A (2:10)

It's Tuesday, March 10, 2026. Squawk Pod begins right now.

B (2:17)

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

H (2:23)

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. Markets turned around substantially yesterday, actually ended higher. The Dow was up by about 239points at this point. The Dow is off of its highs by about 5.5%. The S& P is only off its highs by about 3% on all of this. We are coming off that very volatile session yesterday. The S&P 500 was down by about 1 1/2 percent right after the market opened. It regained all of that ground and then finished nearly 1% higher. Stocks caught that bid after President Trump said that the war in Iran could be reaching its end. And then oil prices following about the biggest one day jump they've ever seen. Also looking at a collapse later in the session yesterday. This morning they're down another 8%. WTI is sitting at 87:15 and Brent is down 8% to $90.93. If you check out yesterday's reversal in oil, man, this was something to watch. Those are the type of spikes you expect to see happening over months, not over the course of a day or so or two. And we'll continue to keep an eye on this as well.

E (3:35)

A lot of this movement coming after some comments by the president in a couple of different places, in a couple of different instances. President Trump speaking about the war in Iran in a late afternoon news conference. Here's a bit of what he said.

F (3:48)

In recent years, the regime and its terror proxies have launched attacks on hundreds of commercial vessels. We're putting an end to all of this threat once and for all. And the result will be lower oil prices, oil and gas prices for American families. We've done that. We've done it. We've brought it very low. This was just an excursion into something that had to be done.

E (4:10)

When pressed, the president said he didn't think the war would be over this week, but said, quote, very soon now, earlier. And this is really what moved the market. Originally he said to CBS News the war is essentially complete and he was thinking about taking over the Strait of Hormuz. Now Iran's Revolutionary Guard saying they won't allow oil to be shipped from the Middle east if US And Israel attacks continue. On Truth Social, last night President Trump posted, if Iran does anything that stops the flow of oil within the Strait of Hormuz, they will be hit by the United states of America 20 times harder than they have been hit thus far. G7 energy ministers are meeting today to talk about trying to mitigate the war's impact on oil prices. It was interesting watching what happened in the market after the comments to CBS News. Then the markets and the oil market seemed to reverse a little bit after his comments more publicly that maybe things were not completely over. So it's still a little bit hard

D (5:08)

to get 119 to 85 and then 85 to like 88 or something. I mean, there's a, I don't know whether the journal, all of a sudden the op ed pages are neocons or warmongers, but they're warning that, look, it's happening the 70 to 75% of the missile launchers are gone. 43 Iranian ships. The UAE got 18 drones attacks yesterday, down from 126 a day average over the past week. The one entity or group that would like everything to end are the mullahs in Iran. Obviously we don't have much of a stomach for this. I don't think I was just struck by USA Today's headline that the Iran war is grinding on, but it's like 10 days. I don't know what we're inured to at this point. Financial markets, real US Reports seventh death. We don't want any deaths, obviously, but if I guess, you know, we're going to. There will be a lot of pressure. And Trump, if, you know, he has been criticized for responding to either, you know, some angst in the markets or whatever to then back down and go the other way. There will be, I guess, pressure or an inclination to back down, to back down.

H (6:27)

The question is.

D (6:28)

But I don't think it's, you know, according to some, and I'm not going to, I have no idea, but according to some, that this is something that you should finish if you've started.

H (6:38)

What is fission. Does finish mean the regime change does finish?

D (6:41)

No, I don't think we can.

H (6:42)

Uranium to make sure that they can't make a nuclear out of it.

D (6:45)

What I mean, I think this is, you know, that is definitely relevant to see a crowd like that, but they do like putting it on, I think the front page. I don't know if you'd see if it was a crowd of normal Iranians protesting the regime.

E (7:00)

I don't know.

D (7:01)

If you see it, maybe you would. I don't know what the end of what that looks like, but if you were to destroy all the missile launchers, all the drones, all the ships so that there's just no way that the

H (7:14)

biggest question probably enriched uranium.

D (7:17)

And if you can't rich uranium stores

H (7:19)

that are already there, can you find either a way to them or find a way to get some agreement?

D (7:26)

Well, if you have no air power or launchers or any ability to protect your nuclear program, which is one of the rationales that was presented earlier, that they wanted to get rid of all the conventional weapons.

E (7:40)

So they know, look, the fundamental question is how long does it go on for? How many boats can or cannot get through the Strait of Hormuz, Right. Can you somehow protect them? If you can't protect them and you actually do have some kind of real supply chain shock, you can't either Store the oil. People have to stop sucking the oil out of the ground and then they can't go back and do it again. That creates a much longer term economic impact that I think no matter what your politics are, the country, this country, for whatever reason, the markets don't seem to say we likely are not going

D (8:15)

to have a supply issue. There's a lot of parts of the world that will have a supply issue.

