Bring in show music, please. This is SquawkPod from CNBC. On today's episode, Fed, Fed, Fed, plus a little extra, a debate about Fed independence and President Trump's threats to fire Fed Chair Jerome Powell with vice chairman of Evercore ISI Krishna Guha. We're seeing a clear signal from the market that it doesn't like even the idea that the president might try to remove the Fed chair. And where Fed President Austan Goolsbee stands on economic politics and on whether a rate cut is coming. Everything's always on the table. As I say, it's a huge table. Plus, the latest on Harvard's spat with the Trump administration. And the religious world mourns Pope Francis who died at 88 just after Easter Sunday. I never told you guys. I went and visited with him. Did you really? I'm CNBC producer Cameron Costa. It's Monday, April 21st, and SquawkPod begins right now. Stand back by in 3, 2, 1. Cue up, please.
Good morning, everybody. Welcome to Squawkbox right here on CNBC. We're live from the NASDAQ market site in Times Square. I'm Becky Quick along with Joe Kernan and Andrew Ross Sorkin. Market was closed for 3 days. I guess it's making up for some lost ground at this point. Gold was at an all-time high on Friday as well. Big today, too.
Yeah, gold is up big, I think. Let's take a look at this. All-time high. Now, it's up 2.3% to $3,450 an ounce. The dollar is on a four-week losing streak that we've been watching again pretty closely over what's been happening with that. There are some questions about whether the Treasury Secretary would like to see a weaker dollar and lower rates. But the dollar this morning off by another 1.25%. For the year to date it's down by 7.5% and those numbers do start to add up.
In the meantime, the Vatican announcing that Pope Francis has died at the age of 88. Francis was Pope for about 12 years. He was the first Latin American pontiff. He stressed humility and he made concern for the poor a recurring theme of his papacy. He was also the first Jesuit who was in this position and a lot of his positions reflected the Jesuit's overall broad views on things. He did alienate conservatives with some of the critiques that came of capitalism and climate change. First non-European pope in 1,200 years since the 8th century. Yesterday, Easter Sunday, the Pope was visible. Got to see him there blessing thousands of people in St. Peter Square in Vatican City. He made a surprise drive through the square in the Popemobile and that had a lot of people hoping and thinking that he was in much better shape than we had been hearing recently. He did suffer from chronic lung disease and was admitted to the hospital in February for a respiratory crisis that developed into double pneumonia. The Pope also met with Vice President JD Vance yesterday. Tributes from world leaders have been flowing in this morning. Francis's successor will be chosen in a gathering of cardinals that's known as the conclave. And we've all seen a lot more about that recently, too.
It's like his last video was with the vice president. Yeah. At the end of 2019, I never told you guys. I went and visited with him. Did you really? And interviewed him.
Because it was a piece I was going to write for New York Times magazine. And then the pandemic happened and so there was no time to... I never wrote the article and I was waiting to write the article and it was all about how all of these corporate leader CEOs were actually going to visit with him. This actually goes back to ESG and capitalism and what was happening with the climate change and everything else. And all of these CEOs, I will keep their names out of it for now, but were going on these pilgrimage almost trips to visit with him and to talk with him about what they were planning to do as it relates to trying to have a more inclusive capitalistic society and what they thought should happen as it related to their companies. And all of that has unwound since and of course now all of that is unwound. Obviously I haven't spoken to him since then, but he was very encouraged by the idea that all of these businesses were doing it. And it was very interesting to see significant business leaders actually go to visit with the Pope to tell them this. And again, you know, people always say, were people doing ESG as some kind of virtue signal thing or something else? And I always go back to the meeting that I went to which also involved a whole other bunch of people as well. And then I spent time with him afterwards. But there were a lot of business leaders who actually I think genuinely did believe in ESG and in all of the work that they were doing as it related to this stuff because they wanted so desperately for his approval.
In fact, were they Catholic business leaders who were going with the Pope?
No, there were Jewish business leaders, there were Muslim business leaders, there were some Catholic business leaders. It was a cross-section. But by the way, from the oil and gas industry, from technology in Silicon Valley, from banking, all sorts who led this.
