing labor. Number four is video creation and production. And then number five is, I'll call it the Office.

Becky Quick (30:13)

But so you have a partnership, for example, with OpenAI for some of the characters and things that people can use?

Hugh Johnston (30:19)

Over 200 of them.

Becky Quick (30:20)

But longer term, does that mean that OpenAI is your model of choice that powers all of the five things you just discussed? Or are you using Anthropic for certain things? Are you using Gemini for certain things?

Hugh Johnston (30:31)

We're very open on it right now. So we will have a period of time where we're going to work, except exclusively with OpenAI, but it's a relatively short period of time. I think the reality is for a company like us, we need to let the models play out because it's not clear. And I wouldn't be surprised if there were multiple models rather than a single model going forward.

Becky Quick (30:48)

Okay. It's great to see you.

Hugh Johnston (30:50)

Great to see you. Thank you. Great to be here. Thank you, as always.

Andrew Ross Sorkin (30:55)

Next up on Squawk Pod, we are joined by the US Attorney for the Southern District of New York and former Sec chair John Jay Clayton, how he sees President Trump's nominee for Federal Reserve Chairman, Kevin Warsh, after months of uncertainty.

Jay Clayton (31:09)

Look, Kevin's a super smart guy. He knows that the balance sheet, the rates, reserves, they're all related in terms of what that means for ease or tightness of financial conditions, I think he'll be a very good communicator.

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Becky Quick (32:25)

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Andrew Ross Sorkin (32:42)

This is Squawk Pod with Joe Kernan, Becky Quick and Andrew Ross Sorkin.

Becky Quick (32:48)

Stand Joe Biden in five seconds. Four, three, two.

Jay Clayton (32:52)

His mike.

Mike Santoli (32:54)

Good morning and welcome back to Squawk Box live from the NASDAQ marketsite in Times Square Treasuries after the announcement last week and then reports about Trump making, I don't know, a joke about suing Kevin Warsh if he doesn't lower interest rates. It'd be funny if we could just assume it was a joke, but you just never know. A lot of times with what is that suitable action by a Fed chair if he doesn't lower rates? Could you actually, I think that does sound more like a joke than an actual but that does obviously put pressure on the new Fed chair, but it shouldn't have picked a guy that picked someone that was going to do what he wanted, if he really wanted to control.

Becky Quick (33:35)

But I go back to the idea that ultimately you have to it's not just one human, it's the rest of the people. You have to get all these other people to get on board with you.

Mike Santoli (33:44)

And we've never said that about the Fed chair. The Fed chair has always been able to do what he wants because they all get in line because that's what he has to do.

Becky Quick (33:51)

Well, so that's the interesting part. Historically, they have gotten in line, but they all had a sort of. The relationship between them was actually quite good. The relationship going into this is going to be a much more complicated but. Well, that's what I'm saying.

Joe Kernan (34:07)

Jason Furman had a very interesting piece that he put. He talked to several people and then actually put his thoughts down on paper.

Mike Santoli (34:13)

He was complimentary.

Joe Kernan (34:14)

He was. He said he is all in favor of Kevin Warsh and that he would not argue against him. But he did say that this is going to be a difficult thing for him to do, that he has to get in there and do all of these things. And he offered some advice along those lines. But he did say that he's happy to see Warsh in the position.

Mike Santoli (34:36)

Our next guest will weigh in on the future of the Fed, the state of business in New York City and much more. Let's bring in Jay Clayton, U.S. attorney for the Southern District of New York, former SEC chair. Should we televise during the breaks, do you think? Or put it on a podcast?

Jay Clayton (34:53)

It would be Must See tv, even.

Mike Santoli (34:55)

More Must See cancelable. Those two go together. So I'll start with, you know, we'll talk about the Fed, but talk about New York City. Is this the ghost of Christmas Future Administration? It doesn't know how to shovel snow, doesn't know how to get homeless people off the street so they don't die. I mean, is this, are we seeing Mamdani in slow motion already, do you think?

Jay Clayton (35:19)

I mean, look, this is, this is the coldest winter that I can remember in New York.

Mike Santoli (35:24)

Like Rod Stewart was 14 years and it was 14 years. All right? But there is black snow everywhere that has not been taken away. It's not going to melt because it's never going above 32 degrees again.

