← The Exchange
The Exchange
Warsh Wins, Wall Street's Wary, and Sen. Warren's Warning 1/30/26
00:46:49
President Donald Trump selects Kevin Warsh as the next Fed chair, leaving investors to wonder which Warsh will show up: the hawk or the dove? Plus, Senator Elizabeth Warren joins us after urging Republicans to not move forward with Warsh's nomination until the DOJ ends its inquiry into Jay Powell.
Loading summary
Transcript134 lines
- [00:00]
Kelly Evans
Thy ticket, lady Jennifer of Coolidge.
- [00:03]
AT&T Business Wireless Announcer
Well, many thanks, good sir.
- [00:05]
Kelly Evans
Here is my Discover card. They accept Discover at Renaissance Fairs.
- [00:11]
AT&T Business Wireless Announcer
Yeah, they do here. Discover is accepted at the places I love to shop.
- [00:15]
Kelly Evans
Get it with the times.
- [00:17]
AT&T Business Wireless Announcer
With the times.
- [00:19]
Kelly Evans
You're playing the lute. Yeah.
- [00:22]
AT&T Business Wireless Announcer
And it sounds pretty good, right? Discover is accepted at 99% of places.
- [00:26]
Steve Liesman
That take credit cards nationwide based on.
- [00:28]
AT&T Business Wireless Announcer
The February 2025 Nielsen report.
- [00:30]
Sarah Seti
Before we had AT&T business Wireless coverage, our delivery GPS wasn't the most reliable. Once our driver had to do a.
- [00:37]
Kelly Evans
14 point turn to get back on route.
- [00:40]
Sarah Seti
A 14 point turn. An influencer even live streamed the whole thing. Not good for business. Now with AT&T business Wireless, routes are updating on the fly and deliveries are on time. And the influencer did get us 53 new followers though.
- [00:55]
David Wessel
AT&T business Wireless Connecting changes everything.
- [01:00]
Kelly Evans
You're listening to the Exchange. Here's today's show. Scott, thank you very much. Warsh wins. The metals melt and the dollar stops dropping. Welcome to the Exchange. I'm Kelly Evans. And stocks are down across the board today. You can see the Dow down 507 points this hour. That's right around session lows of 1% decline as the President's pick for Fed chair is being dissected by the markets and digested. We've also got the latest round of earnings. As you can see, the Russell 2000 actually made the worst performer today down 1.7%. Treasury yields are somewhat mixed on the back of the Fed pick. And that hotter than expected inflation print this morning. Don't sleep on that one. CPI wholesale prices, highest level in three months. Core was highest in six the 10 years at 424 this hour. And the metals momentum, take a look at these moves today. Gold is down 9% now. It's below $5,000 an ounce after topping 5,500 yesterday morning. Silver is down 25% to 80, its biggest decline in more than 14 years. The dollar index is up now by 7.10of a percent, almost back to 97. So you can see the reversal here of this trade that we've been on for quite some time. Let's get to the big news. That perhaps is a reason why we're seeing all of these moves. And as investors have been awaiting this decision by the President, Kevin Warsh has now been officially nominated to be the next Fed Chair replacing Jerome Powell. The President's search for this position started in September. Steve Liesman has been following it from the very beginning and of course has the very latest for us at this.
- [02:35]
Steve Liesman
Hour, Steve, every nook and cranny and nitty gritty detail. After a months long search, Kelly, that started with 11 candidates, the president announcing this morning that he will nominate former Fed governor Kevin Warsh to be the next Fed chair. Warsh comes with experience in government, the Fed and in the markets. He's most recently working with famed investor Stanley Druckenmiller at the Duquesne family, at the Duquesne family office, fed governor from 06 to 11 during the Great financial crisis and worked as special assistant to President George Bush in the early part of this century. I have known Kevin for a long time, for a long period of time. The President said this morning and have no doubt that he will go down as one of the great Fed chairman, maybe the best. On top of everything else, he is quote central casting and he will never let you down. On monetary policy. Bush has been a sharp critic of Fed Chair Powell and the Fed blaming them for the inflation during the pandemic. He has called for the balance sheet to be reduced significantly but has argued that should happen over time and allowing rates to be reduced more if you bring down the balance sheet. He has praised pro growth policies championed by President Trump in the Wall Street Journal often and said the Fed should abandon the dogma that growth creates inflation. War supported initial QE purchases during the great financial crisis, but he broke with Fed chair Bernanke over later QE purchases in part because concern over inflation, that inflation never appeared. He further argued that QE encouraged Congress to spend essentially financing the deficits and leading to those massive deficits. However, on the issue of Fed independence, a key issue for markets, Wersch telling CNBC in July. I've strongly believed for 20 years and history tells us that independent conduct of monetary policy is essential. Near term, the expectation is that a war sled Fed would guide rates towards the two cuts this year already expected. With that second cut perhaps coming a bit sooner. Reading our futures markets today. Longer term, the question is whether he turns his tough talk about the balance sheet, Kelly, into real policy.
- [04:40]
Kelly Evans
Right. I think though it's the rather wonky era area of bank deregulation, Steve, that's really going to be the first thing that happens here.
- [04:50]
Steve Liesman
So there is this notion out there that if you were to reduce bank regulations, the amount of capital that banks have to keep in reserve, then the Fed could lower its balance sheet and that's because the banks keep this, a lot of this money in reserve. But there's a debate, Kelly, about just how much that would mean if you go from 12 to 10%, for example, on some of the capital requirements. How much capital is that really? Is that really the kind of balance sheet reduction? Now remember Scott Bessant as also a supporter of a reduced Fed balance sheet. But when, when he wrote that article, the National Economy, I called the treasurer, I asked when does he want to do this? And they said over time. So this is a tricky area, Kelly, where you have to calibrate the balance sheet to interest rates. And we don't talk a lot about the balance sheet because it's kind of boring. And lot people think it's have a big effect. But that's not Kevin Warshaw's view.
