An “Armada” for Iran & Crypto’s Two Regulators 1/29/26

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1:06The Federal Reserve stands pat, no major surprise from the markets, waiting for the end of Jay Powell as Fed chair. We think we're well positioned here to watch how the economy performs. A conversation with crypto's two regulators, SEC Chair Paul Atkins, on retirement access to digital assets. We're looking to allow people to have access to those through the 401k, through the professional management of what is allowed into their funds. And the CFTC's Mike Selig on making America attractive for crypto business. We've seen a lot of these technologies and assets move offshore and we want to bring it back.

1:45And so I think with legislation and work together between the SEC and the CFTC, we can really codify sensible, common sense, reasonable, rational rules of the road. President Trump issues a warning to Iran, make a nuclear deal or brace for an armada. Amos Hochstein, a senior advisor from the Biden administration, joins us. Not just the quantity of force in the region right now, but the types of force that we have put in the region right now are ones that suggest both a strike and a fairly significant one. Plus, another winter storm on the way. It's Thursday, January 29th. Squawk Pod begins right now.

2:27Stand back to you by in 3, 2, 1, cue it 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 Andrew Ross Sorkin. Joe is out today. Six days in a row of gains for the S &P 500 and the Nasdaq, at least. The S &P is now sitting at an early all-time intraday high that we saw yesterday. We'll continue to watch this this morning, too. Take a look at what's been happening with Treasury yields. After the Fed meeting yesterday, you do see the 10-year still sitting right around 425. It's slightly higher.

3:03Two-year yield is slightly lower. It's at 357. We're going to talk a lot more about what Jay Powell had to say yesterday after that meeting. But again, the Fed holding rates steady as had been anticipated. Not much to say there. In fact, in some places, Jay Powell pulled a little bit of a Charlie Munger. I have nothing further to add. Didn't answer some of those questions that were getting lobbed his way. Let's take a look at gold prices. Another high for gold prices. Up another three and a third percent this morning to$5 ,480. Those numbers keep climbing. Same story for silver, which is now up another 2.7 % to 116.58.

3:38Copper prices, another huge climb here, a gain of more than 6%, 6.28 and change. And if you're watching the dollar, the dollar yesterday was down once again. In fact, for the month, we are looking at the dollar index on pace for its worth months since August of last year. Year-to-date, the year is pretty young, but year-to-date it's down by 1.9%, 96.44. is the last tick. Let's move now to those big tech earnings. MediShare is jumping on fourth quarter results and stronger than expected current quarter sales guidance. Investors appear to like what they see despite Medi giving a forecast for AI-related capital expenditures well above analyst forecasts.

4:17The company expects to spend between, are you ready for this folks? $115 billion. You can swallow hard. $135 billion, much higher than last year's$72 billion. dollars. And CEO Mark Zuckerberg saying AI will not only augment the company's core advertising business, but also dramatically improve how workers do their jobs at Meta. I mean, this is where it's actually paying off. They're using their own AI tools. And Zuckerberg said something that's pretty interesting on the conference call, too. Basically, things that used to take full teams of people to do can now be done by one talented person. So it's not just what they're doing with AI, but being able to use it internally and how that's going to help.

4:58Well, and this goes to some of the comments even Jay Powell was making about AI and jobs. And that's sort of the next. But there is underneath then the whole economy. Right. And what that means for productivity, what that means in terms for whether inflation is brought under control as a result, there is that huge debate. And some members of the Fed, those who voted for a cut yesterday, not only because they They are in keeping with what Donald Trump is thinking about these things. But their argument is that all of this additional technology will allow rates to come down, will allow rates to come down without boosting inflation because of that efficiency that pushes through.

5:34Ed Yardeny's got some really interesting thoughts on that. He thinks this is the roaring 20s and those things happen, but that you should not lower rates because it could do a melt up in the markets. And that's not what you want to see. A melt up like we're seeing with gold prices, with copper prices and so many of these other things, too. It was a tale, though, of two very different stories for these MAG7 stocks that we heard from yesterday. Microsoft shares, on the other hand, getting hit pretty hard despite the fact that the company posted better than expected sales and profit and recording more than$7 billion in net income contribution from OpenAI.

6:10Revenue at the company's Azure cloud division grew by 38 percent. That was just below expectations of like 39 percent. but a deceleration from the 40 % growth in the first quarter. But still, these were pretty strong numbers. And yet you're seeing the sell-up about 6.6 % in a very large cap stock. Analysts were actually waiting for Microsoft's capital spending numbers as the company races to build AI capacity. CapEx in that just-completed quarter was$37.5 billion. That was a jump of more than 65 % from last year and higher than the roughly$34 billion that had been expected. But again, this is a case where, you know, Satya Nadella was talking about the growth they've seen there and how the growth in the AI business has been so phenomenal that it's built up to these levels that it used to take decades to build some of these units up before.

