Federal Judge Blocks Subpoena In Fed Reserve Probe… And Counting Down to Nvidia’s GTC 3/13/26

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1:28And can it get itself back on track? Plus, a Boeing bounce to end the week. A year-long boycott of Target comes to an end. And Lulu logs its longest losing streak ever. Will earnings next week turn things around? We'll head to the options pits to find out. I'm Melissa Lee. Come to you live from Studio B at the NASDAQ. On the desk tonight, Tim Seymour, Bono and I, from Steve Brasso, and Mike Coe. We'll get to all those stock stories in just a bit, but we do start off with the latest development in President Trump's battle with Fed Chair Jerome Powell. Janine Pirro, the U.S. Attorney General for D.C., saying the DOJ will appeal a federal judge's decision to block the subpoena in the criminal probe of Powell.

2:05Steve Leisman joins us with all the details and the implications, of course, for putting Kevin Warsh in as Fed chair. Steve. Yeah, there's a couple components to this, Melissa. First, I want to read to you the one part of the judge's decision, which was very, very damning about Jeanine Pirro and the reason for bringing this. Well, I think we have a screen there that we can put up and show you what he said. Did prosecutors issue those subpoenas for a proper purpose? The court finds they did not. There's abundant evidence that the subpoena's dominant, if not sole purpose, is to harass and pressure Powell either to yield to the president or to resign.

2:41It goes on to further see this as a pattern of harassment or legal harassment. And this is a separate issue here. Joe Buswell, to your question, Melissa, just wrote a commentary saying, any prospective appointment may not occur until, I'm sorry, let's just say 2027, if at all, based on what key decision makers in the political authority are signaling. I think that might be extreme, but I think your suggestion there, Melissa, that this could further delay, and the reason the hearings of Warsh, and the reason is because there's two separate legal actions that it looks like Jeanine Perrault is taking.

3:18One is to send it back to the judge to reconsider, and the other is a potential appeal. So Senator Tillis later issued a statement saying unless this whole thing goes away, he would not move to advance Kevin Walsh's nomination to be Fed chair. I mean, it seems like the whole thing you and I both listened to Jeanine Pirro at that press conference. It seems like the only way this thing is going to go away is if President Trump or somebody else taps her on the shoulder and says, Jeanine, you're not going to pursue this anymore. So short of that, we could actually be looking at Powell in the chair for much longer, which makes next week's press conference a little bit more impactful and worth listening to because he might be the guy later on in the year who will decide if it's time to cut.

4:01I think that's an important point. We thought it was going to be the penultimate meeting where Powell was going to be the chair. And now it's the unknown ultimate meeting in terms of when he would be. He could stay on. And by the way, there is one comment that we cannot verify is accurate, but it is in the court document. And this is where the government is arguing against the Fed's request to quash the subpoena. And apparently there was some kind of hearing. And it said the chair feels like this is the government's recounting. Feels like he would not leave the board when his term as chair expires if he was still under investigation.

4:37You know, we've been trying to pursue that question as to whether or not Fed Chair Powell would stay on the board even after his Fed chair term were to end because, you know, he has a couple of years left in his governor's term. So that's another issue that not only are we now trying to figure out who will be the Fed chair, but we really have no idea what the composition of at least the Federal Reserve Board will be as well because we don't know if Powell will stay. Will others on the Fed board stay? So there's a lot up in the air. But maybe what we should do real quickly, I don't know if we have this stuff available, Melissa, is look at where the market is pricing.

5:13Wow, you read my mind. It's very interesting. We've been doing this for such a long time now. Here's the deal. The market is pricing out rate cuts at least until December. And even in December, they're not quite so confident. I don't know how you read 63 percent, but that's up a little bit today based on the data we got this morning. But that's a probability of one cut. And that's in December. and 22 % probably of two cuts by December. And this, as you know, we had at 1.3 cuts built in and certainly two. But what's interesting about that, and I've said this a bunch of times, is that the market sees potentially Kevin Warsh coming in and not cutting right away, not cutting in the next meeting, not cutting potentially or more definitively till December because of what's happening, obviously, with oil prices.

6:00Yeah. Steve, thank you. Pleasure. Steve Leisman. Thank you. So it is ironic that all of this to remove Powell when in the end he might actually end up staying much longer as Fed chair. Putting that aside, though, Tim, how do you sort of think about this? Yeah, not ironic, but apropos that those pictures that we saw in the lead in some of that B-roll were both Powell and Trump in hard hats because, you know, everybody's there could be more battling going on here. But both sides are very dug in. And the district judge that issued this kind of, let's call it scathing, you know, he's definitely very opinionated in terms of what the intent was.