H (8:19)

No, you're already with prices $3.50 at

D (8:22)

the, that's the average. That's the average for the Biden administration. Four years. Your idea about the average price said

F (8:28)

about do we have this for four years?

H (8:29)

Comes right back.

E (8:30)

But here's the thing. The, the, the president in his State of the Union talked about oil prices repeatedly bringing prices down, talking about affordability. So politically, so no, politically, I understand there is a real issue about how long you can have persistent high prices. And he was elected on the premise that he was not in the war business. There's a lot of things where there are, there are people in this country who are going to look at this and say whether they like it or not, and some people will love it. You, I know you love it. And other people will say they don't love it.

D (9:01)

Nobody loves a war. But you know, the, obviously and he's sensitive to that because he called it an excursion yesterday like it was just a brief time where oil prices will be high. Obviously very sensitive to it. But based on the possible positive outcomes from it. I don't know if I'd use the word grind for what's happening with this conflict so far.

H (9:27)

But it also speaks to how we're not used to extended and we've got

D (9:32)

strength of any, we've got muscle memory from I know everything's shorter time dilation but, well, I guess there was a 12 day war. They call it 12 day wars, but we don't have much of a stomach for it. And that's what I think Iran is counting on, too. President Trump's pick to head the Federal Reserve after Jay Powell looking to gain some goodwill ahead of what could be a confirmation fight center. Thom Tillis office says a North Carolina Republican will meet with Kevin Warsh this week. Warsh will also sit down with North Dakota Republican Senator Ken Kramer. Both Tillis and Kramer sit on a Senate banking committee which oversees Fed nominees. Tillis has praised Warsh but said he won't vote to confirm any new members until the Department of Justice drops a criminal investigation into Jay Powell. And he's, he's really Loving his his last few months as a senator, making the most of it, no doubt about that. He was in the news quite a bit last week and the week before. Go, Tom.

H (10:38)

The Trump administration is reportedly working on a directive that force all parts of the government to stop using Anthropic's AI technology. Axio says an executive order could be issued this week. President Trump targeted Anthropic after the company clashed with the Defense Department over the defense the potential use of its AI. Anthropic now is suing the Trump administration over the Pentagon blacklisting that labeling that labeled the company a supply chain risk, which means that even contractors can't be using Anthropic. In a statement to cnbc, an Anthropic spokesperson said seeking judicial review does not change our long standing commitment to harnessing AI to protect our national security, but this is a necessary step to protect our business, our customers and our partners. We will continue to pursue every path toward resolution, including dialogue with the government. In federal court filings, Anthropic executives said that the administration's move against the company could cut its tweet 2026 revenue by multiple billions of dollars.

E (11:43)

I mean the other piece of this is much a larger situation. I would think that as a country you would want Anthropic open I all of them Google matter to the extent they're trying to play in this game, all of these guys to win. But right now we have two independent large language models that are winning and one of them is the leading model right now in the country. And so the very IDEA that the U.S. government now for political reasons doesn't like this company is trying to upend it is something that I think should concern people who are what who's leading now?

H (12:21)

Anthropic.

E (12:22)

Anthropic.

D (12:23)

And what's the other?

H (12:24)

Open air.

E (12:24)

OpenAI is the second right now in terms of the two independent large language models in the country that are really the best ones in the country are Anthropic and open air and Anthropic.

F (12:36)

There's different in the last.

D (12:37)

There's different things. I mean GROK talks about how great it is in certain. Yeah, sure.

E (12:42)

But it is not even right now. It is not in the same sentence.

D (12:46)

Right.

E (12:46)

And by the way, I think we should wish well for, for Grok to get there too. But the point is that if you

D (12:54)

are the US Government and you're putting

E (12:57)

your your finger on the scale because you don't like the politics of what

D (13:01)

they're willing to do, that's your interpretation of what's going on.

E (13:05)

Well, hold on. Once you decide, you legitimately could say, I don't want to use this for Pentagon, but why use supply chain. But then to decide that, it's then to decide that nobody in the government should use it. Again, across the board, the bigger problem,

H (13:22)

the supply chain threat, which means that supply suppliers to the government can't even use it. That's a. That's a. As they said, they're expecting it could cost billions of dollars for it. Do you really want to do that?

