Please, this is Squawk Pod and I'm CNBC producer Cameron Costa. On today's episode, an exit interview. Gary Gensler is set to resign as SEC chair next week after an eventful tenure and much ado about crypto regulation. These other thousands of projects need to show their use case and show that they actually have fundamental underlying them or they won't persist. How Gensler views his own legacy at the SEC, including climate disclosures, treasuries regulation, and infamously Bitcoin. You love it, you don't like those other coins. I've never owned any of these and I've been consistent for seven or eight years. Plus the rest of today's news that got us squawking: European regulators eyeing big tech, China considering the sale of TikTok to who else, Elon Musk. What do we think as Americans that the Chinese would be willing to sell it to Elon Musk? And Starbucks closing an open door policy. There was the naked guy in the Starbucks right across the street here. It's a naked guy this morning. What? It's Tuesday, January 14th, 2025, and Squawk Pod begins right now. Stand by in 3, 2, 1.
All right, good morning everybody and welcome to Squawk Box right here on CNBC. We're live from the NASDAQ MarketSite in Times Square. I'm Becky Quick, along with Joe Kernen and Andrew Ross Sorkin. And just in the last hour, Britain's competition regulator says it's opening a formal antitrust investigation into Google search and search advertising services. The agency said it would assess whether Google has strategic market status, that's the term being used, which would give the regulator the power to impose changes to prevent what it would be deemed, I guess, anti-competitive behavior. And then also in the European Commission is reportedly reassessing its probes into Apple, Meta, and Alphabet linked to its 2024 Digital Markets Act. And according to the FT, the review could lead to a reduction in the range of investigations. It said all potential fines will be paused during that review, and the companies have asked the incoming Trump administration to intervene in what they characterize as overzealous regulations. I mean, those are pretty big, important stories in the world of business and beyond. When you watch what the big US tech companies are asking the Trump administration to do and what they might get as a result of that, to have the Trump administration standing up for their rights overseas. Also to see what's happening with the potential ceasefire in Israel-Hamas. These are some significant changes that are happening all around inauguration day. It's coming up next week. Seems like it might not be coining.
Yeah, probably not. Probably not.
Meantime, members of President-elect Trump's economic team have been discussing a slow ramp-up to tariffs, month by month. It's according to a Bloomberg report that said that the gradual approach would be aimed at boosting negotiating leverage while trying to avoid a spike in inflation. The report said that the plan relies on executive authority under the International Emergency Economic Powers Act. Now, it would increase tariffs by about 2 to 5% per month. The report said the proposal is in the early stages, has not yet been presented to Trump. Those working on the plan include Scott Bessent and Kevin Hassett, as well as Stephen Miran and Trump's pick for Treasury, of course. Those are the National Economic Council and the Council of Economic Advisers. So it's kind of interesting, is it not? Come up with a gradual boil.
Yeah, it's the negotiating, and I think it also highlights that there might be some inflation. PPI is today, and producer prices, and that has some key components that play into the PCE, which is one of the Fed's favorite numbers. CPI tomorrow. Tomorrow we get CPI. We'll see what holds with some of these. But the expectation at least for PPI today is that the deflationary indications we've seen to this point might come to an end, or that you might even see some. A lot of it is because of exogenous hurricane, storm, weather. Some of it, you also have healthcare prices. That'll be a way to say, there'll be a way to say not to worry, but people will still worry. The markets will worry for sure if it's hot.
Chinese officials are evaluating potential options for TikTok, including the possibility of a sale of the US operations to Elon Musk, if he can afford it, probably. That's according to a report. Say Beijing strongly prefers that TikTok remain under the ownership of ByteDance, it's the parent company, and is contesting the impending ban with an appeal to the Supreme Court, the US Supreme Court. But government officials are considering contingency plans if the Supreme Court does uphold the ban. Reports say it's not clear how much ByteDance knows about the government discussions and whether TikTok and Musk have actually been involved, or whether it's just like, I don't know, fantasy. In a statement, TikTok spokesperson tells CNBC, 'We can't be expected to comment on pure fiction.'