Was there one person who led the whole big thing who were doing this?
No. And there were... People don't know this. There were lots of these kinds of meetings that were happening at that time. It wasn't just one trip. There were a significant number of leaders who were going to do this. And in fact at one point one of the pontiffs had gone to Davos in fact and actually met with a whole number of people about the pontiffs... a previous one I believe... one of the earlier... I'm sorry this pontiff had started to send statements rather, I apologize, to Davos and then they had sent some of their deputies to actually to Davos to start to meet with business leaders. Nonetheless, it's actually just interesting to think about. He issued an encyclical on climate change and we'll see as the years go by whether the church and whether the Pope should have actually been weighing in on that. One of the criticisms of this Pope is that there were other things that were not totally dealt with from the sex scandals and he's working on and some of the issues in the open working on what I mean those are what a lot of people are still skeptical and an encyclical... liberal from Argentina I'm not going to say anything bad about him but I mean a lot of those issues those scandals have been inherited this next Pope whoever that is is going to deal with them too you know but there were just times where it was like this is your priority at this point when this is still you know he's a Jesuit. I mean I was Jesuit educated but I can tell you that you know I did come back to the church after being educated by the Jesuits. It took a while. But they almost got me to... they're so liberal. I mean it's they're crazy but it's okay. Tim Cook had gone to visit with him. Eric Schmidt had gone to visit with him. Steve Schwarzmann Jewish had gone to visit with him again people who are not necessarily all ESG even focused people. Brian Moynihan a Catholic but there have been a number of trips. Reid Hoffman had done a separate trip there were lots of different trips of people and I would say this was back in I would say the majority of those trips were back in 2018, 19 but this is all pre-pandemic so there was just a whole bunch of people who were going to visit with him to talk about what they were doing both around climate which was something that he cared a lot about and a lot of their DEI efforts actually very interestingly were something that they were talking about with him and other kinds of things it was not a... or there was different organizations who did but also some of them were going individually some were going as groups but it was more business leaders than had gone to visit Popes in the past this was... there I mean it was like a... there was like pilgrimages I mean but that's why I couldn't figure out like something that was very... knew why the outreach from the Vatican.
Well, I think there was two things going on. I think the Vatican was open to this clearly given this Pope's views of these things and it was very interesting to see that I think a lot of these leaders, business leaders thought that and they were moving in this direction. This idea of inclusive capitalism, Marxism, you can call it Marxism, other people can call it inclusive capitalism. Pope was truly from Argentina and he truly had a worldview that was antithetical to a lot of what capitalism stands for and I made my... you know I'm not going to... you know he just died. I'm not going to say anything but I was consistent all along with that to put out an encyclical on climate change. I just am not sure that a lot of Catholics decided that's what he should be worried about when they had so many other pressing issues that seemed to be on the back burner that are still on the back burner as a Catholic. Clearly, there were a lot of business leaders who were taking on the climate issue in a meaningful way and that was one of the things they are... they taking it how's that gone?
Well, right now, by the way, it sounds like it's not going very well because this president is making this president.
You don't think there's sort of a... this administration on climate, right?
But I think it's... I think it's this administration on... So, you think it's the administration on DEI and ESG as well, or is it just a societal back?
I think it's the administration. I think on DEI, I think there's sort of a wokeism that went too far and that's the same thing with I think a lot of the... I just think there's a push back on a lot. We're not getting to net zero anytime soon. Even in Europe, you see that with the elections that have happened, the Greens are on the run. It may not happen. I'm just saying I think that the efforts were genuine. Even Klaus is gone. All true. Your guy. All true.