D (13:35)

Government should never be picking. We're back to the same old what

H (13:38)

about government should not be picking favorites,

D (13:40)

shouldn't pick it based on dei esg, childcare, tin bit or because I disagree with you. Or because I disagree with you. It should never do it. And they all do it. So we can all agree that it shouldn't do it.

H (13:50)

But this is when you're in a race with China and you're thinking that we are going to dominate this, why would you kick the knees out from under. I agree with that position. Why would you kick the knees out

D (14:01)

from under one of your best performers? May the best one win. Obviously, if it's a race, I think that's sort of obvious. But

B (14:12)

Tees will be next.

A (14:14)

Still to come on Squawk pod Senator Ted Cruz on the Iran war as it disrupts global oil prices.

F (14:21)

I don't think there's any possibility that this becomes a long, protracted military engagement. You're not going to see hundreds of thousands of boots on the ground. You're not going to see us there months and then years.

A (14:32)

We're back in a moment. You've never been one to settle, stand down or stand still. You're a lifelong learner, energized by excellence. There's a fire inside you you can't ignore. You've got competition to outrun, momentum to build on, and your own high standards to meet. Stop now. Not a chance. At Capella University, we help you catch what you're chasing because you've always had the drive. Now go earn the degree. Capella University. What can't you do? Visit Capella Edu to learn more.

F (15:07)

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F (15:13)

Trailblazing women, changing the game.

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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. Life is short and you just gotta think big to accomplish big things. Julia Boorstin hosts CNBC Changemakers and power players. New episodes every Tuesday, wherever you get your podcasts. Welcome back to Squawk Pod from cnbc. Here's Andrew Ross Sorkin.

E (15:49)

Dow futures have been ticking lower the last three hours, but losses accelerating just in the last 30 minutes, while defense Secretary Hegseth has been delivering an update on Iran. And Amy Javert has been monitoring that news conference when it gets straight over to Eamon with the details.

B (16:03)

Yeah, good morning to you, Andrew. Defense Secretary Pete Hegseth is briefing reporters over at the Pentagon now, and he's been talking about the tempo of the war in Iran. He says that's going to increase. He says Iran is, is badly losing this war. Here's what he said just a moment ago.

E (16:20)

Today will be yet again our most intense day of strikes inside Iran. The most fighters, the most bombers, the most strikes, intelligence more refined and better than ever. So that's on one hand. On the other hand, the last 24 hours have seen Iran fire the lowest number of missiles they've been capable of firing yet.

B (16:45)

Hegseth was also asked about rumors that the new leader of Iran has been wounded. He said that's not something that he can comment on right now. So, Andrew, as you look at the market swinging yesterday on President Trump's comments that maybe the war in Iran might be complete, to use his word now, you hear the secretary of defense saying that they're stepping up the tempo of attacks in Iran. So not a clear picture necessarily of what the end game here is or what the sequencing might be here for those people who are trying to watch and follow along and predict some sort of endpoint. Obviously this is ongoing.

E (17:22)

Eamon, I think the big question is are they raising the tempo in an effort to end it quickly or are they raising the tempo because either they have to raise the tempo or because this is just one sort of piece of a longer journey?

B (17:35)

Well, one of the things Hegseth is pointing to in this press conference is this idea that the Iranian ability to fire missiles is beginning to peter out. He's saying, you know, that that daily missile count by the Iranians is going down step by step each day of the war. So to that extent, the Pentagon's suggesting here that they're making significant progress in degrading Iran's ability to fight. So how much progress, how long that takes, you know, that's all unknown. But they're, they seem pretty confident that they are making the progress they want to be making.

E (18:07)

Amy Javers, thank you. Now for the latest on Capitol Hill, Iran, energy prices, and so much more. We got Senator Ted Cruz of Texas. He, of course, is the chair of the Commerce Committee. Good morning to you. I'll start with just the biggest question in terms of how we think the situation Iran ends. There was a little bit of confusion, I think, yesterday, especially in the markets, based on sort of what was happening to the price of oil, and then the president coming out saying this whole thing was maybe complete, but then maybe reversing himself a bit. Where do you think things stand?

F (18:46)

Look, I think we're likely to see military action last perhaps another couple of weeks. What the president and the military has been able to do in the first nine days is decapitate the regime, is take out their ballistic missile launch capability, take out their ballistic missile manufacturing capability, take out their air defenses, achieve air superiority, take out their drone manufacturing capacity, take out their drone launch capacity, take out their naval capacity. It's been a remarkable military success and virtually all the top leaders of the regime have been eliminated. The transition, I believe, is going to be moving Iran from, from a nation that is headed by a government that is radical Islamist and chance death to America and actively devotes millions of dollars to terrorism and trying to kill Americans. That is no longer acceptable. And so President Trump has acted, I think, boldly to prevent that. And I think we will see a new regime in Iran and a regime that is not focused on murdering Americans. And that transition, as I said, I think happens in the next few weeks

E (19:53)

politically here in the United States. You know, you can see the reaction in the markets when the view is that oil prices and there could be a supply problem and you could feel it yesterday, you know, the president, I imagine, and you may say, you know, we need to be patient, but do you believe the American people ultimately are going to be patient, especially in a midterm election year right now?