- [05:40]
Kelly Evans
No, there have been many. You know, we often have Barry Knapp on the program. He's been pounding the table for a long time. He thinks the balance sheet policy is the reason why we have a K shaped economy. And so there are people who think this has not been getting enough attention and that maybe it will now. But I take your point. He's not going to do anything too much to rock the boat, I don't think, at least in the near term. Steve, thanks for now, we appreciate it. Did you want to add anything to that?
- [06:01]
Steve Liesman
Well, only that the idea that, you know, it is, it is. Critics criticized this notion that what the Fed did benefited the wealthy. And the criticism, the response I've heard from people like Ben Bernanke are, well, if we didn't do it, you should have seen, you should have seen what was going to happen to the poor if we didn't do the things we did. They did benefit the wealthy. But whether or not there was any way of doing that in a way that would have also not benefited everybody else, that's a really good question and.
- [06:27]
Kelly Evans
A great point, excellent point from Bernanke there. Thank you for passing that along, Steve. Thanks, Steve Liesman. Warsh's selection is also getting some mixed reactions from the Street. Former Pimco CEO Mohamed El Erian says he thinks Marsh will maintain Fed independence, even enhance policy effectiveness. But BBA securities writing quote, we think it'll be difficult for Warsh to get the FOMC on board with his policy agenda. There were also plenty of mentions of Warsh's hawkish history. Evercore's Krishna Guha crediting that for today's drop in metals, while also warning investors not to overdo those trades, seeing Marsh as a pragmatist ultimately rather than a permahawk. And investors may not realize how dramatic the changes to monetary policy and regulation could be. That was from Forward Bond's Chris Rupke. Why don't we hear from someone who knows Kevin Marsh personally, who hired him as a special assistant at the National Economic Council 25 years ago. Joining us now is Larry Lindsay, the former NEC director and former Fed governor. Larry, welcome to you. And who is he? Who is Kevin Warsh, really?
- [07:25]
Larry Lindsey
Oh, Kelly, he is a very talented young man. Well, he's now, I guess, middle aged, but we'll leave it young. He's young relative to me. And he is, he's smart, he's independent thinking. I think that the concerns White might have about Fed independence largely were always exaggerated, but they're definitely not in line this time. He is, he is one tough cookie and he knows how to operate well in Washington.
- [07:53]
Kelly Evans
So that said, Larry, it was always interesting to hear the President say, you know, he's central casting and to hear others say, look, that political kind of description matters in the sense that a lot of the job of Fed Chair is kind of going back and forth to Congress. I mean, Congress is effectively who oversees the Fed. And a lot of the time is spent trying to kind of communicate policy to them and so on and so forth, building consensus on a board where he might want to do bank deregulation and all of that. You know, I can see that being an important aspect here. But listen, any of us who have been around for, you know, more than a few years here, we all remember how hawkish he was in the past. And yes, it was about the balance sheet, but fundamentally very critical of using kind of two interventionist approaches, monetary policy and the Fed. So is that going to bear on him now or do you think that he turns into now more of a loyalist, for lack of a better word, someone who's going to push for more near term rate cuts and other ways to try to, you know, help the economy, maybe from that point of view, but contribute to inflation for those who are worried about it.
- [08:58]
Larry Lindsey
I do not believe that he is an ideologue of any stripe. I also wouldn't put him in the loyalist camp at all. He's an independent thinker. He's going to defend Fed independence. Now, we also have to remember when we talk about when he was objecting to the balance sheet, we went from basically $900 billion balance sheet to by that point about a four and a half trillion dollar balance sheet when he was there. Now we're up at seven and a half. That's an explosion, right? I don't know if one would call that anything vaguely approaching normal. So I do not expect him to do radical anything at this point. Things have to be done gradually. And for rate cuts, I imagine that his first meeting will involve rate cut. I think that's probably almost obligatory. I'm not sure that they will be cutting any more than once as a result. The Fed already is, you know, basically at what its R Star construct says it should be at, assuming they get to their target of 2% inflation.
- [10:14]
Steve Liesman
Right.
- [10:14]
Larry Lindsey
But the President think there's a lot of room to cut.
- [10:16]
Kelly Evans
The President thinks there's a lot of room to cut. So if Warsh comes in and says, you know, there's really only a cut, I just can't imagine what the first tweet is going to be that says the Fed needs to lower interest rates. Unless you know what I mean by that.
- [10:30]
Larry Lindsey
Well, yes. So one of the words that Bush used in the run up to this was he thought the President should be consulted. Well, that doesn't mean he has to acquiesce. The President needs to be informed, have the reason explained to him. And I think that's perfectly appropriate. There's none better than Kevin to inform form and explain why he's doing what he's doing. And I think what he will tell the President is, look, this economy also has to avoid inflationary risk. And by the way, Mr. President, that's bad for your legacy. Inflation takes off. So we've got to balance the risks here. And I think that, I think the tweet is not going to be glowing, but I don't think it's going to be quite as savage as one might expect. I think Kevin will explain his logic very, very well to the President.
- [11:21]
Kelly Evans
I can't wait to see how this will play out. And it was interesting to see Albert Edwards of all people saying he thought war should have been picked in 2017. I don't know if war thought the same thing and if, you know. So it's interesting to go back and imagine. I mean, maybe you can answer that question, Larry. How might Fed policy have looked different if he had been chosen nine years ago?
- [11:41]
Larry Lindsey
Well, if he was chosen nine years ago, he would have had to serve through Covid and by this point I think he would be pretty beat up and battered even though he's a strong Constitution. That was, it was a tough period. I think we would have had problems, we would have had less inflation. We certainly would not have had the surge in inflation in 22. I think you would have leaned against the fiscal wind in the passage of the March 21. A stimulus package and so I think we would have avoided the so called transitory inflation and he never would have labeled it transitory to begin with. He's very pragmatic. He tells it like it is. And I think that'll be refreshing.