And the latest on Harvard. Wall Street Journal's reporting that the Trump administration is planning to pull an additional billion dollars from Harvard University's funding for health research. This is after last week's developments when the White House froze more than $2 billion of grants to Harvard after the school rejected demands which would have audited the viewpoints of the student body and some other actions. And prior to that, the Journal's report says that the Trump administration was planning to treat Harvard more leniently than Columbia, which saw $400 million in federal funding frozen over what the White House sees as insufficient combating of anti-semitism on the campus. The report says Trump administration officials thought that the initial list of demands they sent Harvard a little more than a week ago was a confidential starting point for negotiations. Meanwhile, the New York Times has reported that the list was sent by mistake. I don't know if you read that piece, which was fascinating how the folks at Harvard actually got a call from the folks at the administration afterwards saying that the letter was a mistake, that it wasn't supposed to have been sent to them. They get it on a Friday. They think to themselves, well, this looks like an official letter and it has all these demands in it. We have to respond to this letter. And so of course they called their lawyers and all the things happened that we saw and then of course the response from Harvard and then they find out afterwards that at least the administration privately was telling them we weren't actually planning to send you that letter. That letter was going to be distributed internally or something first before we figured it all out before. And now of course there's a doubling down though that's going on by the administration not just to suggest it wasn't a mistake but we're going to take it farther.
Tease will be next. Next on Squawk Pod, Fed Chair Jay Powell versus President Donald Trump. Who will succeed the head of the central bank with vice chairman of Evercore ISI Krishna Guha? If it looks like that person is coming in without weakness, without independence at the beck and call of the president, then you would set up the next Fed chair for failure. And I hope that on sober reflection, the administration will understand a debate about Fed independence right after this.
Welcome back to SquawkPod. This next conversation is all about the Fed. Fed Chair Jerome Powell spoke at the Economic Club of Chicago last week and he weighed in on the economic impact of tariffs. The level of tariff increases announced so far is significantly larger than anticipated and the same is likely to be true of the economic effects which will include higher inflation and slower growth. Both survey and market-based measures of near-term inflation expectations have moved up significantly with survey participants pointing to tariffs. After years of chatter from Donald Trump about firing the central bank head, Powell commented on the independence of the Fed as well. Never going to be influenced by any political pressure. People can say whatever they want. That's fine. That's not a problem. But we will do what we do strictly without consideration of political or any other extraneous factors. Within a day, President Trump posted on his own social media platform. Quote, 'Powell's termination cannot come fast enough.' End quote. He then commented to reporters in the Oval Office that he hasn't ever been fond of Chair Powell. He's too late. Always too late, little too slow, and I'm not happy with him. I let him know it and oh, if I want him out, he'll be out of there real fast, believe me. Now, the entire exchange has renewed a debate about whether President Trump can dismiss the head of the Federal Reserve, the impacts, if he did pursue doing so, and what kind of successor the economy can expect when Powell's term ends in May 2026. Let's get back to Andrew, Joe, and Becky.
I want to bring in Krishna Guha. He is the Evercore ISI vice chairman. And maybe you can speak to the question. Do you imagine that the president could fire this head of the Fed? Is that even conceivable to you?
So, I think even at this moment, it's probably not likely. But it is clearly in the conceivable set. It's something that we have to take seriously, you know, as a risk and I think a serious risk to markets.
And if he does that, what is the risk to markets? But then secondarily, what do you think of this sort of shadow idea? You know, it's something that Scott Bessent had raised before President Trump was elected. This idea that you could nominate effectively somebody who was in this case I imagine you'd have to find somebody who's famously dovish and announce their nomination months ahead of time in which case that somehow the market sees through whatever this Fed chair is doing with the expectation that the next Fed chair is going to be significantly different.
So let me take those in order if I may. So, first of all, I think we're already seeing like right here and now in the equity futures, in the dollar, in the bond yields, we're seeing a clear signal from the market that it doesn't like even the idea that the president might try to remove the Fed chair. You know, there has been some loss of confidence in US economic policymaking in recent weeks. We've seen that in this very odd combination of upward pressure at times on longer-term bond yields combined with a weaker dollar that suggests global investors pulling capital out of the US. But what you've seen is ongoing confidence in the Fed. You've seen ongoing confidence in the Fed and that is crucial. You've seen those inflation expectations well behaved, well anchored, and that's what will eventually allow the Fed to be able to cut rates when we get to the point that unemployment has increased materially. But if you start to raise questions about Federal Reserve independence, you are raising the bar for the Federal Reserve to cut. If you actually did try to remove the Federal Reserve chairman, I think you would see a severe reaction in markets with yields higher, dollars lower, and equity selling off. I can't believe that that's what the administration is trying to achieve. Now, with respect to the question of what are we doing in terms of shadow Fed chair? I think it's not a great idea to have someone out there trying to second guess the Federal Reserve chairman. But it would be less dangerous if that person did not have a seat on the FOMC and there are no vacancies right now.