I've made a lot of calls last night. I don't believe the folks at ByteDance have been... I don't think this has anything to do with them. And I don't even believe necessarily that the Chinese officials who might have floated this floated all the way to the top of the government. Oh, okay. I think there are people inside the Chinese government who are thinking, okay, well, if this happens, do we do this, do we do that? I don't know where we really are. I don't think we're anywhere in this in a meaningful way in that there are any kind of negotiations going on or anything like that. I mean, I think part of this whole thing has been for them to say we are not negotiating, there is no negotiation, and that they want to actually force the, effectively force the issue. The issue has been forced, but if they can somehow get past technically the inauguration, then they think that there's an opportunity. And interesting, I don't know if that's the case though, because but interestingly, as we've discussed this, and as my children will tell you, 'Dad, the service is still going to work on the 21st, the 22nd, the 23rd, the 24th.' Gradually decline, it'll just gradually decline. So you actually have more time than you think. The idea that somehow this whole thing sort of comes to a screeching halt on the 19th is not really ever the thing. That is an issue though, is if it works less and less, you're degrading the value of the property.
Correct. No, no, no, no. I think you have a... I'm going to say you have a couple of weeks, maybe a month, to figure it out. And so my only point is it's still on the table in that way. Then the second question, which I think is maybe more meaningful this morning, is to the extent they are going to sell the company, what do we think as Americans about the idea that the Chinese would be willing to sell it to Elon Musk? And what do we think as Americans that then Elon Musk is as close as he is to President Trump? Think about all of this just for a second. Meaning they are not prepared to sell this business to just about anybody else in the world. Why would they be prepared to sell it to Elon Musk? Because he has an enormous business in China that they have influence over, that they have influence over, and that they feel they have leverage over. Yeah, think about that in the context of somebody who has been described—I'm not saying this is a bad thing or good thing, I'm just saying this is what it is—people describe him also as the co-president of the United States. So when people think about the national security issues and they think about leverage and they think about influence, there's a lot of...
But you all along, you all along, you haven't really believed in any of the conspiracy theories about TikTok in the first place.
I mean, Kevin O'Leary, is he going to get it? I think we need to hear back from the other sharks at this point. I don't know what Barbara Corcoran is thinking. I don't know whether they're all... who's the other guy? I can't even say his name. Her, her, her, her, he, he's... none of those people on the list. He's shilling, he's shilling for private jets. I see a lot. I don't know who... Robert? Damon John. Damon John. So the other sharks haven't come back. I don't think... is Cuban still... he's not a shark anymore. He's hiding somewhere. But look, there have been other serious offers that have come through from the former Treasury Secretary of the United States. And if you go back even further, the whole idea of Walmart wanting this business, Oracle, and Amazon. Now those to me would be more realistic and make a lot more sense. However, they make no sense if you are the Chinese government. Yeah, I don't know what kind of leverage the Chinese government will have. And by the way, it doesn't necessarily matter who's president of the United States because this was a law that was passed by Congress. The Supreme Court can overturn Congress, a new administration cannot. So I don't know what kind of negotiating power there will be. This is a deal that was laid by Congress. And we had Bradley Tusk on this week who made some very interesting points about how the Supreme Court has upheld Congress's decision in a lot of recent cases that have come through on this. He said to the Chinese government, you might see them more willing to cut a deal because even the Chinese government doesn't want to lose out on billions of dollars in a sale that would come with something like this too. I don't know. I don't immediately see all the tin hat aspects of Musk owning it. I look at the way he's operated Twitter and I mean, I think it's not great for legacy media, but it's one issue you might have is just concentration of media in new media because you would not...
Concentrated in users' hands, which isn't nearly... it isn't, it isn't. The algorithm is controlled by whoever's running the company, and you could set the algorithms up to be fairly powerful. You would not see two networks owned by the same entity. It wouldn't be allowed, right? But it's all user-generated content, right? But you tell me, would Facebook be allowed to buy TikTok? Um, you know, Facebook is... they... Facebook, they were... I've never been on Facebook. I mean, about Facebook, I've never been on Instagram. They're saying Instagram... I think right now you should be loving Mark Zuckerberg. You know I love him. That's my point. Then I think it's cool when he's on the surfboards. I like his new hairstyle. No, well, I'm asking you a different question, which matches his politics, his new ones. I just don't... I don't know, Andrew, you're so worried about everything. I just... I don't... Elon Musk, don't worry about TikTok. The Chinese aren't coming over. I don't even think he's colluding with the... Trump's colluding with the Russians anymore. I don't even think that's happening anymore.
Yeah, yeah, exactly. Tees will be next. Next on Squawk Pod, an exit interview with SEC Chair Gary Gensler. He hands the reins to his successor on inauguration day, but before that, he reflects on his tenure at the SEC, his very visible work on regulating crypto, and the legacy he's leaving in less controversial markets like treasuries and equities.
That market is so much more critical to you and the American public than crypto. The $60 trillion equity market, and we have put in fundamental reforms.
