A Fed Cut, Sen. Elizabeth Warren, & Steve Eisman 12/11/25

0:00Bring in show music please. Hi, I'm CNBC producer Katie Kramer. Today on Squawk Pod. The Fed moves. It's the day after the central bank made its third quarter point rate cut this year with a strong dose of caution about the economy. We don't know. They're waiting to see what happens both with the labor market and with inflation. Senator Elizabeth Warren on the Fed's future under new leadership, still TBD. The president is looking for someone who will do his bidding. And with political implications in the new year. Are Republicans really willing to stand up for the principles they say they believe in, like an independent Fed?

0:41Are they just going to say whatever Donald Trump wants is what they'll go along with? Famed investor Steve Eisman, remember the big short? He's on alert over one AI idea that could impact the chip business. I'm not selling anything, but this argument makes me nervous. and I pay attention to it every day. And Eisman's personal PSA after a serious diagnosis. Yes, it's rare for men, but it's not unheard of. And if you see something on your breasts and you're a man, just check it out. All that today. Plus, will lower rates impact your credit spending? Personal finance correspondent Sharon Epperson on the consumer impact.

1:20Some people may be expecting to see an automatic decrease in their borrowing costs, and that's not going to happen. It's Thursday, December 11th, 2025. The day after the Fed cutting interest rates. Squawk Pod begins right now. Stand Becky by in three, two, one. Cue, please. Good morning, everybody. Welcome to Squawk Box 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. And it is the day after the Fed decision. and turns out what the Fed gives, Oracle will take away. In support of our goals, in light of the balance of risks to employment and inflation, today the Federal Open Market Committee decided to lower our policy interest rate by a quarter percentage point.

2:10During the session yesterday, stocks took off right after that decision came out. Saw the Dow up by about 500 points, gains across the board again with all of these. And the Russell 2000 set yet another all-time high. We'll keep an eye on that today, but year-to-date, it's up by 14 percent just this week. It's had a pretty spectacular week. It's been up sharply. Yesterday, it was up by 1.4 percent. If you take a look at Treasury yields post-Oracle and post-the Fed, probably more importantly, the 10-year yield has come down. It's at 414. The two-year is at 354, although there are all kinds of questions about what comes next for the Fed.

2:46The Federal Reserve cutting interest rates by a quarter percentage point for the third meeting in a row to a range now of 3.5 to 3.75 percent, but the Fed's signaling a tougher road ahead for further cuts, so I'm not sure we're going to expect that. The so-called dot plot of rate expectations indicating only one cut next year and one more in 27. That was unchanged from September, but the plot also reflected divisions among Fed members, some of whom indicated they didn't agree with yesterday's decision, and seven of whom don't want any cuts at all next year. The vote to cut also included three dissents for the first time in years.

3:22So we've got a lot of battling going on, it appears. Two of those votes came from regional Fed presidents who didn't want to cut. And one came from a Fed governor, Stephen Myron, who wanted deeper reductions. Here's Fed Chair Jay Powell at that post-meeting press conference. We've now cut a total of 175 basis points. And as I mentioned, you know, we feel like where we're positioned now puts we're well positioned to wait and see how the economy evolves from here. Now, following that decision yesterday, President Trump was saying officials should have cut rates by at least 50 basis points instead of the 25.

4:02He did a rather, I would say, a rather small number that could have been doubled, at least doubled. And that's the other thing. I think the rates for the United States are always the lowest in the world, because without us, there is no world. The question that I have, which I don't know enough about, is let's say Kevin Hassett or Kevin Warsh, or you name your person, becomes the next Fed chair. Someone not named Kevin. Someone not named Jay. Right. How does that dot plot actually change? Does it really matter? My question is, why did the market go up yesterday? You got a good explanation for that?

4:39No, I did not have a good explanation for that. And I think the bigger issue is going to be, and Powell kind of laid this out, we don't know. They're waiting to see what happens both with the labor market and with inflation. He did not sound as hawkish as I thought. Right, but what he said was horrible. He said, we're in such a tough spot, we don't know which is worse. Inflation, a weakening labor market, or both. And so it was very strange that maybe, I was thinking maybe it went up because we do have, not group think. It's not rubber stamps. Not only did you have three dissents, but two of them were one way and the other one was the other way.