Jay Clayton (35:36)

I remember living in Washington in the 90s when Mayor Marion Barry was the mayor and had no snowplows and his comment was, God is our snowplow waiting for the sun. Maybe that's, maybe that's what we're doing.

Mike Santoli (35:49)

So. All right, so you're not ready to take the lead. Well, we'll go to the Fed there, but I'm just wondering, I hope this isn't a, you know, a sign of. You don't think so.

Becky Quick (35:58)

You know what on this side will give great. I have great empathy and sympathy for all the folks who are doing this work only because they did a pretty great job of actually clearing stuff early. And the biggest issue right now is just getting some of this stuff off the sidewalks. But that's, that is actually a very hard and labor intensive thing to do that the city doesn't.

Mike Santoli (36:15)

We were. And they were still. All the streets were closing because they were still trying to dig out. And it's not leaving. So you need to move it.

Jay Clayton (36:22)

Yeah, let me jump in there. I'm not in sanitation or snow removal, but I am in law enforcement. And today, and everybody asks this, would there be a change in our relationship with the police department, the Fed? There has been no change to date with, with the new mayoral administration.

Mike Santoli (36:37)

You know about.

Joe Kernan (36:37)

That's good news.

Becky Quick (36:38)

Yeah.

Mike Santoli (36:39)

You know about taking out the southern district. You know a lot about the sanitation. How about Kevin Warsh?

Jay Clayton (36:45)

Look, I think it's, I think it's, it's good. We have a pick with uncertainty of when it was coming, who it was, and I really like the pick. I like Kevin a lot. I think he's got to do a good job. He's a known quantity. Known quantity inside the building. He's known quantity on Wall Street. Those are, those are really good things.

Mike Santoli (37:02)

Do you take any of the market reaction that we've seen since, since the pick, do you think that is significant or signals anything? I think it signals that he didn't like the size of the, of the Fed's balance sheet.

Jay Clayton (37:16)

Yeah. And he's talked directly about this, talked about said valuations and reducing the size of the balance sheet. And look, Kevin's a super smart guy. He knows that the balance sheet, the rates, reserves, they're all related in terms of what that means for ease or tightness of financial conditions. And I think he'll be, I think he'll be a very good communicator.

Mike Santoli (37:38)

And you always, you're fearless and you're a lawyer, and you're a good lawyer. So you don't, you can always talk your way out of anything. I've seen it. I've seen you do it.

Jay Clayton (37:46)

And you should have seen me in high school.

Mike Santoli (37:48)

So let me ask. Yes. So we're talking about this UAE deal. So a sovereign fund invests in a Trump family crypto venture before the inauguration, and then after the inauguration, the Trump administration okays some chip sales to the uae, which the Biden administration says was not going to do it. I said, you need to find the quid pro quo in the smoking gun. And I was told that is the smoking gun. It's already there. And if the Trump administration says, I'm not saying that it doesn't look bad, or I'm not saying there's no conflict of interest, but if they say, we looked separately at the security concerns that, that maybe the prior administration had, we have been convinced by blah, blah, blah, that that has been satisfied and this has changed and they have said this and this. You need to be able to prove quid pro quo before you can say it's quid pro quo, don't you?

Jay Clayton (38:45)

Yes.

Mike Santoli (38:46)

So do we have. Is it quid pro. Can you tell me? Because I was told definitively it's quid pro quo.

Jay Clayton (38:51)

It's right there.

Mike Santoli (38:52)

It's right before your eyes.

Jay Clayton (38:54)

Joe, wherever we calibrate the ethics rules, there are going to be people who are not happy. But there are two things that I think are really important, and one of them is congressional trading that we've been talking about.

Mike Santoli (39:05)

Are you changing this?

Jay Clayton (39:06)

No, I'm going to come back to this. I'm going to come back to it. One of them is congressional trading that we have been talking about for way too long. A very solvable problem, easily solvable problem. Another one is government ethics and your family. I think we should draw the line pretty clearly that adult children, other family members can continue, continue to do their business. Should they be subject to transparency obligations? Maybe yes, maybe no. But we can't tell people that if you go into elected office, you and all your relations have to give up their businesses because then we're going to greatly shrink the size of experience.

Mike Santoli (39:39)

If there was a wink and a nod.

Jay Clayton (39:41)

Well, that's why we have transparency and people can look into it, I believe.