F (20:17)

Well, I don't think there's any possibility that this becomes a long, protracted military engagement. You're not going to see hundreds of thousands of boots on the ground. You're not going to see us there months and then years. This Iran is not Iraq. They are very, very different. I think the Iraq war was a mistake. I would not, not support a major and extended invasion in Iran. This is very different. These are targeted but, but very consequential strikes to take out a very direct threat. Iran over the last 40 years has murdered nearly 1,000Americans. They have been the leading state sponsor of terrorism for 47 years. Hamas gets 90% of its funding from Iran. Hezbollah does to the Houthis do too. Twice. The Ayatollah has hired hitmen and sent them to try to murder President Trump. And so I think President Trump made a very reasonable decision that he was going to act as commander in chief to stop this threat to America. In terms of the oil prices, we've seen a temporary spike. I don't think it will be extended naturally when you have military conflict in the Middle east that predictably has an impact on, on oil prices. But I think over the long term, this will put downward pressure on oil prices. Having Iran, led by a government that is not a terrorist organization, at war with America will result in greater global supply that'll benefit American consumers over time.

D (21:45)

Senator, is it feasible to take over the Strait of Hormuz? When you've heard the, the president, you know, put forth that idea and a lot of people wonder if it's, even if it's even a lot easier to disrupt it than it is like to keep it open militarily. Is that a serious idea and is it possible to do that, do you think?

F (22:08)

Well, I have not heard a specific military briefing on the feasibility of doing so to date. The Iranians, we don't believe, have mined the Strait of Hormuz, that that's certainly something they could attempt to do. Although I'll tell you today it is much, much more difficult for them to do that than it would have been nine days ago because most of their naval fleet has been sunk and is at the bottom of the ocean. Now, they could attempt to use a fishing vessel or some other vessel to place mines there. So it is nonetheless dangerous. But I think the President is rightly focused on trying to ensure the safety of ships that are transversing the Strait of Hormuz. And the objective here, here is to have just a normal regime, a non terrorist regime, a government that is not actively trying to kill Americans. I don't think that's a tremendously high threshold, and I think I'm glad we're headed in that direction.

H (23:00)

But Senator, the president said yesterday that this is going to be over soon. We have not gotten anywhere near a regime change at this point. Are you suggesting that that is definitely the objective? We're in this. And until we get a regime change.

F (23:13)

Well, the president has laid out the objective of taking out their ability to project force, taking out the ballistic missiles, the drones and the nuclear facilities we took out last summer with, with the B2 bombing run. Those objectives have largely been achieved. I have been urging the President that the real objective, you know, you said we have not made progress towards a regime change. With respect, I don't think that's accurate. The Ayatollah is no longer with his senior leadership, is no longer with us.

H (23:40)

So much of their senior leadership.

E (23:41)

But.

H (23:42)

But they haven't bowed on that yet. So are we saying we're not done until they say, okay, this regime's over?

F (23:50)

I think the administration is going to continue applying force, military and otherwise, until they get a regime there that is not a radical Islamist regime that is waging war with America. The reason for this attack was because Iran has been killing Americans for a long time, long time. And the President decided it was no longer acceptable to have that threat of more Americans dying.

H (24:16)

I'm not arguing that point. My only question is the markets reversed yesterday in large part because the President suggested that we're near the end to this. If we're near the end of that. My assumption was at that point that maybe we would live without the regime change. But you're convinced that the President is waiting for a regime change that could take a little longer than some people are anticipating it could.

F (24:39)

I think the President is right. Regardless that we're near the end of it. It is certainly possible this last a couple more weeks, but I don't think we're looking at a many month or many year engagement. I think this is, this is focused at delivering on concrete objectives and I think many of them are being delivered on already.

D (24:56)

Do you think that the new guy, the son, could he. Could the regime change its stripes to the point where it was not going to try to kill Americans? If you notice, yesterday someone said, is there a target on the sun's head? Is there a bounty on his head, essentially? And the President said, no, I wouldn't say that. So he made it clear that. And I'm not sure whether that's true or not, if we had the chance or not. Do you know?

