Apple Turnovers & Two Kevins Eye the Fed 7/9/25

0:00Bring in show music, please. Hi, I'm CNBC producer Katie Kramer. Today on Squawk Pod. Change is taking a bite out of Apple. The company's COO and presumed successor to Tim Cook is retiring. Another shift for the tech mega cap feeling pressure from tariffs and investors. CNBC's Steve Kovac on the story. Apple's demise has been greatly exaggerated. Many times. Hot stablecoin summer rolls on. Ripple CEO Brad Garlinghouse is in Washington for a blockchain hearing, and he's thinking big about the future of finance. The world isn't going to be taken over by crypto. Instead, we think about how do we take the best of what crypto brings in facilitating faster, cheaper transactions and bring it to traditional finance.

0:48Plus, a tale of two Kevins as the president weighs a new Fed chair, The tariff Two Steps, the White House is dancing and trashing a strike in the city of brotherly love. Squawk Box has been all over this one, like this thing that has plagued Philadelphia. It's Wednesday, July 9th, 2025. Squawk Pod begins right now. Stand by in three, two, one. Good morning. Welcome to Squawk Box here on CNBC. We're live at the Nasdaq Market site in Times Square. I'm Melissa Lee along with Joe Kernan. Becky and Andrew are off today. Great to be back. Good to have you. Part two. Actually, part Friday will be part three.

1:30Part three. That's really a lot of episodes. There are a lot of three part episodes on Netflix. There are. So this makes sense. It's good. What happened for tomorrow? People need a break from us. I know it's too much of a good thing. That's right. That's right. All right. There's a new Wall Street Journal piece that says that the race to be the next Fed chair may be narrowing to the battle of the Kevins. It said White House economic advisor Kevin Hassett is emerging now as a serious contender and met with Trump about the job at least twice in June. His rise threatens the early favorite for the job.

2:06Former Fed Governor Kevin Warsh report says some people close to the president worry that Warsh won't be a champion of lower interest rates. It's just, we've talked about this so many times right here. Because we know Kevin, we know both Kevins, but we know Kevin Warsh. We've read his op-eds over the years. And one of his main complaints was that the Fed let the balance sheet stay too high. And, you know, post-pandemic was far too easy. And it just runs completely counter to the president, the real estate guy, who really likes low interest rates. Although Warsh was on TV yesterday saying that he would lower interest rates.

2:50So I guess the campaign is on in terms of trying to convince the president. Apparently, I know Kevin. I've known Kevin Warsh. I've known them both. But I've known Kevin for a long time. And I didn't realize how close he was in 2016 to getting that job. And I think he was a little bit miffed. Wouldn't you be? To not be chosen as the second most powerful man in the world. Well, you can make an argument that it's the most powerful man in the world. Maybe it is the most powerful man. No, that would be one of the circuit judges out in Berkeley, California. In another circuit, Ninth Circuit or something.

3:30The journal describes the jockeying for the job as an apprentice style contest. You know, if you can do it, you've got to make that stretch, I guess, since President Trump obviously had that very successful long-running show on NBC. At yesterday's cabinet meeting, President Trump said, we should get somebody in there that's going to lower interest rates. Gosh darn it. I actually think like last time, for whatever reason, the president wants to do it. But like last time, it kind of was in spite of whether it was the right thing and whether he came to that conclusion for all of the sophisticated monetary reasons.

4:16It was the right time. This time, it seems like it's the same thing as kind of playing out in my mind, because I'm not sure inflation. Right. We don't know. And when you have a 50 percent tariff on copper, for instance, copper, which feeds into buildings. So you're saying if you're going to do if you're going to do tariffs, you might as well help with with low rates. No, no, I'm saying we don't know the inflationary impacts yet. Oh, right. There's a lot of unknowns still. But up to this point, there hasn't been much. No, there has, yes, for sure. It has not shown up in the data at all. But when you have a 50 % tariff on the input to a lot of industries, then it's...