5:15So at least there's some debate going on. His discussion, I mean, his talking points were far less hawkish than I had anticipated. They would be, and maybe that's why. Maybe that's why. But there's a lot of people, including the journal today, that are saying, what are you doing? You're forecasting better growth, the Fed itself. Why are you still cutting? So there's a lot of people, and we get our emails and everything else, like what, and Rick Santelli yesterday, there's a lot of people that worry about the dollar and hard money and not devaluing currency and printing too much. A lot of people that worry about that.

5:52Maybe when you hear that it's just one, maybe that's good that it might be just one. Some people take it positively. The dollar was at its lowest level yesterday since October 28th, since before Halloween. They're on it. They're on the case, the inflation case, which they maybe weren't on so much a couple of years ago. But they're on it. OK? I guess you've got to, why'd it go up? It wasn't that much. I thought it was likely for inflation to come back closer to 2 % once we get through some of the tariff. You would think. Even though I don't think the tariff's a problem. I think housing and wages.

6:25Wages are rising, which is good, but wages are rising much quicker than they were before. Well, maybe it's just that there's so much of a fight going on, and you say to yourself, okay, if Jay Powell is not one of the voting members and can wrangle these people, maybe get a better answer later. Although Myron had said that if he was the deciding vote, he would vote for a quarter paint. We paint him as a dissenter because he wants more cuts. No, but in terms of just more cuts coming in 27, you may say to yourself, okay, look at where they say they are. 26. 26. We're getting ahead of ourselves. Do not do that.

6:58Do not do that. But so you got to live every day. I'm definitely living every year. Okay. Oracle shares are a problem. They're not living every day right now. It closed at 223 yesterday, and the bid is 197. We did the math for you there on that chart. That's 11%. The company beat earnings estimates, but missed on revenue and cloud infrastructure sales metrics. I was just thinking. I started smiling. Our next story, maybe we ought to put a Paramount story in there next. You know, it's like, whoa, hold on, because do the math. Do the math on what. That's the first thing I thought when the stuff fell yesterday.

7:40But by the way, this. Are they going to have the stomach to get up to 35? But this goes to the point of why the board of Time Warner, of Warner Brothers Discovery. Wants to see. Has favored the Netflix deal in part, because they're saying to themselves, it's a they think Netflix is a 400 billion dollar company that's effectively going to be able to buy it no matter what happens right they don't there's there's a conversation paramount is tiny inside of the time warner world or warner brothers world that's saying we don't really know all of these different pockets of money one of the pockets is is the Ellison family and that pocket's relying on oracle and we think i mean some of them actually think that there's a bubble going on in the market, and therefore maybe Oracle's prices.

8:26Even though it's not shares of Oracle, it's just the father of the guy who's doing things. But he does imply, like with David Faber the other day, just leave it there. I'm going to read it. Just leave it there. But he does imply that if you needed money, it's not going to be a problem. He doesn't just imply it. He said it. He said that the Oracle, you know, The Ellison family and their firm are going to be backing this up, not Oracle. The market cap loss today could almost buy. Guy Dance. No, it could almost buy what they want. Oh, the market cap. The market cap loss in Oracle today is about$70 billion.

9:09And look, not that we're billionaires, but you feel it when net worth goes down. You think twice about making future purchases. It's just human nature. And he doesn't own all of it, obviously. So it's not just that's the market capital of the company, which also projected third quarter revenue growth and profit below expectations and said that capital expenditures for next year would be billions of dollars higher than it forecast back in September. where the company's futures contracts jumped 15 % from then to more than a half a trillion dollars. But investors are showing concern about the risk Oracle is taking to build AI data centers.

9:50On a conference call with analysts, Oracle CEO floated the possibility of customers bringing their own chips into the company's facilities. Or maybe going up on a SpaceX rocket to put the chips into the data centers that are up circling the Earth. That's the next part of this. That's what's happening next. Oracle shares were down 23 % in November. That's their worst monthly performance since 2001. As of Wednesday's close, the stock is 32 % below the record that it reached in September. But for the year, it's still up by 34%. And you're looking at that three-year up by about 155%. I'm doing the wrong.