Becky Quick (39:45)

Here's a question for you, though, and I, I'm curious. You said that's why we have transparency. In this case, we have transparency because the Wall Street Journal reported this news. That's why we have transparency. By the way, another great credit, not just the Journal, but to the First Amendment and the idea that the press can do their job, hopefully.

Jay Clayton (40:06)

Absolutely.

Becky Quick (40:07)

I say that in the context that there have been, that there's a view right now that sometimes this administration has taken towards the media to either intimidate them from not doing their job. I mean, that is, that is part and parcel of what is out there, at least is something that people are worried about. And. No, I'm curious actually, how you think about that, because the transparency piece of this, it's not transparent. It was not transparent until this piece came out. And I think that the answer is my Personal answer is I think it would be, it would have been much better for this to have been disclosed. And then the public can make what they want of it, Congress can make what they want of it and we can say it's fine or it's not fine or whatever, whatever everybody wants.

Jay Clayton (40:50)

You're going to find a person who's very comfortable with and in favor of transparency around financial disclosure. So I'm not arguing that. I think it's a very important part of being a public official is to have that kind of transparency. On the First Amendment stuff. Look, First Amendment's a two way street. The press does not get to take a view, report something, and then if somebody thinks it's wrong, say, oh, no, no, you're not allowed to say it's wrong. It's about public debate.

Mike Santoli (41:19)

Or if a journalist breaks the law, you can't say, hey, I'm a journalist, I can do whatever I want. Because I was. I don't know if that's where you were going.

Jay Clayton (41:28)

The First Amendment has its limits.

Mike Santoli (41:30)

Right. And I've seen a lot of people, Ethan Hawke, this is a country I'm now afraid to speak up in. As he's speaking up about being afraid to speak up. It's like you're fully able to say whatever you want.

Hugh Johnston (41:44)

Hold on.

Becky Quick (41:44)

But can I say. Hold on. I just want to just stop us because we just had Hugh Johnson on it. I think we can agree with this. There was a moment earlier this year where Jimmy Kimmel said something that was horrific. He should have not have said what he said. And he apologized for, for saying what he said.

Mike Santoli (41:58)

No, he didn't. And he didn't, he didn't.

Jay Clayton (42:01)

But.

Becky Quick (42:01)

Hold on, I'm not going to. But as a result of what he said, which was, I think we could all agree, distasteful. And that's what we're talking about, distasteful. But there's.

Mike Santoli (42:11)

And false.

Becky Quick (42:13)

But, but there is. But you are free to say, for better or worse, things that are distasteful. All of a sudden we got into a situation where the head of the FCC was on television, effectively threatening the network. Right, Right. So this, go, this goes to what the issue is. And I just think we need to appreciate where, you know, where we are and what's happening. That's, that's just the context. I don't know if you, you, I don't think there's, we can agree or disagree about the. Those are just the facts. That's what's going on. So that's why people. To the extent that some people don't view.

Jay Clayton (42:47)

I. Andrew, everything. Everything you said, I agree with. If you're going to take away a license, there is a process that you go through, but there are. There are reasons that you can do it. I don't want to litigate that case here, but I do think that people say, oh, I'm protected by the First Amendment. If I go out and destroy a law enforcement car because I'm upset with law enforcement, that is not protected 100%. You know, if you do those types of.

Joe Kernan (43:14)

And look, your First Amendment right is not protected. The network can choose to fire you, but the administration threatening to use the power that they are, that they hold over the network to force.

Jay Clayton (43:26)

And that's a. But that's a power that, that those powers are powers that we have protections for, whether it's the administrative process, the court process. And we should all recognize.

Becky Quick (43:36)

Here's a complicated one for you. I don't know, maybe it's.

Jay Clayton (43:39)

We all should have some protection from government power.

Becky Quick (43:42)

Right. So here's a question. Question. So last week, over the weekend, Don Lemon gets arrested. He was inside a church where there were protesters, some people blocking people from leaving. Part of the people, the. The protesters clearly were trespassing. Yeah, it's. I believe it's probably not legal to. To be in there doing. Doing what they were doing. Historically, the Justice Department has not gone after, quote, unquote, journalists who have been covering stories in this context. It appears that they're including Don Lemon not as a journalist, but as a protester, as sort of part of the operation and what that portends.