6:40There's also an Obama appointee. So there's the sides that are drawn up on both sides here. And it's pretty clear, though, that Fed Powell is not necessarily he could chair the FOMC. We I was listening to your interview in the closing bell. That was fascinating. Some of the politics here are not even politics. There's semantics on logistics. And this is coming at a time when inflation is feeding through. This is coming at a time when we have where the market has moved ahead of what the Fed will do. So next week is a week. Really, it's all about Fed meetings. It's the ECB. It's the BOJ. It's the Bank of Canada in a world that suddenly has changed almost overnight.

7:20Because, again, CPI was, you know, if that's what you listen to, that was a great number. Yeah, I think if you go down the litany of everything that Tim just said, if that would have happened a month ago, I think it would be worth exponentially more important to the market. I think Iran has taken center stage. Oil has taken center stage. I don't want to say Powell is in the backseat. I don't think the market's paying the same amount of attention because there's so much noise around oil prices, CPI, PCE, delayed PCE, core PCE. that you can interpret it whichever way that you want right now. If you're a dove or a hawk, you can see it two different ways.

8:01Right. But to that point, to that very point, that there's so many uncertainties in terms of how it all impacts the inflation picture and the impact on the economy, maybe it's better for the markets in terms of gaining some comfort in terms of how the Fed is going to deal with this if the same guy is in charge as opposed to switching over to Kevin Warsh sometime in the middle of the year, May 15th or so. Yeah, I think I agree with that on a service. I think my prime takeaway from this, the judge's ruling, was that I think it essentially bolsters Fed independence. For me, that's the primary concern, whether or not there's someone at the helm that is essentially going to feel compelled or allow himself to be pushed to either cut or pause or raise rates on a whim.

8:46All of the uncertainty that Steve mentioned, oil, I agree, center stage. But all of that, to me, makes the mix of what we're going to do next that much more complicated and that much more important that we get it right and that it's based on factual data as opposed to impulse. With that said, you know, you kind of look at the rate picture. You look at GDP. I mean, Tim mentioned some of the CPI readings. That GDP revision, I think, is a bit concerning. That stacked up against what we've seen continue ticking up in unemployment, some of the Jolson numbers. I think you have a very muddled picture.

9:19I think if you go and look at three readings back from any, like, three or five rolling period, you're given a drastically different picture. And so, for me, my primary takeaway is that the judge's ruling today said that we're going to continue to have Fed independence, at least in the interim. We have confidence that that is going to be the case. Not that it was ever necessarily not going to be, but I think it's front and center. And we can have faith that the Fed is going to take those things into consideration and be leaning towards the right decision rather than us essentially just having a poster child for what the administration wants.

9:51But plus one thing before we go to my sorry. The other thing is, what does the market look like and what does Iran look like and what does oil look like? It's in March right now. So this things change in 10 minutes in this marketplace. They change in two minutes. So we're paid to act and trade off of the market that we have in front of us. But all of this could be sort of rear window or side window come back. Mike, what are your thoughts? I think if you're interested in what's going to happen with rates rather than focusing on political posturing, which I think has a lot to do with basically what the DOJ is doing here.

10:31Warsh is a very strong candidate. I think Powell is a very strong Fed chairman. And I think if you just keep your eye on the two-year, you're going to have a pretty good sense of where rates are going to go. And probably just allow the rest of this to play out on its own. I don't think we should be focusing our time and attention on it. And the fact is that there's a good reason why we're not focusing as much time and attention on it. Because the events in the Middle East and what's going on with oil prices are, I mean, we're talking about a half a percent to one percent of total global GDP. Is it impacted by what's going on over there?

11:03I think that obviously has to be considered a bigger priority. Yeah, it doesn't matter. We haven't talked about Warsh or Powell or what would they do at all. We've only been talking about the two-year yield moving higher, 10-year yield moving higher. But the thing about today's ruling that is important for interest rates, if you really believe that Fed independence and the legitimacy of the institution is very good for interest rates, as in lower rates, right? I mean, we were starting. I don't know if the world was reacting back in in April of last year to to what or at different times to the perceived independence or maybe future lack thereof.

11:39But I think that's very important. I hear you, Steve, on like, yeah, we're kind of trading the market we have here. I will say whether it's looking at the oil futures curve where we have less backwardation, the future is pricing in higher oil prices by the day. In fact, it's already shot through the Sunday night spike. If you look out six months or into 27, those rates, those changes are actually equal. We've actually gone higher than the spike of where we were again, farther out pricing and longer term Pentagon moving more warships to the Middle East as we speak. This is becoming more entrenched.