7:01You talked about and you talked to him not this year at Douglas, but the year before where he talked all about how, yeah, we're still here. We're going to be spending those numbers. And those numbers have only gone up since. But then through a cloud code, cloud code. No, but honestly, I think what's happening here, one of the things that sort of not it's not about the earnings itself, but I think even the last week, the emergence of cloud code effectively, which is really going after Microsoft's business. It's not going after the open AI business. It's not going after everybody else's business.

7:31They are probably the ones that have the most sort of in that in the target. And I wonder what that ultimately means. The White House is going to be hosting a meeting with banking and crypto executives on Monday to talk over the digital asset market structure bill. Join us right now. The two key regulators in the industry, SEC Chairman Paul Atkins and CFTC Chairman Mike Selig. Later today, the two agencies are hosting a joint event in Washington. I want to welcome both of you to the broadcast. We're thrilled to have you, especially ahead of what I know is going to be an eventful day. And then we'll see what happens next week.

8:05But Paul, maybe I can start with you and you can help sort of set the table for the conversation you have later today. And what you think perhaps, I don't want to say what went wrong, but at least the pause button was pushed on the previous bill and what you see as the central sticking point. Well, thank you, Andrew. It's great to see you this morning and be with you today and especially here with my former colleague and now chairman of the CFTC, Mike Selig. Well, so, you know, Congress has its ways of negotiating, and obviously we have a bill that was adopted in the House and passed the House, and now the Senate is going through its process with the Agricultural Committee and the Banking Committee.

8:50And so, you know, there's inevitably issues that come up. The SEC has been giving technical assistance to the people there on both committees now for months. And so we're looking forward to helping them get across the finish line and getting something that works for all the parties. But in terms of just on the merits, on the sort of fault lines, if you will, of this bill, I can try to spell it out and maybe you can respond to it. You know, one of the big issues, and we talked to Brian Armstrong from Coinbase in Davos just about it last week, is this sort of back and forth battle that's taking place between the crypto industry, the banking industry, how deposits effectively could be treated or what will happen to the banking deposits.

9:34If, for example, you can get a real yield, if you will, on crypto, that seems to be one of the main points. Where do you land on that? Well, the good thing for me is that the Genius Act that was passed that dealt with stable coins, which is at issue here, is not in my bailiwick. So, you know, Congress was explicit with that. And so, you know, we're focused on issues that deal with securities, tokens, tokenized securities. And so that's that's really what we're focused on. But with respect to those issues about staking and yield that comes off of stable coins, I'll leave that to the different parties in Congress to work out.

10:19But we're ready, willing and able to work with whatever they come up with. Mike, you want to weigh in on that on that piece? I don't know if you have a sort of stronger, stronger view. And then the other big one, by the way, just to throw into the mix is there are some questions about, you know, who should regulate, meaning you, Mike, or Paul, effectively, your different agencies, different elements of all of this? Well, Andrew, I will tell you that just like the SEC, the stable coin piece, the yield piece, that really is not within our remit. But we're very excited to take new authority with the legislation that, thanks to the president's leadership, is really on the cusp of being enacted.

11:00We've worked very closely with Chairman Bozeman and the Senate Agriculture Committee, and we're excited to see this bill go across the line. Our authority right now is pretty broad with respect to commodities. We have anti-fraud and anti-manipulation authority that covers these markets. And so we are a cop on the beat. We are surveilling and monitoring these markets. But we're excited to have even more authority to actually regulate the spot markets in these digital assets. And that's very important to us. I've got a question since we have both of you together. This is kind of interesting. There have been calls, as you know, to merge both of your agencies for a long time now, but more recently.

11:39Given how well you're working together and given the administration's sort of larger view that we should take down regulation, would either of you object to merging the groups? Well, you know, Andrew, I could jump in here. You know, that's It's being talked about now for decades, and so I think we're beyond that. We'll do whatever Congress and the president decides ultimately, but I compare it to historically two different fortresses with a no man's land in between. And in that no man's land, there are a lot of bodies of failed and dead products that tried to go effective, because many of our registrants are registered with both agencies.

12:23And so when they try to do a product that is unclear where it fits is between the two. Lots of times it just languishes and never gets approved. And there's so much uncertainty. Costs mount up and then people just abandon them. That's over with. We're out to like merge. We're out to collaborate and help people do their innovation, get to market and give investors what they need. Here's a question for you, Paul. And maybe it's philosophical. Maybe it's practical. And it really comes from Elizabeth Warren, who I believe wrote you a letter earlier this week that said the following, allowing a crypto allowing crypto into American retirement accounts creates a fertile ground for workers and families to lose big.