Mike Santoli (44:27)

There's a lot beforehand that he was on record saying, I'm going to go do this, this and that, the other thing. And I don't know.

Becky Quick (44:33)

Well, that's. No, that's what.

Jay Clayton (44:33)

I'm not going to talk about that specific case. It's, you know, that's not where I can go at that time. But you can't be part of what would be illegal activity.

Mike Santoli (44:46)

Right.

Jay Clayton (44:46)

Just a general. You can't be part of what would be illegal activity. Throw a journalist coat on and say, okay, now I've switched to being a journalist, and then take it off. You know, law schools would have a wonderful time discussing that, like, how much participation can a journalist have, quote, unquote, journalists in the planning and execution of the question.

Becky Quick (45:07)

If you're part of the planning and execution versus you are aware of the planning and execution, and you are effectively embedded the way you might be either with the Military or something else.

Jay Clayton (45:17)

Or you join in.

Becky Quick (45:19)

And the question is. Right. And the question is, did he join in?

Mike Santoli (45:21)

Right.

Becky Quick (45:22)

Or not? I think what's on camera is suggestive that he was reporting on it. But other. There's a different perspective.

Mike Santoli (45:29)

Look, that's what let people out. And I don't know. I don't know. That would all come.

Becky Quick (45:34)

I have a different one for you, by the way.

Jay Clayton (45:36)

I didn't know we were going to have the.

Mike Santoli (45:37)

And there was enough.

Jay Clayton (45:38)

The constitutional law.

Mike Santoli (45:41)

You've told me how the grand jury, Stormy Daniels, it's a real grand jury. You know, we pick our grand juries and whether they're relevant or not, based on our own viewpoints. This grand jury thought it was, you know, fair game to arrest Don Lemon right after.

Becky Quick (45:58)

After two judges I know decided that. Said that they couldn't or shouldn't.

Mike Santoli (46:02)

Right, right. Same thing with the.

Jay Clayton (46:06)

And an appellate court said you should.

Becky Quick (46:07)

Yeah, I'm just saying it's super complicated. Okay. I have a different one. Epstein. Epstein. Emails over the weekend, right? We have all of these emails. We, we're all trying to make sense of these emails. Some of it seems, you know, a lot of the emails are very. Some say unattractive.

Mike Santoli (46:28)

Anonymous calls to the FBI about eating. I mean, some of it's just snuff films. Eating.

Jay Clayton (46:33)

I want to say. I want to say two related things. And the first is. The first is very serious, and that is victims of this type of behavior.

Mike Santoli (46:40)

It's all right.

Jay Clayton (46:41)

Okay. We at the Justice Department, Southern District have spent the last 45, 50 days working around the clock trying to make sure that victim names are redacted, some victim names have been posted. It's very unfortunate. We've worked over the weekend. We're trying to fix that, but we need to protect those victims for their own safety, for their own well being. But also it is very, very difficult to get victims to come forward in these types of situations because of public disclosure, public scrutiny, because some people put victims on trial. There is much more of this type of activity than I ever would have thought. When I went to the Justice Department, we just had a guilty plea last week for a person who was very prominent in the New York Community Banker terrible behavior. People can look it up online. I'm not going to go into it, but we need to know that protecting victims is extremely important for the administration of justice so that we can actually have people who are willing to do.

Becky Quick (47:46)

It's a question, do you think? I mean, one of the things that's happened is we now have all these questions when you read these emails, and you don't know what's true, what's not. You know, by the way, you read the stuff that was written that Epstein was writing to himself about Bill Gates with all sorts of allegations in it. You don't know whether he's a psychopath and he's writing real things, whether he's not writing real things. By the way, you see people's names. By the way, Kevin Warsh's name is mentioned in the thing next to. And I don't know if it's a victim or what, but there's a redacted name next to it. And so invariably, some people say, well, who's he with? What's going on here? The whole thing has opened up a complete can of worms. And I'm not saying it shouldn't. This is what the public and clearly Congress wants. But I also don't know what you think this portends in the future of how all of this gets litigated.

Jay Clayton (48:34)

There are lots of reasons why people wanted this. Years of uncertainty, years of debate. But what this exercise shows now step. And the second thing I want to say is these files are raw. When someone calls the Justice Department, when someone calls the FBI and says, I want to report a crime, you're required to take that information down. You're required to record it. Now, you don't know the veracity of that. You don't know the motivations. What you are seeing is the reason that we don't release this material on a rail.