12:13And that's because and I think the views that we all have, I think strategists who are talking about 15 to 22 percent EPS growth in 26th are going to have to make adjustments. I think a lot of people are going to have to make adjustments. And that's why I think the Fed is very important in that if we remove an easy Fed, and we talked about this yesterday, if just the bias goes to neutral, that's a big change for the stock market, which was expecting at least an easier Fed. That backwardation flattening, there could be – so, you know, the administration has talked about selling today's futures.

12:46If you sell today's futures, you have to hedge and buy the back end. So it flattens backwardation. So it hasn't done anything this week. But last week, you saw the price come down precipitously. If they're selling front month, they have to hedge their positions. Again, even the government, Treasury is never going to sell front month. We don't know if they're doing it, not doing it, or if someone else is doing it for them or if other countries are doing it. But the bottom line is that's natural to see backwardation flattening, because if you're selling front months, you think the price is too high.

13:18You have to hedge off your position and buy back months. And that normalizes the curve. So you're just you're discounting it completely. I'm not discounting completely. What I'm saying is somebody at this price in oil, you've got to believe that oil is going to stay up at this level for a quite significant amount of time to really buy into these prices. And when you see oil pop to that 120, those old highs that we had in 2022 and then fall aggressively, someone's telling you that they don't think it's going to be that long of an event. I don't know if we see it falling aggressively. I mean, last week when we traded overnight on a Sunday night when we traded the 126.

13:55I just, you know, my view is and I'm just telling you, my view has changed markedly in 10 days. And, you know, maybe I was quick to think that this wasn't as big of an engagement. But it's in some sense, policy wise, we're going to have this conversation and I'll wait for Mr. Zervos to come in. And David's got some views on this. And he's always pretty calm, cool and collected. So, you know, back in April of last year, we were wondering what pushed the White House. What you know, what were those pressure points to actually get them to focus on the market? And I think at least in 10 days, there's a lot more on the table for market participants to look at me being one of them and just say I am changing some views.

14:37For more on the Fed and the markets, let's bring in CNBC contributor David Zervos, the chief market strategist at Jeffries. David, great to have you with us, particularly during this period of time, because in the past you've always been, after Liberation Day, you were a comical collector and said it would be time to buy. Do you feel the same way, or are things sort of different, the unknown sort of greater, the fact that the Strait of Hormuz is actually closed, and the new Supreme Leader says not a liter of oil shall pass through that strait? Are the challenges greater this time around for the markets?

15:08Well, I think, Melissa, for me, it's a little bit harder for me because I feel better equipped on the trade side to discuss things than on the geopolitical side. I think it tends to be that financial markets folks like myself, like yourselves, we're just not that great at geopolitics. And the sad part is the people who are good at geopolitics tend not to be that good at markets. So there's not a lot of help to really to kind of calm the panic down. That said, what is calming to me is that the market itself is relatively calm. We're down 3 % for the year on the S &P, which is hardly a blip. The two-year note, which you guys were talking about extensively earlier, is really only up about 25 basis points.

15:50And so we've taken kind of one cut out of the system as we wait and watch, or at least the distribution has changed by about a cut. Again, not that much in the grand scheme of things with$100 oil after touching$120 oil and plenty of people out there scaring us into thinking that we could have$150 oil before all this is said and done, which is certainly in the realm of possibility. And we'd have to think about how that negative supply shock feeds through both to the economic growth outlook, as well as the inflation expectations and inflation outlook. The good news is long-term inflation expectations really do not look like they are budging through the TIPS market or survey data or any other, or even the curve itself, the yield curve.

16:35So I'm kind of holding on to cautious optimism, but also recognizing that we in the markets just generally aren't as good at the geopolitical stuff as we are at the economic stuff. So you interpret the moves that we've seen so far in the major indices as being resilient as opposed to complacent. Because there's a camp that we're being complacent. We're not really pricing in the full risk. We're not placing in the flow through the impact of higher input costs, not just energy, but helium and urea and, you know, you name it moving higher. Yeah. Asphalt, all of it. You know, I think you could make that argument.

17:16I guess the good news for me is that, you know, back in April we were nursing, you know, 12 percent down moves in the S &P. We had a very, very sharp rise in 10 year yields at the same time. The dollar barely strengthened and then started to weaken. It was a really complicated time and much bigger moves in the broader macroeconomic aggregates or financial market aggregates that we look at. So you could take it either way. You could take it as the markets being complacent. That's one view. Or you could take it as it's a sign of resilience that people look at this and are sort of kind of discounting what happens six to 12 months from now and saying, hey, I'm probably a little bit more worried about what this does to growth and employment and a little less worried about how it stops the Fed or causes inflation expectations or the anchoring of inflation expectations to come under pressure.