- [12:28]
Kelly Evans
Do you.
- [12:28]
Larry Lindsey
One other. Sorry, go ahead.
- [12:30]
Kelly Evans
No, no, please, one other thing.
- [12:32]
Larry Lindsey
I think people will notice when the current chair answers questions, he's got a briefing book in front of him and he actually turns the page to look up what the scripted answer is supposed to be. That is not Kevin Marsh. Kevin Warsh is going to actually be, I think, a big confidence builder simply because he's going to have better command of what's happening and a better ability to explain what's happening.
- [12:57]
Kelly Evans
It's funny you said that because my question was going to be to see, even keep the press. So there's been some speculation about whether the Fed pulls back on kind of its official press conferences or if he tries to rein in other officials from being quite. He talked to Becky Quick about this a couple of years ago, his frustration with constant Fed speaking. He almost suggested people should be spending their time, you know, doing research instead and trying to come up with I guess, more deeply informed views about monetary policy and communicating them less frequently.
- [13:24]
Larry Lindsey
Well, during my tenure at the Fed we did not have First Amendment rights and we were scolded roundly for ever saying anything. And you know, I think the literature supports that approach in general. On the other hand, it wasn't a fun experience and you know, Greenspan successors were all people who chafed under that discipline and so really let up on allowing governors and bank presidents to speak all the time, which of course anyone would want to. But yes, I think that can and should be brought into line. You know, good luck with that. You know, taking away First Amendment rights is, is going to be a very difficult challenge. If anyone can at least put some limit on it's going to be Kevin.
- [14:16]
Kelly Evans
Yeah, I don't know if you know how tall he is, but if you've seen this chart making the rounds that the only thing that matters really is Fed chairs height. If you're from strategists. There you go, Larry. So maybe it was just a coincidence that when the era of low rates, but it looks like if this has any, any bearing on reality, then maybe we shouldn't expect that 10 year to fall too much right now.
- [14:38]
Larry Lindsey
I don't think I, I don't think the 10 year is likely to fall. I think it's actually surprisingly low. I mean one of the miracles of 2025 in my mind was the 10 year yield dropped 40 bips. It's, it's well below what norms would have it at. And even with a man as talented as Warsh, I don't think he's going to be able to keep it down.
- [15:02]
Kelly Evans
All right. Well, I guess they should have gone for the shorter person then. Larry, thank you very much. Really, really appreciate it today. Thanks for sharing your thoughts both personally obviously, and as an analyst of these matters for quite some time. We really do appreciate it.
- [15:14]
Larry Lindsey
Always a pleasure, Kelly. Take care.
- [15:15]
Kelly Evans
Thank you, Lindsey. And coming up, we'll have Democratic Senator Elizabeth Warren sharing some of her concerns over Warsh as the Fed pick. She will join us to react to this news live a little bit later on in the show. So what does Kevin Wash his appointment mean for the markets? You just heard Larry Lindsey's take. Should it change the narrative on rate policy this year? Let's ask Surat SETI portfolio manager and equity analyst at DCLA and CNBC contributor. Sarah, welcome to you. You know, when Larry says the 10 year, if anything yield is lower than it should be, I just think we're stuck. I mean this is go back to dollar debasement, right? We're spending a dollar out of every five collected on interest payments and maybe it's not going to budge. But I think that is his task force probably. What are your thoughts?
- [15:54]
Sarah Seti
Yeah, I think it's interesting in the market reaction too. I mean, he comes in with the reputation of being hawkish. But given what President Trump is asking for, it'll be a fine line here. And I think you saw at least on the metal side today, the big sell off and all that could be a we have a lot of money momentum there. But it also could be that maybe the dollar stops being debased because that was one of the big fundamental drivers behind that too. So I think the markets in this ask questions period. And until we get some more answers, it's selling right. You know, the areas that it thinks.
- [16:28]
Kelly Evans
Are going to be most well, you know, you're famous. You know, you and I will sit on set and you'll leave and you'll go, you know, by the way, and then you say something brilliant and I'm like, no, no, no, no, no. So it's kind of a Colombo thing, Sarah, but I want to know, like what are all the different ways that your mind is thinking through this election today? And again, the primary one, it sounds like you're saying is that, you know, for the dollar to stop falling for the trades that have Been soaring to like that is a necessary and healthy reset, whether it's a direct result of his nomination or whatnot. But I mean, what else do you think is going to stem from this for the banks? Are we, should we expect deregulation? Are they going to bail us out by buying a lot more Treasuries?
- [17:04]
Sarah Seti
Yeah, and I think that's going to be, you know, really key. The deregulation that we've seen that will start continuing. I think, you know, the new Fed chair is going to have the year of the President as well. And we saw that trend in financials really for last year. It stopped a bit this year, Kelly, just because we had, you know, issues with the credit cards and kind of a couple of other things there that pull back on the banks. But I think that's going to be big, that the banks are going to be able to get more access to Treasuries by that. That's going to put some, you know, late on interest rates too. I think that focus is going to be really on interest rates and Kelly is going to be on housing. I think that's what this administration wants to do, wants to free up capital, wants to make things more affordable. You saw the things they were doing with, with housing with, you know, companies like Blackstone. So I think you're going to get a little more free market and interest rates will move kind of once you see some action through that. So it's definitely a pro market move, even though today the market's kind of selling a little bit, but not much.
- [18:05]
Kelly Evans
Yeah, I mean they say the President said he wants, you know, housing to be more affordable, he wants the mortgage rate down. But there's some school of thought that wash by kind of signaling a little bit more hawkishness maybe than, than a Hassett would have to the markets that he will bring the 10 year yield in. Other than that, I mean literally other than unleashing, you know, possibly a lot of bank buying of Treasuries, what else brings that significantly lower? Because again, I'm sure the audience is following along with this. Cutting rates of the short end may have no bearing on lowering mortgage rates.