10:31Yeah, the market. Okay, yeah. Prices, yeah. Market cap at the close was$635 billion. So it's down roughly 12 % or 11 % today. So that is about$70 billion, is it not? It is. It's market cap. We marvel at the way up. You marvel at the way down. But it is still up for the year pretty significantly, too. In the meantime, President Trump says that the United States has seized an oil tanker off of the coast of Venezuela as the White House tries to ratchet up pressure on the Venezuelan government, its president, and the international drug trade. Attorney General Pam Bondi posting a video to X showing that raid.

11:13She said that the tanker has been used to transport oil from Venezuela and Iran and has been sanctioned by the United States for years. When asked what would happen to the oil aboard the ship, President Trump said he thought the United States would keep it. In a statement, Venezuela's government said that the seizure constituted blatant theft and was an act of international piracy. And by the way, we should take a look at crude oil prices because it did have an impact yesterday on those prices. This morning, though, prices are off by about 1.4 percent. So a bounce last night, but WTI this morning at 57.63.

11:49Check out the shares of Cisco, which closed at 80 and a quarter yesterday. Topping their previous high of 80 reached on March 27th, 2000 at the height of the dot-com era. That was the same day Cisco passed Microsoft to become the most valuable publicly traded company in the world. I remember it. It was like 600. Let's see what it is. We are just over a quarter century later and they're back. And they're back. And we pointed it out many times. And you know what other companies at 600 billion? General Electric, which is also on its way back. Theoretically, given what we saw on the planet. Cheese will be next.

12:36Coming up next, Steve Eisman, the famed big short investor in the financial crisis of 2008. He weighs in on monetary policy in 2025. The only time the Fed really matters is when it's being very aggressive at cutting rates or very aggressive at raising rates. If it's just tinkering around the edges, which is what it's clearly doing, it's irrelevant. Plus, the artificial intelligence thesis that has him at the edge of his investing seat and the diagnosis that's ushered in a new chapter in his life. It's given me a window into a world. This is one of those clubs that you would rather not be a member of.

13:14A wide-ranging conversation with Steve Eisman right after this break.

13:23Welcome back. This is Squawk Pod from CNBC. Joe Kernan. Yes, sir. Television. I know. I got it. I'm preparing for something after. Sharon, what you're going to love. I'm excited. There's a divergence when it comes to consumers' credit, and it's likely to continue in the next year. The K-shaped economy, which we talk about all the time, having a direct impact on how and when consumers repay loans and make credit card payments. Sharon Epperson joins us now with more from her exclusive interview with the CEO of one of the nation's largest credit scoring companies. I don't like those people. Anyway, Courtney.

14:02Credit scores measure a consumer's credit worthiness, and they predict the likelihood that we pay borrowed money. At Vantage Score, the average credit score is now 701 on a scale of 300 to 850, which is pretty healthy, says Vantage Score CEO Silvio Tavares. And yet it does not reveal the full picture of consumers' credit health. For high-income and middle-income consumers, their late payments, they've actually dropped three of the last four months. But when you look at the lower-income consumers for that same period, their delinquencies have increased. And so that's a cause for concern. More than 220 million consumers have a Vantage score.

14:45It's based on data from the three major credit bureaus, Equifax, Experian and TransUnion. Now, despite some economic uncertainty, a new report from TransUnion predicts overall delinquencies will stabilize next year for credit cards, auto loans and personal loans, while mortgage delinquencies will be slightly higher due to a modest rise in unemployment. Tavares says job security could continue to impact the divergence in credit health of higher and lower income consumers in the year ahead. As we look at 2026, the employment picture is going to be a key driver of consumers' credit worthiness. There's been much said about factors that are potentially decreasing employment, like artificial intelligence.

15:28We don't actually see that in the numbers yet. And for the most part, the employment picture is very good. He's optimistic that as interest rates come down, more people will be spending, creating more jobs and helping to improve overall consumer credit health. Joe. All right. What impact will yesterday's news have on consumers' credit? I don't mean yesterday's newspaper, but the Fed cut. Well, people are expecting, some people may be expecting to see an automatic decrease in their borrowing costs. And that's not going to happen. But we are expecting to see, as we have lower interest rates, that consumers will be able to pay more of their bills on time and that overall delinquencies will decline.