18:14David, Tim, so you're sounding cool. You're looking cool tonight, by the way. You've got a cool outfit on. And I always watch you around when my blood pressure is high because I think you bring that element. What raises your blood pressure then? And as the market strategist, I guess I feel that strategists at some point could be starting to make adjustments to that EPS outlook based upon some of the headwinds we're seeing. Help us even understand even some of the mechanics on the hood. I don't need to hear where Jeffries is on this. I know you can't tell me some of those things, but help me understand what gets you uncool and how far away are we?

18:53You know, look, I think any time we have one of these negative supply shocks like a change in oil prices, a marked, significant, sustained change in oil prices, it's just generally bad news. Does that mean that it counters all of the good news out there? No. And so I'm I'm still looking at the incredible stories that have driven the stock market up until this point over the last year or two or more coming out of covid, mainly productivity. And that's just productivity coming from our technology discussions and AI and everything else, but also from deregulation and the tax changes in the one big, beautiful bill and the like.

19:33There's a lot of things that this oil shock would have to negate and then push back on for me to get really, really nervous. And here at 90 to 100 dollars a barrel, I'm annoyed, but I'm not worried. If we sustain this, and you guys made up a great point, which is these back month oil contracts, which didn't participate in the Sunday night rally last week, have actually done very well and are showing that we're going to be in a more sustained period. That causes me some concern. I don't like to see that. I think that is a drag on the global economy. It's a drag on it's a drag on employment. It's a drag on growth.

20:13And I think that's going to be a problem for us. I don't see the worries on the inflation side maybe as much as some others do, like a de-anchoring of inflation expectations like we had in the 70s or even a little bit during the late 80s and early 90s during the Gulf War. Most of the big oil shocks that we've seen in the last 25 years, and we've seen some big ones, bigger than this, really did not get people nervous about a long-term change in inflation expectations. That said, there were a lot of people that came on your show and other shows and said, oh, my God, we're going back to the 70s. It's Arthur Burns.

20:50It's the Fed making mistakes. It's all going to end in tears. We're going to have massive stagflation. I'm not a buyer. I don't think that's the story. I think you're supposed to push back on that story. But could we have a period where that inflation spike lasts a little while and it keeps the Fed on hold a little longer? Yeah. And that's going to hurt. And you're right. That's going to hurt EPS. David, great to see you. Thank you. Always a pleasure. David Zervos. Mike Coe, are you starting to get worried? Well, I mean, I've been a little anxious. I think we probably all have ever since February 28th.

21:25It would be unreasonable not to be. And of course, what is going on in crude is particularly troubling. I mean, it's not that easy to fix that situation, although the futures curve is going to reflect a couple of things. Number one, it's going to end up looking through, to a certain extent, what's going on in the Middle East. It's always going to look through to improvements in productivity coming out of things like the Orinoco Basin, which we now might expect is going to actually take place. There's a lot of incremental production that could come online from that portion of the world, but it's going to take us some time to get there.

21:56And kind of to Steve's earlier point, just taking a look at the futures curve, you know, it's kind of interesting if you think about it this way. if those that manage the SPR are looking at this the way an oil trader would and said, OK, we've got 400 million plus barrels in the SPR and we're below where we should be, call it six or 700 million. If you start selling on the front, you can buy maybe 40 percent more in the back to refill it. So from a strategic point of view, it might be a decent course of action if that's the way they approach it, that they're going to say we're in the long run, we're going to refill this thing and get back above where we are now.

22:31but we're going to try to stabilize oil prices in the short term. Coming up, Boeing taking flight as the planemaker looks to fix an issue that's delaying 737 max delivery. It's a new timeline for production next. Plus, Meta plunging on reports it's delaying its latest flagship AI model. How other hyperscalers could pounce on the opportunity. Don't go out anywhere. Fast Money is back right after this. This is Fast Money with Melissa Lee right here on CNBC.

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24:03it's smart to always have a few financial goals and a really smart one you can set earning cash back on what you buy every day and with Discover you can get this Discover automatically matches all the cash back you've earned at the end of your first year seriously all of it and we trust you to make smart decisions after all you listen to this show See terms at discover.com slash credit card. Welcome back to Fast Money. Boeing breaking a four-day losing streak up 2.5 % after Bloomberg reported the aircraft maker is fixing faulty wiring in its 737 MAX jets. The damage reported earlier this week could potentially impact March deliveries.

24:43The stock is still down over 9 % since Monday. When that story crossed, you thought, another issue? Boeing, really? Is that what you thought? I did think that. And I think I feel like I flagged this one on Wednesday or Tuesday. And but guess what? I actually am not that worried about this wiring issue. I'm not that worried about these delays. I think their their approach. I'm not going to tell you that there couldn't be something more substantial than this. The biggest issue with Boeing is once you look at the chart of Airbus, look at the chart of Embraer. Once you look at the chart of every airline in the world.