- [18:35]
Sarah Seti
It's going to have very little. In fact, it could do just the opposite.
- [18:39]
Kelly Evans
Right.
- [18:39]
Sarah Seti
Because then as our deficit gets bigger and you look at kind of, and if growth comes back, you get a combination of two things that you've got natural, you know, natural higher levels of interest rates. So I think that's going to be key. But, but you know, I think he's going to play A fine line. He's very articulate, he's very smart. So I think the market likes that a lot as well. And it was a last minute thing too because we weren't really sure who was going to get but even though he was in the mix. So I do think it is net net a positive for the market and for the economy.
- [19:09]
Kelly Evans
Anything you're trading, buying, thinking about today, even, even far flung from this topic.
- [19:14]
Sarah Seti
I mean I just think if you look at kind of where the market is, it's you've got some really interesting valuations in the software space that got killed yesterday because added to it Microsoft, nothing to do with the Fed. But I just think when you've got stocks trading like workday salesforce at 13, 14 times, cash flow growing at 8 to 10% when historically they traded at 22 to 24 times, you know, either there's a fundamental shift in the market which we don't believe or just hey listen, people are just taking opportunities and you've got a lot of momentum in this market. So you've got, you know, the memory stocks going up and you've got software stocks going down. And I think fundamentally if you're a long term investor, these are going to be some pockets of opportunity.
- [19:55]
Kelly Evans
It sounds like you're in there. Excellent. That's that, you know, hardware is the new software, but maybe software is the new value stock or something, I don't know. Sarah, thanks very much for your time today. It's good to have you.
- [20:07]
Sarah Seti
Thanks Kelly.
- [20:09]
Kelly Evans
DCLA Coming up, he just mentioned the memory stocks and they are on the move again. They're still among the top names in the S and P even with some declines after their recent rally. And even though Western Digital shares are down nearly 12% today, they're still up 42% in January, trying for their best month in a quarter century. We'll speak exclusively with the CEO Irvington next about the momentum they're seeing and how long it can continue. Much more to come right after this. This is the exchange on CNBC.
- [20:44]
AT&T Business Wireless Announcer
Not every sale happens at the register.
- [20:46]
Kelly Evans
Before AT&T business Wireless checking out customers.
- [20:50]
AT&T Business Wireless Announcer
On our mobile POS systems took too long.
- [20:53]
Kelly Evans
Basically a staring contest where everyone loses. It's crazy what people will say during an awkward silence.
- [20:59]
AT&T Business Wireless Announcer
Now transactions are done before the silence takes hold.
- [21:02]
Kelly Evans
That means I can focus on the.
- [21:03]
AT&T Business Wireless Announcer
Task at hand and make an extra sale or two. Sometimes I do miss the bonding time.
- [21:08]
David Wessel
Sometimes AT&T business Wireless connecting changes everything.
- [21:14]
Kelly Evans
Close your eyes, listen to Monday.com. feel the sensation of an AI work platform so flexible and intuitive it feels like it was built just for you. Now open your eyes, go to Monday.com, start for free, and finally breathe. Is it time to reimagine your future? The right business skills may make a difference in your career. At Capella University, we offer a relevant education that's designed to focus on what you need to know in the business world. We'll teach professional skills to help you pursue your goals like business management, strategic.
- [21:48]
AT&T Business Wireless Announcer
Planning, and effective communication, and you can.
- [21:51]
Kelly Evans
Apply these skills right away. A different future is closer than you think with Capella University. Learn more at capella. Edu welcome back to the Exchange. The memory stocks are taking a breather today, but they've had quite a run. Seagate, Western Digital and Sandisk all posting triple if not quadruple digit gains over the past year. Western Digital is up 420% in 12 months. Those three names are all beating on top and bottom lines in their earnings reports this week as well. Western Digital Digital recording a 25% year on year jump in revenue as the AI craze continues. For more, let's bring in Western Digital CEO Irving Tan. Irving, it's really great to have you here. Welcome.
- [22:32]
Irving Tan
Thanks Kelly for having me.
- [22:33]
Kelly Evans
Can you just describe what it's like running a company through a period like this?
- [22:38]
Irving Tan
It's exciting. It's crazy, but it's exciting. And it's a great opportunity for us to really show what we are able to deliver to our customers into the market.
- [22:46]
Kelly Evans
But did were you ready? At what point did you wake up one day and go wait a minute, there is a freight train of demand coming at us?
- [22:54]
Irving Tan
Well actually we've been seeing this for probably the last three to four quarters already. It started really with air coming to the fore in the model training and therefore that requires a lot of storage. And now what we are seeing is actually as inference becomes a more pervasive, you know, that's generating a lot more data, that's requiring a lot more storage. So we sort of saw this coming and we've been preparing for it, especially in terms of the innovation that we're bringing to the table to our customers and also our ability to deliver higher capacity drives at massive scale.
- [23:27]
Kelly Evans
But how do you, you know, it's one thing when you say okay, Apple has to make a few more iPhones, it's another thing to say that memory names have to, I mean, how much bigger is the production 2,3,4x or am I exaggerating it? You can't just create factories overnight and bring on supply chains. How do you, how do you meet that kind of shift in demand?
- [23:44]
Irving Tan
That's a really good question. We're not actually adding any production capacity in terms of the number of units we are producing. Our focus has been really on innovating through technology and being able to deliver higher and higher capacity drives. So if you look at it, if you go back just a year ago, we were shipping drives at the top end of our 24 terabytes per drive. Today we're shipping 32 terabyte per drive products and we're about to launch the next generation. Our drives will be even higher capacity than that. So we are able to deliver to our customers the storage requirements through technology. Higher aerial density, as we call it, high capacity drives. And that also is part of the reason why we've been able to drive the margin expansion that you've seen.