Right. Okay. So, let me ask you then a different question which is does and this is kind of an interesting meta maybe idea here. We all think that J. Powell is quote unquote independent today. But of course, whoever the next person is, you would hope is going to be independent, too. But it's possible that you would see that next person as a puppet of the administration. Maybe not independent. I don't know. Would the market have the same kind of reaction?
So I think it's really important that whoever takes over from J. Powell should take over in good circumstances in circumstances where that person looks that he as he continues to have the independence that all Fed chairs have had in the modern era. That's going to set the next Fed chair presumably someone who Trump wants to occupy that position. It's going to set that person up for success. But if it looks like that person is coming in without weakness, without independence at the beck and call of the president, then you would set up the next Fed chair for failure. And I hope that on sober reflection the administration will understand that look, by all means, it's the president's right to nominate the next Federal Reserve chair in regular order. They should think about how trying to set that person up for success. So it also rebounds to the success of the administration as well.
Krishna, I worry about trying to, you know, anticipate the future for the Fed because they notoriously have not really been good at doing that. Maybe it's just the nature of the beast that it's almost impossible. You're always looking at the rearview mirror in backwards data. If he were to be wrong again and you know if this inflation isn't really the problem right now because of the tariffs and we really are going into a slowdown for a lot of reasons trade wars everything else and if we're late and we should be cutting now and everybody again says uh-oh looks like Trump was right and J. Powell didn't lower rates it would be bad to go out on a mistake so that's what I mean I don't know if he'd be set up for success. It'd be almost like it should have gotten rid of him earlier if it and all these guys are just they can only be right for so long. I think a lot of times they should get out when it looks when the getting's good.
So look, I think it's always the case that the Federal Reserve is only making the best judgments they can under extreme uncertainty and it's going to make some mistakes. I think those mistakes are of course still more likely when you're being hit by very difficult shocks and a big trade war is a big man-made shock. It pushes inflation up. It pushes growth down. So is it possible the Fed could make a mistake in this environment? Yes, it absolutely is. And the question that you have to ask yourself, the question I think markets have a lot of conviction on is would you rather have an independent group of people, an independent group of experts trying to make those calls as best they can, or do you think those decisions would be better made under political pressure? That's the issue.
You know, we've batted around a whole bunch of names over the years of potential Fed chairs. And one of the questions we were just discussing earlier is is there somebody out there right now that you think is quote unquote famously dovish? Meaning to the extent that you would want to nominate somebody who the market would see this way, who is that person?
The old... So I'm not actually sure you'd want to nominate someone who is famously dovish. Who would actually want to nominate somebody who has very strong hawkish credentials and so the market would trust them including to the point where they decided that it was appropriate to get cutting on interest rates. If you nominate someone who has a very dovish reputation then the bond market would riot. So that's why I think there's interest for instance in looking at former Fed Governor Warsh who does have a reputation as being hawkish. Again I think that the manner of the appointment would be crucial regular order.
Because he's known as they will come back around. That's a different question. Christian is trying to do the Jedi mind trick though. Not who Trump... not who should be nominated who Trump wants nominated.
No but actually what he's saying is saying would have the credibility because he looks... but he's saying in fact he would be the bond market.
Yeah because the bond market would think he... but you think Trump is playing three-dimensional chess where he's thinking about how the bond market's going to... that Trump told you that. Don't tell you. Don't say I've told you that. I don't know any more than you what's whether there's a method to the madness at this point.
So, you think that President Trump would think, 'Wow, Warsh should be good for the bond market. I'll nominate him.'