13:07How do you think about crypto versus any other kind of investment for the average American family out there? Well, Andrew, a lot of people are already exposed to crypto and other sorts of assets like that through their pension funds. And because they're managed by professional managers in those pension funds. So we're talking about the 401ks now where, you know, that we have to do things with respect to the different markets very carefully. We're focused right now on private securities, private equity funds and things like that, where, again, a lot of people are already exposed to those in their managed pension funds.

13:54And so we're looking to allow people to have access to those through the 401k, through the professional management of what is allowed into their funds, their trustees that are looking after those funds. But I think the time is ripe to go forward with that in a measured way that has guardrails to protect the retirees. Hey, Mike, I know you don't give investment advice, but I think one of the big questions is if this bill goes through, what does the industry look like several years from now? How much bigger do you think it gets? Because I think there are a lot of people who have been betting on a whole bunch of these coins and what that industry looks like based on the idea of regulation in America.

14:43We're really at a pivotal moment. Blockchain technology has now been around for about 15 years, and it's really transforming the way that these markets are really developing within our remit. But really offshore, we've seen a lot of these technologies and assets move offshore and we want to bring it back. And so I think with legislation and work together between the SEC and the CFTC, where you can really codify sensible, common sense, reasonable, rational rules of the road for the asset class, that's going to be what it takes to allow for this asset class to flourish here in America. These markets that have gone offshore, they really don't have the same types of customer protections and controls.

15:23And so the average person is looking at these markets and cautious about getting involved. In the United States, if we can set the standard, really a gold standard for crypto asset markets, we're going to see a lot of new types of products, a lot of new types of on-chain markets and financial applications. And that's going to bring us into the future, make the United States the premier place to do business, to offer digital assets and to participate in markets. Paul, Mike, I want to thank you both for joining us this morning. Good luck with the meeting. Thank you very much. Thank you.

15:59Coming up on Squawk Pod, Amos Hochstein, former senior advisor on energy security in President Biden's State Department, how he's viewing President Trump's warning on Iran. Everybody was talking the regime is about to fall. I said the regime is not falling because the cohesion is there. When they gave the order to go kill protesters, nobody objected. In Egypt, they objected and Mubarak fell. We're back after this. Bitcoin is often talked about as an investment, but it was built to be used. With Cash App, you can actually do that. Send Bitcoin instantly, pay at local Square businesses that accept it, or move it to your own wallet whenever you want.

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17:51To realize the future America needs, we understand what's needed from us to face each threat head on. We've earned our place in the fight for our nation's future. We are Marines. We were made for this. Welcome back to Squawk Pod from CNBC. Up and Andrew, Q. You're watching Squawk Box right here on CNBC. I'm Andrew Ross Sorkin, along with Becky Quick and the introduction of Brian Sullivan joining us this morning. Can I read it? You guys were talking about something. I was driving in listening to a show called Squawk Box. It's a very good 6 a.m. hour. And you were talking about Meta's increased spending on AI.

18:30Did I hear the numbers? Right. It's early. I'm waking up. About$135 billion. Yeah. $115 to$135 billion. What a massive jump. Yeah. But the street likes that the stock is up by 8.9 % because they are able to introduce these tools and use them. And it is helping their core business in terms of being able to select better ads and sell things better. And I think Becky Quick said you could replace a whole team with one very talented. Mark Zuckerberg said that. I was just repeating what he said. Becky citing Mark Zuckerberg. But that's an insane jump in spending. And I wonder, are they getting it from debt financing?

19:07They don't have that much cash. They've got a lot of cash. They've got a lot of cash flow. I don't think they have that. They're not Warren Buffett. They've got, I don't know, is that going to be debt-fueled growth? How are they going to pay for that$115 billion? Well, no, they actually do have an extraordinary amount of cash. The other thing that they've been doing, which is a little different than some of the other hyperscalers, is they actually have been working with folks like Blue Owl in the private credit space and others to effectively, and in a different kind of debt financing, meaning it's a partnership.

19:33They've done a number of JVs now, the biggest one being Louisiana, where they have the equivalent of a new data center going up. Do you worry, is Andrew Ross Sorkin worry about the private credit markets right now, that it's illiquid? I worry about it, but I haven't, I'm not completely wringing my hands just yet. Not yet. But I'm anxious. But I'm always anxious. President Trump has issued another warning to Iran, pushing Tehran to agree to a nuclear deal or face a U.S. military attack. Joining us right now for the latest is TWG global managing partner Amos Hochstein, who served as a senior advisor in the Biden administration.