Joe Kernan (49:07)

That's what I was going to ask you. Should this material have been released? I think it raises the question of, you know, where. Where are the arrests? There's never been any of Jeffrey Epstein's clients who we've seen any arrests.

Jay Clayton (49:21)

And. Well, I don't. It should be the very exceptional circumstance, very, very exceptional circumstance where we release this material for all the reasons you're seeing, the victim protection paramount. But there are allegations in there that with 10 or 15 minutes of work, you can realize have no basis in fact.

Mike Santoli (49:43)

A lot of them.

Jay Clayton (49:43)

A lot of them.

Mike Santoli (49:44)

And just like the craziest space aliens, I mean, it's crazy stuff.

Jay Clayton (49:51)

And to Becky's question, what I would encourage people to do is look at the internal Justice Department debates. Now, a lot of it is redacted because there's discussions of legal theories and victims. But it shows the process that the prosecutors at the time went through to decide who should or should not be charged. And it would be good that if some of the legal journalists took a look at that and gave an assessment. You know, it's America. They get to assess whether we at the Justice Department did a good or bad job in those decisions in 2020 or.

Hugh Johnston (50:22)

Right.

Becky Quick (50:22)

But you have a situation now where the public is looking at all these emails thinking to Becky's question, why hasn't someone been prosecuted? You read through all this stuff and say, well, somebody should be prosecuted.

Jay Clayton (50:31)

And Andrew, what I'm saying with all that information, take a look at, take a look at the. There's, there is a great deal of process inside the Justice Department department. When charging decisions are made, prosecution memos are produced where the line prosecutors are tell people like me, the supervisors, here are the strengths and weaknesses of the various cases. Looking at those and you will have some insight into this. And one thing that I applaud, Deputy Attorney General Blanche and the attorney general herself is said to Congress, look, there are lots of redactions. Public can look at those redactions, but a member of Congress can come to the Justice Department with appropriate confidentiality arrangements and look at those documents. And that type of transparency, I think, is extremely important in this exercise. So as this plays out over the next several weeks, people get a chance to digest it and then, you know, the public opinion on whether there should have been or should not have been somebody else charged or other investigations. Last thing I'll say is people are looking all over this. If there are criminal activities that have not been reported to us yet.

Hugh Johnston (51:40)

We.

Jay Clayton (51:40)

Are very open for victims, their counsel to come forward and point us in the right direction.

Mike Santoli (51:47)

Crazy part of the Bannon. Did you watch that interview? I had never seen, I don't know, Jeffrey Epstein sort of talk in his New York accent on. But at the end he says, are you the devil incarnate?

Becky Quick (52:00)

Yep.

Mike Santoli (52:00)

And like Epstein was like, let me think about that. Well, what do you mean? And he was almost open to the idea of saying, yeah, pretty much, which was just so scary to me. The whole thing is, you know, it could be a horror film, I think.

Jay Clayton (52:19)

Well, I am sure there will be films. I have no doubt about that.

Mike Santoli (52:24)

All right, take care. Thank you. Thanks.

Andrew Ross Sorkin (52:28)

And that's Squawk Pod for today, this Monday. Thanks for starting your week with us. Squawk Box is hosted by Joe Kernan, Becky Quick and Andrew Ross Sorkin. Tune in weekday mornings on CNBC at 6 Eastern. Get the best of our TV show right into your ears. When you follow Squawk Pod wherever you get your podcasts, please check out episodes of the Path with Becky quick. That's our new series from the CNBC Cures Initiative on rare disease. There are two episodes out now available in your Squawk Pod feed. That's it. Have a great day. We'll meet you right back here tomorrow.

Becky Quick (53:06)

We are clear. Thanks, guys.

Keith Landsford (53:18)

Building a portfolio with Fidelity Basket Portfolios is kind of like making a sandwich. It's as simple as picking your stocks and ETFs, sort of like your meats and other topics, and managing it as one big, juicy investment. Mmm. Now that's pretty good. Learn more@fidelity.com baskets Investing involves risks, including risk of loss. Fidelity Brokerage Services, llc Member nyse, SIPC.