This is Squawk Pod from CNBC, bringing you the best of the morning show Squawk Box in podcast form every day with Joe Kernen, Becky Quick, and Andrew Ross Sorkin.
It's called the incompleteness theorem in mathematics, which shows a system cannot actually prove its own consistency or look at itself. It's hard for individuals to look at themselves, don't you think? Introspecting, I try all the time, and it hurts, but I do. There are times you... and you write down improvements, things like that. All I look at myself in the mirror? No, I don't. Yeah, that's... is it can't or can't let... not even go there. Do you know? I'm pretty sure it's can't. Okay, you're not going to get me to say otherwise.
You are watching Squawk Box right here on CNBC. I'm Becky Quick, along with Joe Kernen and Andrew Ross Sorkin. Thinking about introspection now, thinking about all kinds of words and how to say them carefully. He... now, speaking of self-reflection, that's what this next interview is partially about. It's Gary Gensler's exit interview from the SEC. He's been a very visible regulator since he took office in 2021, at first because of the meme stock mania and GameStop short squeeze drama that year, but then because of the memes of Gensler himself, popularized by the crypto community. The agency's efforts to regulate cryptocurrency under his leadership sparked a lot of backlash. The SEC suing Binance and Coinbase, for example, only fueled more animosity for Gensler, at least among those crypto bulls. It got so heated Donald Trump turned it into part of his presidential campaign. One of the promises he ran on was firing Gensler on day one of his term. Now, technically, Trump might not have had the oversight to do that, but he ended up not having to. Though Gensler's SEC tenure could run to 2026, like many SEC chairs before him, he announced his resignation effective on inauguration day. President-elect Trump's pick for his replacement, Paul Atkins, a very pro-crypto choice. Let's get back to Joe, Becky, and Andrew.
Let's talk with Gary Gensler on his exit interview. The SEC leadership still making headlines with just four days left before President-elect Donald Trump taking office. The current SEC chair, Gary Gensler, stepping down. Yesterday, two Robinhood broker-dealers agreed to pay $45 million to settle SEC charges that they violated more than 10 securities law provisions related to brokerage operations. We're going to talk about that and so much more. Joining us right now is SEC Chair Gary Gensler in his exit interview. Gary, thank you so much for joining us, and thank you for talking with us throughout your time in office. There's about 100 questions that I have on my list, but I want to start with one that I think actually may be, in a way, the hardest. And I think it's a political question, but it's also a philosophical question, which is when you look back at the work that you did over the last four years, and you also look at this election, specifically this election, and you look at the number of folks in the crypto world who ultimately turned out, not just turned out for President-elect Trump, but turned out for President-elect Trump with money, with dollars, the huge amount of money that went into effectively his campaign as to some degree a rebuke of what was happening with your efforts to block some of the things that they were doing. I'm so curious how you personally think about that today.
First, Andrew, Joe, Becky, so good to be with you, and thank you for inviting me. Look, I believe deeply in our great democracy. I think this election, though, as you point out, there was money raised from the crypto field. I don't think that's what this election was about. This field, the crypto field, a highly speculative field, has not been compliant with various laws, whether it's anti-money laundering laws, sanctions laws, or in our case, securities laws. Now, Bitcoin is not a security, but these 10 or 15,000 other tokens, the investing public has been hurt over the many years. My predecessor, Jay Clayton, who is going to serve again in the Trump administration, but Jay Clayton had brought about 80 cases. We're a law enforcement agency. That's what we've continued to do to protect the investing public, so they get disclosure, they protect against fraud, manipulation, and there's just been too much of that in this field. And then, of course, to address conflicts when you had these crypto exchanges not only operating as exchanges but also trading against their customers, and on and on.
Gary, I think the question though is, you know, some critics have said that the SEC has pursued a policy that has been focused more on litigation, if you will, or rules by way of litigation, than actual law. That perhaps there should have been a greater effort put on creating real laws, not just guidelines, which then created this litigation. I'm looking, by the way, at even what just took place in the last, what, 48 hours from this court as it relates to the Coinbase case, where they're asking the SEC now, your, effectively you, to quote, 'explain yourself' as it relates to some of the things that are being done. And by the way, the judge in the case said to the SEC, quote, 'it should not give yet another poor explanation in an already long line of them.' And so I know it's a hard question, but I put it to you because I think that the public is trying to understand the way you've thought about it thus far.