16:11Again, there's likely to be this divergence, this dichotomy between higher income consumers and lower income consumers in terms of how their ability to pay. But the key there is going to be whether interest rates continue to come down, particularly on some of those variable rate loans, but also on things like mortgages, which is the biggest part of the borrower's pie for the most part. Yeah, and that's been the frustrating part because the 10-year has not come down the same way the low end of the curve, the short end of the curve has. Exactly. And even from when we started to see rates come down last year and we've seen a slight decline in credit card rates, we've actually seen mortgage rates tick up a little bit.

16:47Yeah, I mean, 4.1 percent, no big deal. That historically is incredibly low. It's just we haven't seen the decline while the Fed has got 175 basis points. Exactly. Exactly. And I think that's very frustrating to consumers. But what Tavares points out and many people say that what's so important to focus on is really your credit score in terms of getting those lower rates. Don't expect that you're going to see the automatic change because of what the Fed has done. But you raise your credit score, you definitely are going to see those lower rates. And it happens. It's amazing how quickly it can happen and how much of a difference it can make in terms of what you're having to pay back.

17:24All right. Thank you, Shannon. Sure. We want to talk more about the markets and the AI trade with Steve Eisman. He is the host of The Real Eisman Playbook podcast. He's former senior portfolio manager at Neuberger Berman. He is, of course, very well known for making about a billion dollars for successful short bets that he made against the housing market before the great financial crisis. Oh, that's an overstatement. That's what it says in AI. Maybe that tells you about how good AI is. That is what it says at the AI overview. I know, but it's not right. How much is it? I won't say, but it ain't that even close.

17:58Half? Not saying. Okay. Good to know that AI is wrong, though. Hallucination. Yeah, welcome. A big hallucination. It's great to see you this morning. Thank you. I know that you've had some medical issues that you've dealt with. And I know you want to talk about that first. Why don't we just say where things stand. How are you doing? Thank you. Thank you. Appreciate being here. So in June, I was diagnosed with breast cancer, which breast cancer is not rare, but in a man, it's quite rare. It's less than 1 % of all cases. And I'm actually fortunate because the way he was diagnosed was I had an irritation on my left breast which, like any other man, I would completely ignore as a skin irritation.

18:44And I play squash with one of my best friends. I'm going to name him because you'll understand why. His name is Dr. Robert Gelfand. He's an oncologist. And we play squash every Wednesday. And in late June, we were playing and we were in the locker room afterwards after we'd showered and he looks at me and he said he says what's that and I go what's what and he literally walks over to me and starts giving me a breast exam in the locker room and after the breast exam he says I don't like what I'm seeing here I'm sending you for a mammogram like now I had a mammogram the next day and I was diagnosed with with with breast cancer and that was a huge shock And, you know, since then I've had a double mastectomy and I've been on chemotherapy since August and the chemo will end at the end of this year on December 29th.

19:38Then I'll go through radiation. You know, it's given me a window into a world, you know, this is one of those clubs that you would rather not be a member of, but, you know, women face this all the time. The reason why I'm mentioning this is that, you know, yes, it's rare for men, but it's not unheard of. And if, you know, if you see something on your breast and you're a man, you know, just check it out. After the mammogram, the doctor said to me, your friend saved your life. How are you feeling and what's your prognosis? So, you know, the chemo is, as anyone who's been through chemotherapy would tell you, it's a hell of a lot better today than it used to be.

20:20I'm on, the way it's done, there are two drugs. So for first they give you a drug called Taxol, which is for 12 straight weeks. And then afterwards, they put you on the more traditional, it's called AC. There are two drugs. It's the older chemotherapy, which is the harder chemotherapy. But, you know, it's the one where you would see in the movies people throwing their guts up. But today, because of the incredible advances that are made, number one, you don't have to use it as much. And they have all these drugs that make it much more tolerable. So the worst symptoms that I have is, you know, every now and then I have a little bit of nausea, which I take something for and it's not, so it's very tolerable.