F (25:26)

I don't know for a fact either way. I do think Back to the 12 Day War last year. And if you'll recall, one head of the IRGC after another was taken out, the Ayatollah would name a new head of the IRGC and 24 hours later that individual would be taken out. That happened to three or four of them. I will say this, this current Ayatollah, my suspicion is his tenure is not long. And I'm not interested in an Iran run by an Ayatollah. And Ayatollah is an Islamist cleric in Iran. And we have every reason to believe that the new ayatollah just like his dad, is a theocratic nutcase. Look, his dad would lead mobs chanting Death to America. And I believe him. I don't think that was empty rhetoric. And so I think it is in America's interest to have Iran led by a government that is not a radical Islamist government. They can choose their own leaders. America is not interested in running Iran. But we are interested in not having leaders in Iran that are trying to murder Americans.

D (26:30)

Yeah, a lot of virtual meetings over there now. I have a feeling. Not in person.

E (26:36)

Hey Senator, while we have you here, the other big news that we've been tracking all morning in the business world is the possibility of an executive order by the President of the United States to prevent all of the government from doing business with Anthropic, which of course runs the Claude large language model. I'm curious what your reaction to that is and whether you think the Department of War should no longer be using Anthropic and whether you think the entire government should not be using Anthropic.

F (27:10)

Andrew, I'll confess I have not seen a basis laid out for why the government would be prohibited from using Anthropic. CLAUDE is one of the many AI tools, tools that can be very helpful. Secretary Hegseth laid out his reasoning that Anthropic was trying to control and limit how the Department of War would employ an AI. And he rightly said that the military is not going to allow a private sector country to set military and defense policy for America. I think that's reasonable. On the face of it, I haven't seen a broader basis for a government wide prohibition. So I don't. Without more information, I don't have a view one way or the other.

E (27:48)

I think part of the question is just whether this has become effectively political or not. In part because it appears now that the deal that has been reached between The Pentagon and OpenAI is actually quite similar to the deal that they that Anthropic effectively was putting forth. Meaning OpenAI is providing its model, but with all of the with guardrails on it.

F (28:16)

Look, my view on AI as you know, I chair the Senate Commerce Committee and I think we are in the middle of a race for AI with China. And I think it is the most important economic challenge of this next century that we need to win the race for AI. Whichever country wins the race for AI is going to dominate AI. We are going to see millions of jobs that are going to be created through dominating AI and we're also going to see the country that wins the values of that country suffusing AI. And so I don't want the values of Communist China dictating AI. I want America to. I recognize the question you're asking. Look, between the two companies, I don't have a dog in that fight.

D (28:59)

But I think the standard is always honest. And you would probably say, just as it wasn't right when we were trying to win the EV race to exclude Tesla from, you know, from that White House meeting because they didn't employ union workers, this is probably not necessarily the right move. If it's political. Neither one is right and one administration does. It doesn't mean it's okay for, for another administration if that's what Indeed, if that's what it is. Some personal thing between Hegset, Darrow.

F (29:31)

Look, Anthropic, as anthropic as a company has a whole bunch of Biden administration and Obama administration alums. They're a very political company and they were the most vocal of all the tech companies urging the Biden administration, urging President Biden to sign the Biden AI executive order which basically put the federal government in charge of AI. It was catastrophic. Thankfully, President Trump repealed that executive order. But, but I think Anthropic was quite eager to have the federal government in charge of AI when their friends and buddies were deciding who would be favored. I think they may have a very different view now that there's a different administration. That's the reason I don't think government should be picking winners and losers. I'm a free market guy, not a government control guy.

E (30:18)

Senator Ted Cruz, we always enjoy talking to you. We appreciate your perspective this morning. Look forward to seeing you again very, very soon.

A (30:27)

Next on Squawk pod. The unprecedented and wild swing in global energy prices creates a sticky situation for the US Federal Reserve. The Rate setting committee meets next week. Our Steve Liesman on the challenges in that room. And the wars of the future are the wars of the current day. Cybersecurity expert Kevin Mandia Unheard of high tech threats.

G (30:48)

Make no mistake, all modern war is going to have AI. The side that has software that can think, learn and is secure is probably going to dominate the battlefields of the future.

C (31:06)

Martha listens to her favorite band all the time. In the car, gym, even sleeping. So when they finally went on tour, Martha bundled her flight and hotel on Expedia to see them live. She saved so much, she got her seat close enough to actually see and hear them sort of. You were made to scream from the front row. We were made to quietly save you More Expedia made to travel savings vary and subject to availability. Flight inclusive packages are atoll protected.

