A Weak Jobs Report & Regulating Prediction Markets 3/6/26

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1:06A U.S. jobs market that could be on shaky ground. 92 ,000 job losses in February. Mary Daly, head of the San Francisco Federal Reserve Bank. I think it's really important to step back. No one month of data is a decisional month of data. On the jobs picture, inflation, the devil is in the data details. I think it just tells us that, you know, the hopes that the labor market was studying, maybe that was too much. Betting on the news? The popularity of prediction markets on current events has exploded. Can regulation keep up? The former congressman now running a coalition of prediction markets, Sean Maloney, joins us.

1:45What we want is good rules, good regulation, transparency. Plus, the latest on the engagement in Iran and the country's stability. I wouldn't be raising my hand. Let me run this place. And the war for AI warfare. Anthropic versus OpenAI versus the Pentagon. The politics. I can't help you. Okay. Well, I can't help you either. It is Friday, March 6th, 2026. 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 are live from the Nasdaq market site in Times Square. I'm Becky Quick along with Joe Kernan and Andrew Ross Sorkin.

2:31This chair doesn't go down. The chair won't go. They can't tell. We'll leave it like that. Unless they took a wide shot, they can't tell. But your chair's... Yes, ma 'am. Andrew, we're like... Listen up, boys. Can I get you some coffee? This chair's very high and it's stuck. Great. Can I get you a croissant or something? Yes, please. Snap to it. Attacks across the Middle East on the seventh day now of the Iran war. Here's the latest. Iran's Revolutionary Guard saying they're targeting Tel Aviv with missiles. Israel struck Hezbollah's controlled southern Beirut suburbs in Lebanon after ordering residents to leave.

3:08The commander of CENTCOM saying ballistic missile attacks by Iran have fallen by 90 percent since the first day of the war. In an interview, Iran's foreign ministry said his country isn't seeking a ceasefire from the U.S. and Israel and doesn't see any reason why it should negotiate. Meanwhile, the House rejecting a resolution designed to curb President Trump's powers in that war. And President Trump telling several media outlets that he wants the U.S. to be involved in helping to choose the next leader of Iran. This gets very much to the question we had with Michael Froman yesterday about really, you know, if Israel wants regime change.

3:42and now presidents out there saying he wants regime change, which he said before, but just whether they would ultimately split on that and what it means if, in fact, we are choosing that person, do you have to have boots on the ground to get to that point? The House did pass a resolution saying that it's the biggest state sponsor of terrorism, and it was overwhelmingly passive, but there are still 52 Democrats, the usual suspects. Ro Khanna, that's all, voted against it. And I think Fetterman, who has been very outspoken in recent days, said 30 ,000 of their own people dead in the last couple of months.

4:19Pretty big sponsor of terrorism. What was the other thing? I'll read this, then maybe I'll come up with it. On the energy front, President Trump teasing further action to reduce the price of oil, which has jumped as tankers have stopped moving through the Strait of Hormuz. A senior White House official told Reuters that the Treasury Department was considering using the oil futures market to combat rising prices. But Bloomberg later reported that move wasn't on the table right now. Meantime, Energy Secretary Chris Wright said that the current jump in U.S. gasoline prices will be brief. They were up 34 cents a gallon in the past week, President Trump told Reuters.

4:57If prices at the pump rise, they rise. But he predicted that they would drop rapidly when the conflict with Iran is over. I know what I was thinking. I was thinking that the Iranian gentleman is starting to remind me of Baghdad, Bob. Nothing to see here. Things are awesome. No need to negotiate. Yeah. While, you know, attacks on Israel down 90 percent. The most staggering thing was a visual I saw yesterday showing which countries have gotten the most attacks, both drones and missiles. UAE, far and away. By a factor of 10. More than Israel. Israel is way down here. and there's a lot of Americans, I guess, in Dubai and it's a very Western place.

5:38It is. 37 ,000 flights that have been canceled into and around the Middle East area. There are a lot of tourists who are still trying to get out. Some of them have gone across the border into Oman and tried to get private charters to get out. Right. But this is a, it's made its name on being a Western enclave, a Westernized enclave. What I don't understand is, if you really wanted, you know, death to Israel, death to the United States, if you had aimed, I mean, they're aiming these things, right? Someone has decided, they sit around thinking, who are we going to aim these things at? And someone decided, the UAE, what if they had concentrated all of those on Israel with the Iron Dome?

6:21The Iron Dome would impact. But it's being degraded, the Iron Dome, just like their issues are being degraded. But I mean, I hate, you don't want to say, Dubai is a great target. Dubai is a great target. Because they don't have, they do intercept. They don't have all the defenses. But they've intercepted 85%. But they also have one of the most popular airports in the world. Meaning so many flights go through Dubai. So the West, Iran figures that that will, Dubai will, the UAE will pressure the United States to stop. I guess that's the calculus. But we really do have to go back and figure out What are these, you know, trying to figure out a method in the madness?