4:53The journal talks about today, the worst, the most hard hit would be one of the president's favorite industries, oil and gas, obviously, because so much copper is used to produce oil and gas. and the journal ends with the sentence, Mr. President, it's a tax. And they say, and when you tax something, you get less of it. And that's something we don't. There's scarcity. It becomes more scarce. It becomes more scarce. Prices go high. We don't want copper more scarce or oil and gas more scarce. We don't want either more. This will be both friends of the show, I guess. Hassett is, I think Warsh was really the favorite.

5:34And I think now the way we characterize it was probably correct. He has a serious contender at this point. Scott Besson, supposedly, is in the mix as well. And he hasn't denied that. But now, supposedly, Hassett or Warsh is scheduled to meet with Besson about being. Right. Well, Dick Cheney led the search for vice president. He did. He did. see how that turned out. 200%, 200%, I'll say it again, 200%, on pharmaceuticals imported into the U.S., in the president's words, very soon. But he said the levies wouldn't go into effect immediately, saying he will give people about a year or a year and a half to get their act together.

6:19He was apparently referring to drug makers bringing back manufacturing into the U.S. After yesterday's cabinet meeting, Commerce Secretary Howard Lutnik told CNBC that details on pharmaceutical tariffs will come at the end of the month. Pharma stocks were largely unchanged, though, after the president's comments. I think we are at the pharma already knows with the most favored nation. And, you know, this was not sustainable where all around the world, it's a fraction of what consumers pay here. Trump's not going to. He's not going to. I mean, 200 percent tariff sounds like a negotiation to get drug makers to lower their prices.

6:56I'd rather raise, I'd rather have market pricing in the rest of the world rather than bring the price controls that they have in the rest of the world. Rather than bring that here, I think it's a threat to innovation. But something's got to give one way or another when we're paying, you know, our citizens here don't deserve to pay, you know,$5 ,000 for something that sells for$200 somewhere else. That's not good. Speaking of pharma, shares of Verona, a farmer soaring. The Financial Times is saying that Merck is closing in on a$10 billion deal to acquire Verona, which is a respiratory drug maker.

7:35The report says Merck would pay$107 a share. That would be a 23 percent premium to yesterday's closing price. An announcement could come as soon as today. This is for COPTA, C-O-P-D. It makes drugs to treat chronic obstructive pulmonary disease. It's testing that drug's potential to treat other conditions, including asthma and cystic fibrosis. This drug was approved by the FDA last year, I think, and it's projected at peak sales of a billion dollars. A billion dollars. A lot of people, as they age, have different, and it's smokers. People think that you're only susceptible to lung cancer. COPD, and I don't think that's fun for people.

8:19Anytime you have a breathing problem. Horrible. Terrible. A new Wall Street Journal report says government officials close to Doge have been questioned about whether they are loyal to President Trump or Elon Musk. The fight has pitted Doge officials against some in the White House who are looking to diminish Doge's role. President Trump was asked yesterday if he was second guessing any of the cuts that Doge make. He said he would have done it a little bit differently, but it was dramatic, important and saved a lot of money. Tesla bull Dan Ives posted about Elon Musk yesterday on X, of course, urging Tesla's board to grant Musk a pay package that would get him to 25 percent voting control.

8:56That would clear the way for a merger with XAI. He also called for Tesla's board to establish guardrails for the amount of time that Musk spends at Tesla and provide oversight for Musk's political endeavors. Ives said the soap opera must end. And in response on X, Musk wrote, shut up, Dan. No comment. In an email to CNBC, I've said that before. In an email to CNBC, I wrote, Elon has his opinion and I get it, but we stand by what the right course of action is for the board. Which Dan are you? You saw how long I waited. You saw how long I waited. There are a lot of Dans in our world. There are. I think you would say shut up to all of them, actually.

9:44You're right. Exactly. I basically say shut up to anybody. Not you. Whoa. No, no, no. And not some other people, you know, believe me. In a deal in Philly, union leaders agreed to a tentative deal this time to end the nine day garbage strike. Squawk box has been all over this one. like the stink that has plagued Philadelphia as the trash overflowed at drop-off points. So we've been all over it. All over the stretch. Stepping out. Yeah. All right. Cheese will be next. Stay right there. So much more Squawk Pod ahead. A conversation with Ripple's CEO, Brad Garlinghouse, who just took on BNY as the company's stablecoin custodian.