A (31:36)

There's a fire inside you you can't ignore. Stand still. Not a chance. You're a lifelong learner who's come back this far. Now we are here to help you keep going further Capella University what can't you do? Visit Capella. Edu to learn more.

F (31:51)

What made you confident that you could

H (31:53)

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

A (31:57)

Trailblazing women, changing the game One of

F (32:00)

my favorite pieces of advice, think about

H (32:03)

what your boss's boss needs.

A (32:05)

Leadership can look in many, many different forms. It really does come down to just trusting yourself. Life is short and you just gotta think big to accomplish big things. Julia Boorstin hosts CNBC Changemakers and Power Players. New episodes every Tuesday, wherever you get your podcasts. This is Squawk Pod.

B (32:26)

Stand Andrew by in three, two, one.

E (32:29)

Qander, you're watching Squawk Box right here on cnbc. I'm Andrew Sorkin on this what are we on here? A Tuesday Tuesday Morning with Joe Kernan. Also, Becky Quick and the jump in

D (32:41)

oil prices presents the Fed with what is a familiar dilemma to look through the surge and cut to pause or to tighten. Senior economics reporter Steve Liesman joins us with a debate on what will likely be transitory.

C (32:56)

Are you using that word?

D (32:59)

You can't use it, can you?

C (33:00)

No one said you don't have nerve, Joe.

D (33:02)

You can't use it.

C (33:03)

I use it.

D (33:04)

It's a normal word. It's in the English language. But if you use it, it's so loaded at this point.

C (33:09)

It's loaded. It is loaded. Amid ongoing pressure, Joe, on inflation we have from tariffs. Fed facing the dilemma over whether it should also look through a new surge in oil prices that could raise prices even further. So we went back and we looked. Since 1970, there have been 10 instances where the year over year price of oil has risen by 25% or more and stayed there at least for six months. That was our criteria. The Fed's reaction has gone from a near uniform tightening response before 1980 to more mixed response now. That's more dependent on economic conditions. We call it state dependent. Reasons for looking through the surge include that oil prices, as Joe said, elected to be. I use the word temporary concern that extreme tightening can worsen a downturn. As Bernanke and co authors found in 1996 paper, Greater Focus by the Fed on inflation expectations rather than just inflation and changes to the structure of the economy. In a 2009 paper, former IMF chief economist Olivia Blanchard and researcher Jordan Galley found a declining impact of oil on the economy. They attribute that to, interestingly good luck is lack of other shocks hitting the economy, a smaller share of oil and growth, more flexible labor market and improvements in monetary policy. The two found, quote, a story of more flexible labor market weakening unions and vanishing wage indexation thus emerged as the major explanation. But there are reasons for concern. They include that inflation is running above target. The Fed is already looking through tariffs and expectations for inflation are stable, but they're kind of high. J.P. morgan's Mike Feroli telling me we're coming off a period of high inflation where you didn't entirely slay the inflation beast. It may leave some lingering doubts as to how firmly committed they the Fed are to the target. Now, most officials have spoken so far from the Fed have so far seen the price surge as a reason to pause. With rates somewhat above neutral, the hope is that the current level could see the Fed and the economy through the price surge without any need to hike.

D (35:08)

All right, what's going to happen? I mean where are, when do we need to get this ball rolling with with Bush for it to be a

C (35:17)

time Everything is late. Joe, you didn't notice something that didn't happen? What did happen?

D (35:22)

That's hard to do, isn't it?

C (35:24)

No, it is. It is.

D (35:25)

You can notice something that did happen

C (35:26)

that shouldn't happen, but if you do my job for 23 years, you will notice that it didn't happen. What didn't happen? That's supposed to happen by Federal Reserve statute on or around February 20th.

D (35:36)

February 20th.

C (35:38)

I love putting trivia questions to you guys in the morning. The so called Humphrey Hawkins testimony.

D (35:43)

Oh my God, we're going so deep into that.

C (35:45)

How is the rabbit hole go to the Congress 20 twice a year that has not happened.

H (35:51)

Why?

C (35:51)

We don't exactly know.

H (35:53)

Is it because the last time he went and spoke before Congress they, there was a.

C (35:57)

We don't know.

H (35:58)

They think they're going. We're trying to get by the Justice

C (36:01)

Department to the bottom of Was he invited and refused to go? We don't, we don't believe that's the case. Was he not invited by the Senate Banking or by the House? We don't know what the story is. He obviously I would doubt he would refuse an invitation. So my best guess who wants to

H (36:16)

testify before Congress when they're trying to figure out if you were perjured the last time you were there? It's A investigating.