7:00Can you ever really figure Iran out with the history of the last 47 years? Look, even when you knew who was running the country, it was hard to fathom and hard to figure out. At this point, there's mass confusion on top of all of it. Right. Well, I don't know. I would not want to be the, I wouldn't be raising my hand, let me run this place at this point. No. Reports say the Trump administration is planning to meet with top defense industry executives at the White House today on the agenda U.S. weapons. The Wall Street Journal says that lawmakers are expecting a funding request from the Pentagon to rebuild stockpiles that have been drawn down over the last week of fighting.

7:39But Defense Secretary Pete Hegseth is pushing back as recently as yesterday on the idea that the U.S. ammunition is not at its full capacity. We've talked about that. There are questions. It's been stretched thin, not only by what we've been doing in the Middle East, but by years of helping support Ukraine as well and the incursion from Russia. Meantime, we had talked about those comments that Daryl Amode had made from Anthropic yesterday in that leaked memo. Well, now he's apologizing for what he's calling the tone of that memo, criticizing the Trump administration. But he says that his company has no choice but to challenge its designation as a supply chain risk by the Defense Department.

8:18In a statement on Anthropik's website, Amadei made it clear that the company thinks the vast majority of its customers won't be affected by the supply chain risk label. He said the language from the Defense Department, quote, plainly applies only to the use of Claude by customers as a direct part of contracts with the Department of War. not all use of Claude by customers who have such contracts, which was a big worry for the company in terms of just how expansive other companies might consider whether they can or cannot use Anthropic. Meanwhile, Microsoft's saying it's going to keep Anthropic's AI technology embedded in its products for its clients, and that excludes, though, the Pentagon.

8:56So this continues to play out. It seems at this point that these ongoing talks are no longer ongoing. If you really read through what he's saying, it sounds like there is now a genuine impasse that maybe up until a couple of days ago, and I think that the memo, the internally leaked memo, obviously didn't help. He said, he said, we didn't leak it, and it was clearly not in our interest to leak it. To me it was... I have TDS, I have TDS. And even Sam Altman kind of bristled at what Amadei was saying about him and bending the knee and said that I just don't think you should base company decisions on not liking the person that's the president of the United States.

9:41I don't think you should base your company's decision on it. You should probably put it in context, though. But he also, what else did he say? He also said that the government, no one company or even collection of companies is more powerful than the government, which sounds like you can't fight City Hall. Right. That's all true. But probably put it in context of a CEO, a founder of a company who's very frustrated at the idea that his company could be taken down by, you know, refusing to go along with these things. Probably just thinking of it in that context of things, you can understand where he'd get heated.

10:12It was a mistake on a lot of levels, though. It's self-defeating. Maybe you didn't know the memo would get leaked, but it's kind of self-defeating when you're, you know, just picking a fight like that and being so over because we know that what what trump is capable and we know remember when when um but why remember when biden didn't or when uh biden didn't invite elon to the ev summit because he didn't have unions or when the biden administration decides none of these these chip makers aren't going to get any money because they don't have dei esg child care i mean administrations are are powerful are powerful and they use that power to do yeah i I would just say that Biden didn't end the government's contracts with SpaceX.

10:59No, no, no. Maybe not with SpaceX. No, no, but if you really go back and think about, or, by the way, if you think about all of the subsidies that were given to Tesla during that period, there's a very big distinction about, you said that Trump is going to Trump. I think there's plenty of instances of administrations pressuring companies using what they're able to do, and this is no different. and you should apply it equally. Or neither, or no, but once again, nobody should be able to do it. The idea that it's not being applied equally is the crazy part, though. It's not being applied equally.

11:30I don't think there's ever been an American company that's been designated a supply chain risk. Right. The Biden administration never did this. No other administration has ever done this. But then you're connecting it not to genuine concerns that they might have about not wanting those guardrails to making it political, which I don't know why. Why? I'll tell you why. Because the Treasury Secretary came on this program, and the Treasury Department has nothing to do with the Pentagon, and he said, why should we be in business with these people? We ask him opinions on all kinds of things. Sure, but he literally said they were going to rip it out of the Treasury Department.

12:05The point is, that is political. That is as patently political as it could possibly be. Well, don't be naive about past administrations. I don't understand. No worse this time than the Treasury Department. And that's the distinction that I think we're going to that you and I will will disagree on. This is a different situation. It's always different for you. And it's never different for me. I don't even understand that when you can look factually and empirically at the fact. Oh, there you go. The factual and your facts and empiricals are different than mine. You know what? I'm not going to be.