Look, I thought about it that we have laws. Congress has passed those laws. Of course, they can change them. But a sector of this field, crypto, the investing public is investing based on projects, and these things, without prejudging any one of them, many of them are under the securities laws. And in that field, there's a lot of non-compliance. Look, Andrew, in most of what you talk about on any given day, you talk about the fundamentals of a stock or a bond or the markets, the valuations, mix fundamentals and momentum or sentiment. And this crypto field seems to trade mostly on sentiment and much less on fundamentals. But if the fundamentals are there, and I say if, then make the proper disclosures under the securities laws. That's the basic bargain.
I was glad to have you coming on today, Chair Gensler, and I was thinking of just an overriding question about Bitcoin and what we've seen for the past four years under your tenure. And I can only come up really with two scenarios, and neither one of them are great. The first one is that under your leadership, it was, you know, really dragged kicking and screaming into where we are today, and it's a far cry from four years ago. You'd have to admit it, you know, with ETFs and adoption by so many different firms. It's almost like there were so many obstacles put up that made it very hard for what could be a transformative new asset or industry. So that's on the one hand, that you did. Or on the other hand, it should have been very closely scrutinized, and at $95,000, if this is ephemeral and built on air and a Beanie Baby, there's going to be an absolute bloodbath. So either you stood in the way of a totally new industry, or you were unable to prevent a huge bubble from forming, which is going to end very badly. And neither one is going to be much of a legacy to look back on.
Joe, I know from our conversations in the past you view Bitcoin very differently than these 10 or 15,000 other tokens. It was hard for Bitcoin under you, though, under your regime. It's very difficult for anything good to happen for Bitcoin. Joe, within the first few months in the job, we had Bitcoin exchange-traded funds based on futures. But also, you recall when I was coming into this role, the whole GameStop events, and that market is so much more critical to you and the American public than crypto. The $60 trillion equity markets, and we have put in fundamental reforms, not only shortening the settlement cycle where you can get your money in one day rather than two days if you're an everyday investor, but that actually the markets will be more efficient. We addressed ourselves to the second most important market, I would say, the US Treasury market, that had had jitters for so long, a $28 trillion market, and fundamental, important reforms. We addressed ourselves to corporate governance, that insiders no longer can file a plan on a Monday the same time they have insider information and sell their stock on a Tuesday. They'll now have to wait three months. So I'm very proud of the record. And this focus that you all have had on crypto, I understand it brings in eyeballs, it sells newspapers and so forth, but the capital markets at $120 trillion, I'm very proud of our record.
Gary, let me go to a different topic. We're going to move way off of crypto, but another topic that has frankly become quite controversial, which is both climate rules, which are now in litigation that you put forward, and then there were efforts early on that I think effectively either were abandoned, or you tell me, around ESG rules, boosting board diversity, for example. There were some workforce management issues and other things, and the whole country or world seems to have shifted in some way. You may not agree with the way it has shifted, but I again wonder how you think about this election, what you think's happened in this country. Almost every single day there is another Fortune 500 company coming out with announcements that they're abandoning DEI programs, they're abandoning ESG programs, they're abandoning a lot of the things that were being talked about by this administration and by the SEC as it related to rules and other things that they were trying to put forward.
Andrew, as a securities regulator, I'm neutral to just about all that you just said. We're not a climate regulator and we are not a workforce regulator. We're a securities regulator. But when I came into the role, we had found that of the top thousand companies listed on the exchanges, a majority were making disclosures about their climate risks, and investors were telling us that they found those disclosures inconsistent but material to their investment decisions. So we grounded in materiality. We went out, we heard the public, we got tens of thousands of comments, lots of investors who wanted this information to be more consistent and just based on material information. And I've been consistent since my confirmation that we would ground it in just what's material to investors. As you might recall, the back and forth, yes, some advocates wanted more, but we're just a securities regulator, and I believe that we rightly just addressed, try to bring consistency, even if we both could stipulate that it was for disclosure purposes.
I'm curious, just on a very personal level, what now that you're taking off and leaving the role, what you make of this reversal as it relates to ESG and DEI and so many of these other things that had become almost a staple of corporate America over the last four, five, six, seven years that was developing.
Well, I know in just managing the SEC's 5,000 people, we benefit from recruiting and giving opportunities to the diverse population we have in America, 330 million people, regardless of gender, race, or background, or orientation. That helps our agency. But in terms of a securities regulator, really investors have to decide what's relevant. We did not put forward, we at the SEC under my leadership didn't put forward any disclosure rules around workforce or diversity. We did come in and do something around climate because the markets were already having those disclosures. What I do think is the markets will figure out, the investors will figure out whether the climate disclosure is relevant and material to their investment decisions.