10:33his vision for stablecoins and everyday crypto transactions. Consumers will probably see it secondary to businesses here in the United States. Outside the United States, you're seeing consumers lean in, in part because they don't necessarily want to hold their local currency.

10:53This is Squawk Pod. You see how I still have physical newspapers? I read them all online. You do? I do. I need boarding passes printed out. I need, and you're watching Squawk Box on CNBC. I'm Joe Kernan, along with Melissa Lee, Becky, and Andrew are off today. Ripple announcing just moments ago that it's partnering with BNY for BNY to be its primary custodian for its stable coin. Joining us first on CNBC, Ripple CEO Brad Garlinghouse. That's a nice shot, Brad. It suits you well. You're looking very, even presidential almost. Welcome. Thank you. It's good to be here. Good to be back on Squawk Box.

11:35You need a custodian for your stablecoin. Why BNY? Look, I think as the crypto industry has emerged from kind of the last administration where the industry was being attacked, working with the most trusted, the most well-regulated and even the best capitalized partners is a way to continue to build trust in this system. And stablecoins at their core, by their nature, it's, you know, a dollar backed with a dollar in deposits. BNY Mellon has, you know, for a very long time been amongst the most trusted partners out there for as a custody bank. So we're really pleased. We think it's indicative of the shift of tide where we've had headwinds for this industry are now becoming tailwinds.

12:19I think we're going to see a lot of growth. I mean, all the way back to that, that dual, I think. Right. Is that Bank of New York? I think. Yeah. Alexander Hamill. It goes back a ways, doesn't it? That one goes way back. I didn't put a number out there because I wasn't sure how many how many years it's been. But the BNY Mellon, we feel very lucky to be partnered with them. And we think, again, building trust for the whole industry and having RLUSD, our stablecoin, which just passed half a billion dollars of market cap. We launched only about six months ago. So we're really pleased with that trend line.

12:50I feel like this will only continue to build that trust. It's small compared to some of your competitors, though, at this point. How does that factor into how you approach the whole stablecoin industry? So the stablecoin industry is about$250 billion today. You know, many people think it'll be between one and two trillion in a handful of years. The growth behind it has been profound. We joined the market kind of late, partly because we were using stablecoins in our payment flows for our institutional customers. As you probably know, Ripple at its core has been a payments company in solving a cross-border payments problem.

13:27We use stable coins, we use XRP where it makes sense. And stable coins, when we were using that, we were a big part of activity for us. We were minting a lot and we thought, we can participate in this market given our institutional background, given the fact that we've leaned into compliance, been very regulated. We have over 60 global licenses to participate in these markets. So we feel like the growth ahead will serve us well as we continue to serve that institutional client. This doesn't you still need you still want a banking license, right, even though you have this deal with with BNY. Well, yes, is the short answer.

14:04We don't we have pursued a requested application to apply for an OCC license as well as a Fed master account. We think that the key here for crypto and the kind of decentralized finance, as many people call it, Ripple has been building bridges between traditional finance and decentralized finance. The world isn't going to be taken over by crypto. Instead, we think about how do we take the best of what crypto brings in facilitating faster, cheaper transactions and bring it to traditional finance. That's been at the heart of what Ripple has been focused on from the beginning. This is a step towards that.

14:37and certainly getting an OCC license. For those that have said that the crypto world wants to be unregulated, whatever, the opposite is true. You know, I'm here in Washington in part, as you referenced, there's a Senate Banking Committee hearing today. We are advocating as an industry to be regulated. And those that, like Ripple, who have stepped forward and said, we want to get an OCC license, in addition to the licenses we have with the New York Department of Financial Services, it only continues to augment that very robust, very compliance first, trusted partner, so that we can continue to use these technologies to benefit consumers and businesses alike.