- [24:26]
Kelly Evans
So who are your clients or customers in particular? And can you explain where you fall relative to the other memory players? And as we start hearing from Apple and little bit more acute later, we know that PCs are going to go up in price because there's a memory squeeze. We know that that could happen to smartphones. So where do you fall up and down that stack and how does that position you relative to your competitors?
- [24:48]
Irving Tan
Yeah, we play very, very much front and center with the hyperscalers because that's where the bulk of storage is happening. In fact, storage is really going increasingly to the cloud. You know, enterprises are moving more of their storage from on premises to the cloud, primarily because they need to take advantage of the AI capabilities that the cloud is delivering to them. So we are very focused on delivering that capacity to our hyperscale customers. We've really pivoted our engineering teams to be very close to the needs of our hyperscale customers, not only in terms of the capacity requirements that they have, but what are the feature, functionality and capabilities that we need to deliver for them to be able to prepare for AI applications coming down the road as well.
- [25:31]
Kelly Evans
So the trillion dollar question for everyone watching right now, Irving, is how much longer should they stay in the stock and how much visibility or backlog do you think there is? We've had analysts come on and tell us effectively this is going to go on for a period of years. What would you say?
- [25:47]
Irving Tan
Yeah, I mean, we, we see exabyte demand growing at a compounded annual growth rate over the next five years of 25%. That's pretty much where we're tracking right now. We've also been able to engage into much longer term contracts with our customers. We're pretty much sold out for all of calendar year 26 with two of our five largest customers. We have long term agreements that extend all the way to the end of calendar year 27 with one of those top five customers. We have contracts that extend all the way to calendar year 28 as well.
- [26:17]
Kelly Evans
Wow. So there is still a healthy pipeline there to support what's been a massive stock run. Irving, thanks for making the time and we hope to have you back soon. Really appreciate it. Thanks so much Kelly Irving Tan, CEO of Western Digital Sticking with tech Investors are rewarding Google for owning the AI ecosystem lately and punishing Microsoft for its reliance on OpenAI. What does it mean for Amazon as it reportedly considers a $50 billion investment into open Air now we'll have those details next. Close your eyes. Focus. Listen to work getting done with Monday.com relax as AI does the manual work while your teams are aligned on a single source of truth. Feel the sensation of an AI work platform so flexible and intuitive it feels like it was built just for you. Notice you're limitless. Now open your eyes, go to Monday.com, start for free, and finally breathe. At Capella University, we believe accessible education can make a difference. That's why we offer scholarship opportunities to all eligible students.
- [27:26]
AT&T Business Wireless Announcer
Un futuro diferente esta mas cerca de.
- [27:29]
Kelly Evans
Lo que cres con Capella University. Learn more at capella.edu what made you.
- [27:35]
David Wessel
Confident that you could do something that.
- [27:37]
Kelly Evans
Hadn'T been done before? I have no fear of failure.
- [27:40]
Deirdre Bosa
Trailblazing women, Changing the game One of.
- [27:43]
Kelly Evans
My favorite pieces of advice Think about what your boss's boss needs. Leadership can look in many, many different forms. It really does come down to just trusting yourself. Life is short and you just gotta.
- [27:54]
AT&T Business Wireless Announcer
Think big to accomplish big things.
- [27:56]
Kelly Evans
Julia Boorstin hosts CNBC Changemakers and Power Players.
- [28:00]
AT&T Business Wireless Announcer
New episodes every Tuesday, wherever you get your podcasts.
- [28:05]
Kelly Evans
Week one of big tech earnings are now in the books, and it offers a snapshot into how they're navigating all these AI growth and spending changes. Deirdre Bosa has more in today's Tech Check. Deirdre hey Kelly.
- [28:17]
Deirdre Bosa
So the early shift in earnings season is how the market is pricing. It's become Google Ask, meaning that investors are rewarding companies that really own the full stack of AI. So through that lens, meta spending, it does look bullish. It's expensive, yes, but it's also internal. Meta controls, the models, the infrastructure, the distribution. So that is the control. The full control that the market is rewarding these days. Microsoft, by contrast, it's being punished for its dependence on OpenAI, which investors now see as a strategic risk. It does have the infrastructure and the distribution, but it's still being tied to open air models. Just as OpenAI pushes deeper into enterprise and starts to look less like a partner and more like a competitor. Apple, meanwhile, Kelly, it is flat and it has been sort of drifting for months. So the market doesn't see it as making its AI bet yet. That will change soon and investors, they're likely going to want to know how much Apple is going to own itself and how much it's going to outsource and of course at what cost. That sets up of course, Amazon and Google for next week. Like Microsoft, Amazon owns a large part of the stack. But the missing piece right now is what the market seems to care most about and that is a model that developers and enterprise think actually are choosing to use Stress test next week for Google to really prove that the 20% gain it's seen over the last three months can keep going. Now, beyond this quarter, we could see some hints as to what the market may feel about Pure play names IPOs that are coming from OpenAI and Anthropic Matter burning through its free cash flow pile. Still, being rewarded for these big, large, expensive bets suggests that investors are willing to look past at least near term profitability.
- [30:04]
Kelly Evans
Kelly Indeed. Deirdre, thank you very much. Deirdre Bosa to Pippa Stevens now for the CNBC news update.
- [30:09]
Emily Wilkins
Pippa Another winter storm is set to hit the east coast this evening with winter weather alerts in effect for 38 million people, according to NBC News. Forecasters at AccuWeather are calling it a bomb cyclone and warned that as much as a foot of snow could fall in the hotel. Hardest hit areas, mainly parts of North Carolina and Virginia. Much of the region is still dealing with last weekend's winter storm, which brought snow and ice across much of the Eastern Seaboard. Meantime, the Justice Department has announced it has opened a civil rights probe into the killing of Alex Preddy. Last weekend, Deputy Attorney General Todd Blanche described it as a standard investigation by the FBI, but it marks a reversal for the administration. As recently as last night, President Trump called Freudian agitator and perhaps insurrectionist. And President Trump has signed an executive order to bring IndyCar to the streets of Washington, D.C. for the celebration of America's 250th birthday. It's just the latest announcement in the celebration of America's 250th president has also announced a UFC fight at the White House. Kelly?