12:37Becky just made the point. I know other company in America has been described as a supply chain. I am not going to be able to calm you down on this. And I can't. I get I'm exhausted. Okay. So it's just, you're going to have to, a lot of times when Becky doesn't get involved, I think you're, you just are exhausted. She may feel one way or the other, but it's just - It's not about feelings. It's about facts. No, it is for me. It's tiresome. I can't, I can't do it. I'm sorry that you're so tired. It's 6 o 'clock in the morning. It's Friday. I don't understand it. It's Friday. I can't help you. Okay.

13:04You got to go elsewhere. Well, I can't help you either, unfortunately. Guys, both major points. Coming up, gauging market risk from the Iran conflict. Why don't we talk about Kristi Noem? Kristi. Christy, three big reasons why that happened. Cheese will be next. Coming up on Squawk Pod, a potentially concerning monthly jobs report. What does it mean for the health of the economy? Mary Daly, San Francisco Fed President, is our special guest. The piece I'm worried about is that labor market's maybe a little weaker than we have seen so far.

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14:58Welcome back to Squawk Pod. Markets on edge this Friday after an unexpected decline in U.S. jobs data. The monthly employment report from the Labor Department showed about 92 ,000 job losses for the month of February. Expectations were for 52 ,000 on the plus side. But this February number is the third time in the past five months that payrolls have declined. The national unemployment rate ticked slightly higher to 4.4 percent. Softness in the labor market could spread across the economy. And the jobs number is one of the key data points for the Federal Reserve to consider when setting monetary policy.

15:38We were joined today by San Francisco Fed President Mary Daly. She was on set with Joe, Becky, Andrew, and our own Steve Leisman. Mary Daly, thank you for joining us. Oh, my pleasure. At an incredible time in terms of what's going on. Let's focus right now on the data we just got. Down 92 ,000, the market says you're all of a sudden ready to cut again. Is that how you read this number? I think it's really important to step back. No one month of data is a decisional month of data. I think it just tells us that the hopes that the labor market was studying, maybe that was too much. And we really have to keep our eye on the labor market.

16:17But we also have inflation printing above target and oil prices rising. How long they last, we don't know. But both of our goals are risks now, and we have to keep our eye on both. So what's the way to think about this? a blockbuster number in January and now a blockbuster negative number in February. Average the two, move on. Average the two and keep watching because there was always going to be, well, first we had a strike, we had snow, we had population changes, bench marking. Well, just to be clear, you didn't have snow in San Francisco. No, we did. We had snow out there. We had a... I'm very jealous of the weather.

16:51We had a tiny little bit of snow on Mount Diablo and everybody celebrated and then we went back to wearing shorts. So that's how it works. But but seriously, you know, the job numbers were they're not a clear read of what's happening, but they are also not a wrong read. You know, if you look at the sentiment surveys of workers, if you look at firms, they don't say they're hiring. And so the job market is in this low hiring, low firing state, which makes it vulnerable to any changes, including just the ones that come on regular basis. Do you feel in general as if the monetary policy should respond to that low fire, low hire situation in the job market by helping it by being less restrictive?

17:33It's a very different universe than when we have inflation below our target. If this was 2019, if you recall, we did a couple of cuts because we thought there were headwinds and we cut the rate in order to make sure the labor market is supported. It doesn't fall below. But right now we have inflation printing above target. It's been printing above target for some time. So it's really a balance of risks calculation. And I'd hope the 75 basis points we did last year would put a floor underneath the labor market. But this jobs market report has got my attention, and I've long been worried about it.

18:06It was printing above inflation before$85 oil, too. Right. And I think the thing with the oil is how long will that last, right? Consumers feel it immediately at the gas pump. You don't use transitory anymore for a word, do you? I don't think it was ever a good word, and it's certainly not one I'll reintroduce. Why do you bring that up? I'm sorry. I'm sorry. Here you are joining us, which we really appreciate, and I have to say that. Rick made a big point about the participation rate, and you made a point off camera, and I just want to do it on camera. So when people feel crappy about the job market, they may leave the participation rate goes down.

18:47Absolutely. They get discouraged about their prospects, and so they just don't search. And so whether you find those workers in the unemployment rate because they're searching actively or they're just sitting on the sidelines waiting until things approve, those are both signals that the labor market's a little weaker. So it's even worse then. You can't say, oh, so it's down 90 and a 62. I don't think you can look through this report, but I also don't think you should make more of it than one month of data. You know, I like Steve's place of let's average and we're about at zero. If you think the benchmark, the level we're supposed to achieve is 30 ,000, we're below 30 ,000.