C (36:23)

That's a fine point, Ms. Quick. However, it is in the statute that he's required to testify. Now, if Congress doesn't invite him, I suppose that's, you know, not his fault anyway.

H (36:33)

Shocked if he said he wouldn't go.

C (36:34)

Right. Anyway, we don't know what the status is of the DOJ investigation. Warshire is doing exactly what every Fed chair does now.

H (36:43)

You got.

C (36:44)

You go talk. Even. Even a governor nominee would do that, so that's normal. It's not just Tillis, by the way, Joe. We're trying to also find out whether he's meeting with Democrats.

H (36:53)

Oh, he's meeting with Kramer.

C (36:54)

To Kramer too. We know those two things, but we don't know if he's meeting with Democrats as well, trying to get support from that side of the aisle.

D (37:00)

Yeah, good luck.

C (37:01)

But. But we don't know, Joe, because we don't have the testimony from the chair on Humphrey Hawkins. Not Humphrey Hawkins anymore, but that's what we call it still. And we don't know if there's any schedule for a. For a hearing yet. So that's where we're at. I guess Tillis has the ability to stop it and he's gonna.

H (37:18)

I take it you've called around and asked and nobody's hearing.

C (37:21)

We have called around and asked and we're waiting to hear. So I was actually gonna report this story more fully tomorrow, but you forced my hand. So here we are.

H (37:30)

Tell us, Steve.

D (37:31)

February.

H (37:32)

We didn't force your hand.

D (37:33)

February 20th. When's the other day?

C (37:37)

I don't know what the other day is. It's like July usually. I know because I plan any time off around it. Right. So I'll try to find out on background. Can I take off at this date or that day? It's mid. Mid February. Later February. I don't think Chair Powell has said no to the Congress.

H (37:52)

I would be shocked if he said no.

C (37:54)

I don't think that's the story, but I don't know why those people don't. Look, I'm trying to reach some senators out there and they haven't called me back on the issue.

H (38:01)

A lot of things Congress doesn't do on time, like pass a budget.

C (38:04)

Yeah, yeah. Among. Among things, I guess the testimony of the Fed chair is kind of low on the totem.

D (38:09)

No Humphreys. So the other guy is Gus. Gus Hawkins, best known for co authoring the Full Employment and Balance growth act of 1978. Big fiscal hawk.

C (38:20)

What's cool is if you read Sorkin's book, you Find out things about people like Glass and Steagall that you didn't know and you maybe didn't want to know.

E (38:28)

Pretty crazy. Conflict in the Middle east and the rapid growth of artificial intelligence raising warnings about cyber threats here in the US Last week, President Trump unveiled his administration's cybersecurity strategy, calling upon partners in the private sector to be able to respond and recover quickly to ensure continuity of the American economy and to modernize our information system so that old infrastructure does not choke innovation. Joining us right now, first on CMC is Kevin. Mandy is the CEO of Armandi. Good morning to you.

G (39:01)

Good morning.

E (39:01)

Well, I want to talk about actually Iran before we go any further, which is just to try to understand to the extent that, that you think about different things that Iran could do on the cyber side effectively in reaction to these attacks, how we should be thinking about that because we have not seen anything, I think, just yet.

G (39:23)

Yeah, I haven't seen anything just yet, Andrew. And here's the good news. You know, when you look at the last 30 years of cyber on offense, you kind of have Russia number one, you've got China number one. They're in that upper tier. And you know, down a tier you get Iranian offense. And Iran kind of emerged on the scene in 2017. So they don't have three decades of cyber offense. They've got one decade of cyber offense during times of peace. By the way, the cyber domain is a contested domain. So we've already seen at least 80% of what Iran's going to do on offense in the cyber domain. And I haven't heard a peep as to what's happened since the war that started on Saturday. So hard to say what we can expect. But at least it's not China, it's not Russia, it's not that upper tier of cyber capability.

E (40:16)

When you think about the longer term cyber threat in the U.S. how much of it is an infrastructure issue? We were just discussing that as we walked into this segment, versus a software issue, if you will.

G (40:31)

Well, I think the threat that's emerging right now is the shift change to AI. When you have AI on offense, Andrew, what you're going to get is a technology that can think, that can learn, that can adapt. And you're going to see things that used to take humans five days on offense to craft an attack, find a vulnerability, get in and do whatever their mission is in a victim network or target network. That's going to happen in minutes. Second so I don't think people are ready for the scale, scope and total recall of AI on offense in the cyber domain. And then of course, there's air, land, space and sea, where AI is going to play a role in at least tactical combat as well.

E (41:12)

When you think about the other debate we've been having all morning, which is about anthropic and the way governments use or don't use certain types of tools based on restrictions or other terms of service, how do you think about that?