- [31:13]
Kelly Evans
Yeah. If we could only get the taxis to move as quickly as the IndyCar through DC maybe leave a permanent avenue after that. Pippa, thanks. Coming up, stocks are struggling to end the week in the green with the Russell actually the weakest, down 2% since Monday. Our market guest is still looking overseas and he'll tell us where next. Also, don't miss our interview. Coming up with Senator Warren. We'll get her reaction and take on Kevin Warshaw's nomination as Fed chair. We're back with more after this. Stocks are extending yesterday's losses. The Dow is down about 523 points 1%. Similar for the S and P and NASDAQ this hour as investors weigh hotter inflation data this morning report namely and Kevin Warshaw's selection as the next Fed chair. All three averages still on pace to end the month in the green. But my next guest says for the first time in a long time he sees more opportunity overseas. Let's bring in Andrew Slim and he's senior portfolio manager at Morgan Stanley Investment Management. Andrew, good to see you. And first of all, what are your thoughts on Kevin Warsh as Fed chair?
- [32:14]
Andrew Sliman
Well, it doesn't surprise me. You know, a lot of people say, well, is the Fed independent? Well, every president elects someone he likes.
- [32:21]
Steve Liesman
Right.
- [32:22]
Andrew Sliman
And so I think it will continue the policy of lower interest rates. So that that is definitely a bullish argument for equities this year is the Fed probably at some point will resume their cutting. And I think that's a definite, you know, tailwind for equities in 2026.
- [32:41]
Kelly Evans
Although I've seen others suggest that there's always this kind of testing period for a new Fed chair where stocks might fall on average 15%.
- [32:48]
Andrew Sliman
Well, you know, the 10 year is pushing higher and that's one of the reasons why the market is weaker today is and especially kind of the high growth stocks is you're starting to see the yield curve steepen a bit.
- [33:00]
Kelly Evans
Right. Which is again steeper yield curve usually a bullish thing, but higher interest rates kind of a problem. So we have both of those to weigh. Does it? You know, I mentioned that you're more interested in international than US Stocks. Why is that fundamentally.
- [33:14]
Andrew Sliman
Yeah. I mean you started perfectly which is, you know what I run Global Strategies. You can invest anywhere in the world. And for the last decade we've been 75% in the U.S. it's been the best place to be because what has been the consistency until last Year was people would say hey Europe is cheaper, Japan was cheaper. But then you'd get to the end of the year and it turns out that e the denominator was too high and then you look back say oh maybe it wasn't that cheap. That has changed last year earnings momentum, earnings revisions have inflected higher in other parts of the world and the markets are rewarding cyclical stocks and that's a very positive change. So we can back into why is it countries are being forced to more turn inward, invest in their companies more than they have? Possibly. But I can see from a factor standpoint that there is a change. The other thing going on which is incredible statistic Kelly is do you know that from 2007 until last year you made no money in the EM Index, I believe of no return but the dollar went up 30% during that period. So that's the problem. Last year the dollar dropped 10% and EM went up 30. So the dollar relationship is very, very important here. And as long as you think the dollar is going to continue to decline and Kevin Wash and you know all this monetary and fiscal policy stimulus coming. I think it will.
- [34:44]
Kelly Evans
So you think is is not negative but you think war could still result in a weaker dollar.
- [34:50]
Andrew Sliman
Correct. I just think it's liquidity. It's more to do with liquidity. There's a lot of liquidity coming in 2026. Monetary and fiscal policy probably continues to weaken somewhat and that that's just another reason why for the first time we're seeing more opportunities elsewhere.
- [35:10]
Kelly Evans
Very interesting. So does that mean you can buy silver too?
- [35:14]
Andrew Sliman
I wouldn't touch that. Look, there's an argument for any of these commodities except at some point the argument changes to. Because they're going up.
- [35:26]
Kelly Evans
Exactly.
- [35:27]
Andrew Sliman
There's a certain group of people that are buying it just because it's going up, which means once it reverses, look.
- [35:32]
Kelly Evans
Out below it is down 34% today.
- [35:38]
Andrew Sliman
It's a commodity. Kelly.
- [35:39]
Kelly Evans
Yes.
- [35:40]
Andrew Sliman
Never lose sight of the fact you buy low and sell high. They revert ultimately and I'm not saying it's the end of the gold trade. I'm just saying you got to be very wary when any of these commodities have very big moves up.
- [35:53]
Kelly Evans
No, I think that goes without saying. Again, that's why I wanted to hear from you even with you thinking a weaker dollar. Andrew, thanks so much. We appreciate it. Today, Andrew Sliman with Morgan Stanley. Coming up, Senator Elizabeth Warren urging her Republican colleagues not to move forward with warship nomination for Fed chair until the DOJ drops its investigation into Jay Powell. She'll join us live next. President Trump selecting Kevin Marsh as his next Fed chair. But his confirmation timing is a big question mark, as Republican Senator Thom Tillis has said he will oppose the confirmation of any nominee until the Department of Justice ends its inquiry into Jay Powell. And that's exactly what my next guest is urging all Republican senators to do. Joining us now is Democrat from Massachusetts, Senator Elizabeth Warren, along with our very own Emily Wilkins. Welcome to both of you. Emily.
- [36:44]
Emily Wilkins
Kelly, thank you so much. And Senator Warren, thank you for joining us. Of course, you are the top Democrat right now on the Banking Committee. Talk to me a little bit about some of the conversations you're having with Republicans. Do any of them agree with Senator Tillis that the Warsh nomination cannot advance until the investigation is over?