21:05And I'm tired. You know, I guarantee you at 3 o 'clock this afternoon, I'll be napping. But other than, you know, being tired and not having as much energy as I normally would have, it's pretty tolerable. It's much, you know, the advances that have been made, thank God that I'm a beneficiary of, are extraordinary. And your prognosis is good. The prognosis for, I'm on a regimen, as I said to you before, which is basically for a post-menopausal woman. It's a long regimen. I'll have radiation in January. And when it's over, you know, the cure rate is like close to 100%. That's fantastic. Steve, first of all, we hope you're feeling better.

21:45We can't wait until you get through this. And second of all, thank you for bringing this to people's attention. I think it's an important public service. My privilege to do so. Have you talked to a lot of other men who've gone through this? You know, it's very funny you say that. In my community, every time someone says, hey, you know, Steve has breast cancer, And literally like 100 % of the people say, oh, you should talk to, and they all say the same one guy that they all know who also had breast cancer, and it's fine. Okay. You're still working, and we're here to talk about what you see with the markets right now.

22:21We kind of teased it before as we're going to get your take on what the market is going to do post-Fed, but you don't think the Fed is like the big decision. I think this whole thing is laughable. I find, with all due respect to Steve Leisman, who was on my podcast, The Realizer Playbook, just give it a quick plug, who does a wonderful job commenting on the Fed. I mean, when you think about it, the only time the Fed really matters is when it's being very aggressive at cutting rates or very aggressive at raising rates. If it's just tinkering around the edges, which is what it's clearly doing, it's irrelevant.

22:56Although Leesman made the argument this morning that what they're doing with the balance sheet might be a little more important. It's on the margin, but, you know, is what they're doing right now going to make you buy Palantir or not buy Palantir? It has no impact. You know, I think, I mean, look, the thing that is by far the most important is the whole debate around AI. And I think what people are focusing too much on shows like this is, is it a bubble, is it not a bubble? I think the debate that's going on X right now is actually much more important because it's much more foundational. So, look, I own a lot of these stocks, too.

23:41Which ones? Like all of them. If you name the name, probably 90 % of them I own and I've owned them for a while. Nvidia, Palantir, all the way there. I don't know Palantir, Microsoft, Meta. I own them all. And I've owned them for years. But the question really is, and I found this one commentator, this guy is named Gary Marcus. And he's on Twitter. I think he's a professor at NYU. And he's been making an argument now for years that LLM models, as they keep scaling. Large language models, yeah. the large LLL models, as they keep scaling, which is the model that everybody has, will start to lose their efficaciousness.

24:21Why? And when I started reading him nine months ago, he was the only one to say this. When you say lose their, what do you mean? In other words, the improvement will slow as opposed to increase. Okay. Which is against sort of the Sam Altman and Dario and everybody else's scale. Against everybody else. And he was like a lone wolf. And I read him because he was the only one saying this. I figured, you know what? Let me read this guy just so I know. This is not my field of expertise, but he's different. Let me see what he has to say. So then ChatGPT5 comes out. And the immediate reaction by all these people who know a hell of a lot more than me is that the improvement in ChatGPT5 is a hell of a lot less over four than four was over three.

25:07And then all of a sudden, look, again, it's not my area of expertise. but I can notice trends in argument. All of a sudden, Gary Marcus is not the lone wolf anymore. There was an interview maybe two weeks ago with Ilya Suskeva, who was one of the founders of OpenAI. He's now founded his own company. He comes out and he says exactly the same thing, that scaling LLM models is a dead end and that we have to return to basic research. And then a lot of other people are starting to say the same thing. Now, I'm not here to panic people, but if this argument, the Gary Marcus argument is right, you're going to start to see more and more people start to say this.

25:53And then at some point, companies like Microsoft, if this becomes true, they're going to start buying fewer chips. This is the foundational argument that everybody should be focused on all the time. It's like the foundational argument before the great financial crisis where I eventually figured out that the entire mortgage fixed income market had rested on one assumption, which was housing prices can't go down. And once that assumption got pulled out, the whole edifice collapsed. So look, I just run my own money these days. So the amount of time it would take me to alter my portfolio would literally be before I walk out this door.