19:24But again, it's only a couple months of data. Oh, go ahead. Do you not like income, I guess, four tenths? I told Steve, wouldn't it be great if we had 4 % instead of 3.6 in terms of wage increases? Do you worry about it too because it's inflationary? So I want to make sure that wages are inflation plus productivity growth. So the piece that's really important that we haven't talked about is productivity growth is higher. So if I'm a firm, I'm still making value because my worker is giving me more benefits for every hour that he or she shows up. So I don't think this wage growth that we're seeing is outsized.

20:00But, you know, so I don't think it's a sign of frothiness in the labor market or too much strength. Right now, I think the piece I'm worried about is that labor market's maybe a little weaker than we have seen so far. And so I've got to keep. But I've been worried about that since last summer. Well, that's what I want to focus in on. You're very measured. I appreciate that because I think that's probably realistically looking at what we're facing on these. But if you had to put your finger on one of the mandates or the other, which one would you say is a higher concern level for you right now?

20:29You know, I think at this point we have two sided risks. I'm not being just balanced here as much as it's an accuracy. Right. The oil price shock, depending on how long it lasts, is a real thing. Consumers will feel that. That can be challenging for firms because they've got to find workarounds, but it also can cause consumers to pull back on other spending. And if they pull back on other spending, consumers' spending has been a strength of the economy. So I just want to monitor both, and I think it's important that we keep our eye on both. The labor market, of course, gives me some concern, But again, strikes, snow, and some population rebench markings that just make it a harder report to interpret.

21:12Tell me, one of the things that's been out there is, well, obviously you have the situation of a war and you have AI going on at the same time. Let's just talk briefly about how the lessons that we took from the 70s when it comes to oil price hikes. Is the idea that you just be very careful? You may not hike in the face of it, but it would be something that would stay your hand until it worked through the system in terms of cutting, wouldn't it? So I think that's the point that everyone's talking about. It really depends on how long the elevated oil prices continue. If the conflict or the war settles quickly and the oil disruption that people are worrying about doesn't transpire and doesn't live for a long time, well, then we just see those things come back and we'd be back to a normal place.

21:59You don't want to act aggressively when you don't actually know that part. I think the important thing is that it's really hard to hike right now in a world where the labor market isn't very, we don't have any evidence that it's quite steady. So I think we just need more time, and it's why we're going to have to decide as we have an upcoming meeting. Kevin Worsher is going to have this job soon, running this whole operation. Well, we'll see. Likely. Whether it's soon or not. Have they nominated him while I was away? Yeah, you missed that. Formerly nominated. And part of his argument is that we're going to have extraordinary amount of productivity as it relates to AI and things like that.

22:37And that is not going to have an inflationary effect. It's actually going to be potentially deflationary. Do you believe that? Do you buy into that argument? So, you know, for the last I'd say since 2022, when chat GPT was first announced, I've been we've been focused on how can AI transform the economy? And I was an early, my first job was in 96 with the Fed and Chair Greenspan at the time. He's 100 today, by the way. Oh, I didn't know that. Oh, wow. He turned 100 today. So happy birthday. Happy birthday. Happy birthday, Alan. But seriously, we were out in the field touring factories, asking CEOs, what are you doing with computers and the internet?

23:15And you could see the famous phrase transpire. We can see productivity growth everywhere except in the data. So I'm a little more optimistic that this productivity growth we're seeing will go beyond just simple cost-cutting and rebalancing, and will be driven by not all kinds of technology, but AI gives us benefits. But what we learned in the 90s is you can't just reflexively say it's coming. You've got to go dig for the information, see if it happens, and then make the policy decisions. And we're in a different world. We have an oil price shock. We have a labor market that looks vulnerable. And we have productivity growth.

23:50So therefore, when you think about lowering interest rates, how does that play into your thinking? Well, there's another alternative that is also a policy decision, which is to hold them study while we collect the information. And I think for now it's about, you know, do we do we I'm certainly not in a position to think we should be hiking interest rates. But I think there's a real issue about whether we should immediately urgently act on the labor market or whether we should wait to think through the data. Mary, we didn't talk a lot about inflation. What's your expectation in terms of getting down to 2 %?

24:25Are your contacts telling you that the tariff price pass-alongs are done? They are more or less saying that the tariff is just coming through and will end at the end of the year. You know, sort of the middle half of next year. But they do expect that we'll have some run-up in inflation for the next couple of months while all the tariffs fully go through, but then come back down. So that's less of a pressure. I think their pressure now is now what do they do with oil? We just had our meetings for our boards and councils last week, and certainly oil's on their mind. But much like I've said, they're like, don't get over your skis.