- [37:01]
AT&T Business Wireless Announcer
Every Republican I have spoken with on the Banking Committee admits that Fed independence is crucial. And it's crucial for our economy. It's crucial for American families. If you have a Federal Reserve that is making decisions not based on the economy, but based on politics, then over the long arc, that destroys jobs, that drives up prices, that creates chaos, that reduces America's role in the world economy. So everybody understands Fed independence, except Donald Trump doesn't want Fed independence. Donald Trump wants it all Donald Trump's way. So what Tillis has said, now, Senator Tillis has said is, look, until you at least stop this bogus attack trying to get rid of Jerome Powell, and I would add the bogus attack trying to get rid of Fed Governor Lisa Cook, we can't even talk about who the next Fed chair should be. Donald Trump has just got to back up on his ideas of taking over the Fed.
- [38:08]
Emily Wilkins
So at this point, no other Republicans at least saying that they will follow Tillis in that, but you're hearing a lot of concerns about Fed independence. Is there really anything that that Wash can say or do with this point to alleviate some of those concerns?
- [38:20]
AT&T Business Wireless Announcer
The problem is right now what Marsh has already said and done. Take a look at Marsh's history back. You know, he's already been a Fed governor. So you've actually seen him in the, in the secondary role in this. Remember back during the financial crash in 2008, Kevin Marsh was an inflation hawk. That meant he wanted to keep those interest rates high, high. And even after the crash in 2008 and millions of people are being put out of work, and that's usually the moment when the Fed says, get those interest rates down. Kevin Warsh was the guy out there saying, keep those interest rates high. He's been that way since then over and over and over, demanding higher interest rates. Demanding higher interest rates right up until this year when Donald Trump gets elected president. Donald Trump makes clear this past spring and summer he only wants a Fed chair who's going to lower interest rates. And suddenly Kevin is a, is a convert. He wants to see those interest rates come down. And then he goes on Fox News and after Donald Trump has said, in fact, prices are lower than ever, Kevin Warsh just repeats that, knowing that that's not what the data say. So he has made it pretty clear that if Donald Trump wants a sock puppet, that's what he's willing to be.
- [39:43]
Kelly Evans
Senator Warren, it's Kelly here back in the studio. So I just want to clarify, is your issue that you think she doesn't have good judgment on the economy and interest rate policy?
- [39:53]
AT&T Business Wireless Announcer
My issue is he doesn't have independent judgment. He's coming in saying he's already said, remember all those things I used to say? All those things I used to believe year after year after year, don't believe those anymore. If Donald Trump wants somebody to say prices are really low, even when prices are high, Donald Trump wants someone to say interest rates should go down. Even though I'm the guy who said interest rates should stay up, he's willing to say it to get the job. And that's a real problem.
- [40:25]
Kelly Evans
And yet the irony is the markets are reacting as if it's going to be the old Kevin Warsh, the one who's not just telling the president, you know, silver, Silver is down 35% today. Maybe.
- [40:37]
AT&T Business Wireless Announcer
Let's remember one other thing, though, about Kevin Warsh and what we saw in 2008. He was the guy who helped lead the bailout of aig, got money on the table for Bear Stearns, the guy who helped out his old employer, Morgan Stanley, in other words, and continues to work for those folks, has a father in law in the biz. In other words, he's a guy who consistently has delivered for the big boys on Wall Street. Wall street may think that sounds pretty.
- [41:09]
Kelly Evans
Good maybe, you know, even though right now they're kind of concerned about the opposite. But said I want to ask you about something different, which I think I know what you're going to say here, but I never know until you ask. It appears that maybe one of the first things that would happen with the Wash Fed is bank deregulation. Again, if Powell it depends a little bit on the personnel. If they loosen the supplemental leverage ratio, maybe banks don't have to hold capital they could buy more Treasuries that might bring down long term interest rates. Would you support something like that in order to kind of bring you some other kind of way to bring down long term interest rates? Because it seems like right now there's, there's no way to get them down.
- [41:43]
AT&T Business Wireless Announcer
So. So let me just reframe your question a little bit. At a time when everybody who follows the markets understands that the amount of money that's pouring in on private lending, that the Fed and the other economists can't get a good handle on what's happening out there. At a time when AI is loading up on debt at levels that are just literally breathtaking, at a time when crypto is making its way into our banking system. System, or let me just repeat that. At a time when risk is going up, risk is going up, risk is going up. Do I think that deregulation is a good idea? No, I don't. Risk is building up in the economy and I think the efforts, this is once again short term. Banks are going to love it. Wall street will love it very short term. And then when comes to it, it all comes crashing down. They will turn around to American families and say, sorry, once again, you're going to have to bail us out. I has already floated that. We already have how many too big to fail banks. And you know, crypto would love to be too big to fail. That's the sort of thing that is an economy that just keeps taking money out of people's pockets. And that's why the theme of the first year of Trump's presidency has basically been great. If you're already a billionaire and really sucks for American families.
- [43:19]
Emily Wilkins
Senator, I just want to also talk about just the math of getting Walsh confirmed. Obviously, if Tillis remains a no, he can block it on the Banking Committee. But once that's there, Republicans do seem to have the votes to move any nominee through over Democratic opposition. So what's the playbook here for Democrats?
- [43:34]
AT&T Business Wireless Announcer
Look, it's the same playbook as it has been for an entire year of the Trump presidency. And that is to say to Republicans, grow a spine. Do what you know is right. You know the problems that you are building into our economy, you know the problems we've got with ICE right now, you know the problems of invading Greenland, you know these problems, just speak up. That's all we're asking for. Put some curbs in place. We have the power here in the United States Senate to stop the craziness around tariffs that are up and down and sideways. We have the power to tell ICE to do crazy things like follow the Constitution. We have the power just to enforce the law. And so far, Republicans have said their first goal, their last goal, and every goal in between for Republicans in the United States Senate has been to do whatever Donald Trump wants them to do.