G (41:26)

Well, you know, first I have a different view. I served in the military, so Armada and my company will collaborate with the US Government. But we're in the cyber domain and we want to make sure our government is secure and our government has the means to maintain dominance in the cyber domain during conflicts, which means you have to be great on defense and you have to have an offensive component as well. I think this is an issue we have to sort out, period. You know, what is the terms of use for AI. But make no mistake, all modern war is going to have AI. The side that has software that can think, learn and is secure is probably going to dominate the battlefields of the future. So we have to sort this out and get it right.

E (42:07)

Well, let me ask you this, though. If you look at a lot of warfighters and others inside the Pentagon, there are comments coming out of the Pentagon. Folks who use Anthropic believe it's the. It's the best service for what their use case is. And the folks on the ground seem to be frustrated about how this has all gone. What about what do you think?

G (42:29)

Well, Andrew, I heard your comments before and it's still early on. So I think this is going to get sorted out.

D (42:34)

Right.

G (42:35)

You've got anthropompath.

E (42:36)

When you say sorted out, what do you mean? Yeah. What do you think?

G (42:37)

I think, you know, we're in the early innings. You're going to figure out the government's probably going to look at and have more dialogue with Anthropos. Anthropic is going to have more dialogue with the government. And you know, you look at the Department of War right in the name alone, it may violate the terms of use of a company that doesn't want its products used for lethality. But there's a lot of other government agencies with a lot of other missions that don't require lethality. That anthropic is probably very topical and germane to. So I think it's early on. I think both sides will come to the table and have dialogue to figure this one out.

H (43:11)

Kevin, could I just say.

G (43:13)

Sure.

H (43:13)

If they're going to figure this out and come to the table. Which side's going to cave? Is Anthropic going to say, okay, we'll bend on these things, or do you think the Trump administration will say, okay, we want you to survive?

G (43:24)

Well, I don't know how it's going to pan out. You do know, though, that when you're looking at your supply chain, you need it to be reliable and dependable. So that's one side of the story. On the other side of the story, hey, the whole government's not about lethality. It's not about, you know, there's a lot of great users for AI to help local government, to help academia. Quite frankly, it's going to change the roles of virtually every job and every function that the government does. So I just think it's early on, guys. I really think there's going to be dialog and there's going to be some kind of meet in the middle somewhere.

E (43:56)

Kevin. But as someone who's in this business and has been in this business a long time, given that the government says that it doesn't use these tools for, for the purposes that Anthropic says it doesn't want its products used for, can you explain why there is such opposition inside?

G (44:17)

You just. Yeah, you just said it. That's why I think there's some misunderstandings here. Here's the reality. Governments follow their own laws. For the most part. You got to trust the government. I do. I was in the military. I actually believe in the military. I believe in enforcement. I believe in the government agencies that perform the missions they perform. You're exactly right. The military says they weren't going to violate the terms of use anyway. They have laws to abide by the government when it comes to the military. They don't do mass surveillance of civilians. So if that's a concern, why, you know, if you trust the government to follow its own rules, its own laws, that's not an issue. So that's why I think you come to the table and have real dialogue. There'll be an additional understanding. I think this is going to move forward, and I don't think we're at an impasse on this issue.

E (45:03)

And then finally, real quick, how, how quickly do you think we're going to see AI involved in major cyber attacks? Right. And is it going to come from open source AI, large language models, or where is it going to come from?

G (45:16)

Well, that's a great question. And, you know, it's, it's going to happen. And I think the modern nations are actually leaving the beast in the cave based on what they've seen. But it is absolutely inevitable that virtually all cyber attacks are going to be AI enabled or entirely AI. So it's going to happen. It's going to change the landscape. And the biggest change is it's going to take the human out of the loop on defense. So we've got to prepare our defense to be autonomous and be ready for the next attack, which really means we're going to have AI on offense made by the good guys actively hacking AI on defense to train it to get it ready to respond autonomously. All this is going to happen, Andrew, in under two years. The future is basically now.

E (45:59)

Okay, Kevin, thank you. Appreciate it. Good to see you.

A (46:03)

That is Squawk Pod for today. Thanks for listening. Squawk Box is hosted by Joe Kernan, Becky Quick and Andrew Ross Sorkin. Tune in weekday mornings on CNBC at 6 Eastern to get the smart takes and analysis from our TV show right into your ears. Please follow Squawk Pod wherever you get your podcasts. We'll meet you right back here tomorrow.

B (46:26)

We are clear.

E (46:28)

Thanks, guys.

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