20:10And there's a lot happening right now, Amos, that I know you've got some insight into. What do you think happens with Iran? Where do things stand? What are the potential outcomes? Look, I think clearly the administration has not only done up all the warnings, but the amassing of U.S. forces, and not just the quantity of force in the region right now, but the types of force that we have put in the region right now, are ones that suggest both a strike and a fairly significant one of wide-ranging consequences. The problem, of course, is you can take the strikes, but then what do you do afterwards?

20:52And is it a joint strike with Israel or not, which I think is very much on the table. And what's the answer to that? First of all, the difference it would make if it is a joint strike with Israel versus if it is not. Well, Israel, of course, we have more of the military power, but they have more of the intelligence on where key individuals are from the supreme leader his son and other heads of security agencies which they proved over and over again over the last 18 months that they have that intelligence so that that combination is a pretty lethal one look i think at the end of the day the administration sees this everybody told us it wouldn't work in venezuela but we thought but but it did we did it we didn't do regime change we did regime decapitation.

21:35We took out the person. We did overwhelming power, and we told the next person in line, fall in line, or we'll come and get you two. Is that the model, you think, for this? It seems that this is what they think is the model, because, you know, I was here a few weeks ago when the protests were going on, and you asked me if, you know, everybody was talking, the regime's about to fall. And I said, the regime's not falling because the cohesion is there. When they gave the order to go kill protesters, nobody objected. In Egypt, they objected, and Mubarak fell. Nobody objected. They killed probably 10 ,000 people or so.

22:06Why didn't he get more attention? Why did not a mass murder of citizens protesting for their own freedom get more attention on the global stage? I think it's outrageous. It was almost summarily ignored. Well, first of all, there was no one to blame, right? When you're protesting Israel, I guess you're saying, the United States should not fund Israel or Europe or whatever. But there is the double standard, which there always is, that we always protest Israel but not other things. The Palestinian cause is much more. For some reason, those lives matter more to people protesting on the streets. And they should matter.

22:44But 10 ,000 Iranians being gunned down over two days should matter to everybody. I want to be clear with what you said earlier to answer to Becky's first question. You are saying that it is more likely than not that the United States military, with or without Israel, will launch a strike on Iran and soon? I think it is more likely than not. Why would Israel not cooperate? Israel would cooperate. I think this is their dream come true. And they're pushing for it. The question is, does the United States want them as part of the strike force or just as the intelligence provider or not? And I think that's an open question of, does the United States want to do this on its own or want to do it together with Israel militarily?

23:26But Israel will be there every step of the way. What would Iran have to do to entice us to not strike? I think it's a, if you don't want to do a change of regime, you have to do a change of behavior. And so do you commit to, is this, and I don't know what satisfies President Trump. In other words, is it I think if it's just the nuclear commitments of total dismantling for this time, not just a promise we won't do it again. But is it a is it also on the missiles? Is it a change of behavior in support of the proxy terrorist organizations, Hezbollah, the Shia militia groups in Iraq, Houthis, et cetera?

24:10Two questions. If this is, as you suggest, copying the M.O. from Venezuela, where you simply take out the top commander and ask everyone else or demand everyone else fall in line, how successful do you think that is, given the coordination within this regime to this point? and be how long-lasting is it? Is it only as long as you have carriers in the region, as long as you are kind of there to stand down and say we're watching your every move? So you asked a very good question, and the reality is that we don't want to put boots on the ground because the president doesn't want it, and the American people definitely don't want another Iraq, right, of a multi-year boots on the ground.

24:54So if you kill the supreme leader... You're talking about kill, not capture. No, I don't think this is a capture. It is more of a bombing. I mean, he's 86 years old or 88, whatever he is. I think it's about taking out the leadership of the IRGC, the Revolutionary Guard, the political leaders, the military, the basiege, the police. There are a lot of different security forces in order to be able to enable an uprising that delivers change from within. The problem there is there is the regime, as you said, has many different elements. They're all very anti-Western. They're committed maybe not to the Islamic Revolution original cause, but to the anti-Western cause.

25:36And it's a very large country with a lot of porous borders. People can come in from Afghanistan, from Pakistan, from other places to fight the fight, which is what happened in Iraq. And that was the breeding ground for all the opposition to Western forces. So how do you do this in a way? Who's the next leader? Nobody can name who that person is. So a lot of people may not realize this about you, that you were basically the energy policy person in the Biden White House. Respectfully to the Secretary of Energy, you kind of ran the energy show. So I want to ask you about energy. So there's a huge conference next week in Doha, Qatar.