15:12I have to correct you. Yesterday, Joe Lubin told me crypto, in fact, is intent on taking over the world. Didn't he tell us that? I think he told us that yesterday, that both Ether and Bitcoin were going. He kind of said that. He kind of said that. Brad, I'm just wondering if you could take us out, you know, five years, 10 years. I mean, right now we have a host of stable coins out there. We've had reports that Walmart and Amazon are looking into how they use stablecoins. Where do you see stablecoins meeting the general public in terms of function? Well, I think first it will probably benefit companies like Amazon and Walmart and companies that are doing a lot of transactions, particularly cross-border transactions.

15:56The friction of how we all live today, which really is often referred to as the SWIFT network. This was built literally 50 years ago, and the architecture has not kept up with the modern internet. We see the opportunity with things like stablecoins to fundamentally change how corporate payments work, how treasury operations work, reducing the amount of time and float necessary, and then also reducing fees. So stablecoins really can have a profound impact. I think that's why there's been a lot of investor excitement. But I think your consumers will probably see it secondary to businesses here in the United States.

16:30It's outside the United States, you're seeing consumers lean in, in part because they don't necessarily want to hold their local currency. If you live in Argentina, where you've seen the Argentinian peso devalued multiple times in my lifetime, you might actually say, I'd rather hold a U.S. dollar stablecoin. Right. Which has its own. Dollar's got its own issues, I guess, Brevin. Nothing compared to that. That's true. It's good to have you on and keep us updated with what's happening. You got a lot of fans on Twitter. I'll tell you that much. Crypto Twitter is an active group, and I think advocating for the exact same reasons we're here in Washington today.

17:08People, and even to Becky's question, consumers and small participants in this market want clarity. Yeah, it's Melissa Day. I don't think he has a monitor. Yeah, that's fine. Yeah, that's fine. It's a compliment. Just don't call me Andrew. No, I'm kidding. You can call me. Just call me for dinner. See you later. Thank you. Next on Squawk Pod, Apple turnover and not the sweet kind. CNBC's Steve Kovach on leadership changes at the company and a looming deadline for its artificial intelligence strategy. They have to get this right. If they can't build it themselves in that time, they're going to adopt and license someone else.

17:52You're listening to Squawk Pod from CNBC. Today with Joe Kernan and Melissa Lee. Turnover at Apple. We're Apple turnover. The company's chief operating officer announcing plans to retire. Steve Kovac joins us here with more. Steve? Yeah, this is a big shakeup here. So what's going on is Apple CEO Jeff Williams, he's going to be stepping down from his role at the end of this month. And replacing him is Sabi Khan. He's currently the executive in charge of operations. That's the job Williams once held and even CEO Tim Cook held once upon a time. Williams is staying at Apple, though, until the end of the year.

18:25That's when he will formally retire and leave the company. And in the meantime, he's going to continue to run Apple's design team and health division. That includes things like the Apple Watch. Those teams, though, they're going to report back to CEO Tim Cook after Williams leaves the company at the end of the year. This is also the second member of Cook's senior leadership team to step down within the past year. That was CFO Luca Maestri. He stepped down from his role at the end of 2024, but he's still sticking around at Apple and running facilities teams. Now, Williams was once viewed as a top candidate to succeed Cook as CEO.

18:58But Apple says in yesterday's announcement that this is part of what it's calling a long plan succession. So Williams is out of the running for that CEO gig for now. And also he's leaving as Apple reorients its supply chain to mitigate President Trump's tariffs. That's going to be a big challenge for this new COO, guys. How much of this is an Apple plan in terms of all of these C-suite departures and shuffling in the company? And how much of it is just the circumstances and maybe the inability to retain these people? I think it's more the former. Keep in mind that senior leadership team, they're all in their late 50s, early 60s.

19:37So you would kind of expect retirements to start coming through right now. And then as we talk about succession, guys, I mean, think of this with the leadership team. Again, they're aging pretty up there. They're all around Tim Cook's age. Tim Cook is not expected to leave anytime soon. But as we talk about that and talk about who would be the successor with Williams, he was considered the guy. If Tim Cook left tomorrow, Jeff Williams was considered the guy who would take over. So John Ternus is a name that gets thrown around a lot. He's the head of hardware engineering. He is, I believe, in his late 40s, early 50s.