- [44:34]
Emily Wilkins
Well, I did want to touch on the ICE piece that you brought up. We are obviously less than 12 hours from the beginning of a potential federal shutdown. We still don't have a sense on when the Senate is going to vote on the agreement that they've put forward. But taking a step beyond that, you then have two weeks to come together with some of these potential reforms on ice. Leader Schumer laid out a number of them yesterday. Some of your Republican colleagues are saying things like no masks go a little bit too far, but they seem open for things such as wearing body cameras or allowing state and federal requiring that federal investigators have to work with states and localities. From the conversations you've had with your Republican colleagues, how likely do you think it is that there can be an agreement reached in the next two weeks?
- [45:14]
AT&T Business Wireless Announcer
So mostly what Democrats are asking for is just make the ICE agents comply with the same kind of rules and regulations as every other law enforcement officer in America. You know, if our police in Boston and Springfield, Massachusetts, if police in Albuquerque, New Mexico, have to be able to show their faces, everybody knows what their names are. If there's an officer involved shooting, you have an independent investigation and cooperation among all agencies involved. I mean, that's just straightforward stuff. Oh, yeah, and the one about you don't get to kick down people's front doors without having a warrant, a judicial warrant. It's saying make the same rules apply to ice. ICE is not some special secret police that gets to rove around the country and claim that they own the streets and they get to push down citizens and shoot them in cold blood out in the street. We're just trying to get some constraints over ice. Now, if the question is, are those constraints reasonable, I think nearly all the Republicans agree. But once again, will Donald Trump let them do that?
- [46:29]
Emily Wilkins
And we'll be following that very closely. Senator Warren, thank you so much for your time today.
- [46:34]
Kelly Evans
Kelly, back to to you, Senator Warren. Emily Wilkins, thank you very much. Let's continue the discussion right now and bring in David Wessel, senior fellow for Economic Studies at the Brookings Institution. Can I call you a student of the central bank statement? Seems like more like the master. In any case, what is your thought about Warsh's nomination here? What's the real impact of his policy, likely, we're reminded he wrote in 2018 with Druckenmiller as well, an op ed saying the Fed shouldn't raise rates back then. So he would probably say, you know, he's argued both sides of this for longer than people are getting him giving him credit?
- [47:07]
David Wessel
Well, I think, first of all, you can't ask somebody to hold the exact same views on monetary policy today that they did 10 years ago because the world is different. So let's give the guy a bit of a break on that. But he has turned more dovish as he's been campaigning, as he has for the last decade, to be the next Fed chair, and he succeeded. I think the big question is which Kevin Warsh will arrive as chair of the Fed? Will it be an independent minded guy who has some strong views about the balance sheet, who thinks that the economy is able to grow faster without inflation than we used to think because of AI and will do things guided by the Fed staff that's really independent of the president's wishes, or will he be susceptible to the kind of criticism that Trump will undoubtedly give him, that he's not cutting rates low, low enough, fast enough, and we don't really know yet. That's the big question.
- [48:03]
Kelly Evans
You know, I had to ask Warren about the bank deregulation piece, assuming she would not necessarily be a fan. But it does seem like this is one avenue where we could expect a significant deal of movement. It's not going to be headlines, it's not sexy. But do you think that's the right expectation, David, that that's a lever they're going to use?
- [48:21]
David Wessel
Well, I think they've already begun to use it. I mean, Mickey Bowman, the vice chair for supervision, has been turning the dial in favor of the banks, and so have the other bank regulators appointed by the President. And Jay Powell and the rest of the Federal Reserve Board have not interfered. So do I think Kevin Wash will be a fan of that? Absolutely. And is that the direction we're going? Yes. And is Elizabeth Warren right that it's a bit risky for them because if we have a problem, they're going to have eroded some of the protection regulations. But maybe the pendulum moves too far. I don't think he'll be that influential on bank regulation any more than any other chair is. I think where we really wonder is what will his monetary policy stance be and particularly what will he do to the balance sheet over time?
- [49:05]
Kelly Evans
Right. And do you think he'll get rid of the press conference or kind of have officials rein in their their remarks about policy or anything like that.
- [49:12]
David Wessel
Well, I heard you asked Larry Lindsey about that. It kind of cracked me up. I don't recall. Larry Lindsay was very happy at being restrained in the Greenspan. I think there's no way to pull that back. And I suspect that the press conferences will continue. It's hard to make yourself less transparent. After all, he made some recommendations on transparency and reported to the bank of England. But it may change the form of communication, might change what they put out in the Summary of Economic Perspectives. One thing I was amused that Larry Lindsey said is that, oh, look at Jay Powell. He's using he's reading from a script. Well, I think Jay Powell learned, and Kevin Worshwell as well that when you kind of wing it at a press conference, you can inadvertently move the markets.
- [49:53]
Kelly Evans
I was thinking about that to be.
- [49:55]
David Wessel
A little more disciplined than when you're just spinning off from the Hoover Institution or writing for the Wall street options.
- [50:01]
Kelly Evans
And be long volume maybe for the early months. David thank you. David Wessel, Brookings Institution that's it for the exchange. I'll join down to for Powerless right after that. You've been listening to the exchange. Make sure you're subscribed to get each episode every day, same time, same place.
- [50:20]
Emily Wilkins
This is a Monday.com ad.
- [50:22]
Kelly Evans
The same Monday.com helping people worldwide getting work done faster and better. The same Monday.com designed for every team and every industry. The same Monday.com with built in AI scaling your work for from day one. The same Monday.com that your team will actually love using the same Monday.com with an easy and intuitive setup. Go to Monday.com and try it for free. Yes, the same Monday.com.