20:08He is a candidate. There's Greg Joswiak, head of marketing. I know Joe loves when I throw out all these Apple guy names and he has no idea. Tim Cook's, you know, 64? Something like that, yeah, 63, 4. And he's been in the job since 2011. So, I mean, he's had a big run. So I have a different question. We didn't see you yesterday. So this makes me wonder, does Apple end up being, you know, like the great tech companies that sort of miss the next move? And we have all new ones. And AI, does Apple, is that risk happening after losing? There's a chance, but I mean, you guys - Does it need to be the preeminent AI coming?

20:47Or does it just need to incorporate AI into - I think it's the latter. And I think what we heard, I think it was last week, the week before, that the fact that they're considering abandoning their plans to build their own AI systems and just adopt and license from OpenAI or Anthropic, I think that's telling that, hey, we can be the platform for this kind of stuff. I mean, because the ecosystem is so great and it's so ubiquitous. And they continue to leverage that. You know, you just make Siri better and, you know, incorporate the greatest AI system. But you don't need to be developing. I mean, that was their strategy in search, right?

21:19They didn't develop their own search engines. Why not this? Instead of trying to, you know, to be everything to all people. And they have a new deadline that they've imposed on themselves. And the last thing they need to do right now is miss that AI deadline. How big a deal is it that departure? Yes, that guy had 100. He's been there forever. And he had 100 people under him in that day. And not this guy today. Yes. Oh, a couple of days ago. So that wasn't the top AI executive. That executive is John Gianandrea. He is still employed at Apple. But this guy had a team of 100 people. Sure. I mean, he was an executive.

21:53There are a number of executives throughout Apple that are at that same level. They all switch around all the time. He was only at Apple for like three or four years. So I read that more as a meta story than an Apple brain drain story. So it didn't hurt Apple that much? I don't think it does. I think, you know, they did shake up the people running this new Siri. And so there is a new idea here. And again, that's why we're hearing about these ideas, that they're going to take a different approach and get this shipped on time. And again, they cannot miss this deadline. Again, they said it's going to ship in 2026, and they have to get this right.

22:24If they can't build it themselves in that time, they're going to adopt and license someone else. And the stock will fall further. Well, no, not necessarily. You see what the stock did? The stock went on a run. If they miss another deadline, they will miss it. The stock will fall. The perception now is, though, if they adopt this, they won't miss that deadline. They have this sort of insurance or backup plan in order to make that happen. But, yeah, I don't read this as like some kind of AI brain drain. I read this as, you know, they're aging up and it's time to retire. 2025 has not been kind. No, it's what, 15, 16 percent?

22:58The fourth worst performing Dow consultant. It's worth performing. And look at Meta, look at Google, look at all those guys and how they're performing compared. Yeah. Apple's demise has been greatly exaggerated. Many times. This is not the first time doom and gloom are on Apple, right? I remember when it was, you know, you were a toddler. You were. But you remember Gil Emilio? Do you remember John Scully? Yeah, of course I remember John Scully. Do you remember Gil Emilio from National Seminary? I was a little kid at that time. I don't even think you were. Ron Johnson. The list goes on. It was a$9 billion company at the low.

23:33Even when Tim Cook came in. They made something called Newton, I think. Yeah, I remember. It was almost an abacus. It almost, you were like... I was like a teenager when that came out. Except an abacus is timeless. It is. Buying Commodore kicked her out. Did you buy a Newton? I did not buy a Newton. I don't think anyone did. I still might. That's the problem. I might buy one now. You know, I just got on this great social media website, MySpace.

24:01That's Squawk Pod for today. Thanks for listening. Squawk Box is hosted by Joe Kernan, Becky Quick, and Andrew Ross Sorkin. A big thanks to Melissa Lee for sitting in today. You can tune into Squawk Box on TV weekday mornings on CNBC at 6 Eastern. Get the best of our show right into your ears when you follow Squawk Pod wherever you get your podcasts. And please check out our bonus pre-market pod, Five Things to Know Before the Opening Bell, the day's top headlines in your feed three mornings a week. That's it. Have a great Wednesday, and we'll meet you right back here tomorrow. We are clear. Thanks, guys.