California Wealth Tax & Top AI Picks for 2026 12/30/25

0:00Bring in show music, please. Hi, I'm CNBC producer Katie Kramer. Today on Squawk Pod. The political debate over a proposed wealth tax in California that could lead to a tech billionaire exodus from the state. We get the take of venture capitalist Ben Harrison on the potential 5 % tax. If you penalize one extreme, you're going to penalize the hardworking person that's sort of getting there. Top tech picks for the new year from the dapper Dan Ives. We'll talk AI and his wardrobe. That's our whole thesis going 2026. For every dollar spent on an NVIDIA chip, there's an$8 to$10 multiplier across the rest of the tech.

0:42Plus, the rest of today's news that got us squawking, Silver Swings, the fight inside Lululemon, and our favorite soap opera, the president's search for a new head of the Federal Reserve. They better have good food. At the Fed, cafeteria, Mar-a-Lago probably already has decent food. It's Tuesday, December 30th, almost the end of this year. Squawk Pod begins right now. Stand by Joe in three, two, one. His mic is here. Good morning and welcome to Squawk Box here on CNBC, live from the Nasdaq market site in Times Square. I'm Joe Kernan, along with Leslie Picker and Mike Santoli. Becky and Andrew are off today.

1:22For the last week or two, we're watching metals again this morning. Profit taking and increased margin requirements from exchange operator CME Group, contributing to a big fall yesterday. But a rebound is underway this morning. Silver dropped nearly 9 percent. Its worst day since early 2021. Earlier it hit a high around$83 an ounce. Gold was down 4.6 percent. Platinum and palladium dropped about 15 percent each. Copper down 4.7 percent. Platinum up about 3 percent right now. Now, copper is looking to notch its longest winning streak since 2017. There's some issues about supply chain shortages, supply and demand.

2:05Obviously, copper is a critical component. There's some stockpiling. There is a little bit of a tariff component in terms of when you might be able to move it across borders. And I just think that there's so much hot money in metals right now. And it's kind of just we're seeing the pressure settles at the whip end of it. And copper is always a little bit of a follower and more of an industrial. But also, there's been this reflation trade that's been in the equity markets as well, and seems to be reflected to some degree in copper in the last couple of weeks. Meta, meantime, is buying AI agent developer Manus.

2:38The Wall Street Journal puts the purchase price at more than$2 billion. Manus was founded in China as a product of a Chinese startup, but later relocated to Singapore. It launched its first general AI agent earlier this year, which can perform complex tasks like market research, coding, and data analysis. It emerged as a notable AI player after claiming its chatbot offered better performance than OpenAI's deep research agent. The acquisition fits with Meta's broader strategy of buying specialized AI startups to acquire talent and fast-track its broader AI business. The firms say Meta will continue operating its subscription service without any disruption.

3:15You see, not a whole lot of reaction in MetaShares, down fractionally, although it's been kind of in the penalty box in the AI story. people are a little bit less confident in the payback on its heavy investments. Yeah, didn't Benchmark get some pushback with this one when it had its latest investment, its latest round of, I think they put in maybe$75 million there and then got some pushback about it being a Chinese company. And we've seen such a bifurcation between US AI and China AI. And this is an interest, I don't know if it's a signal of more to come or whether there can be more from here.

3:49Obviously, they moved their headquarters to Singapore, probably to try and combat some of those criticisms. But obviously an interesting thing to note in the whole AI arms race between the two countries. President Trump focusing again last evening on the future of the Federal Reserve. Mr. Trump said he would reveal his choice sometime next month. He also renewed a threat to fire current Fed Chair Jerome Powell and sue him for what the president called gross incompetence related to the renovation of the Federal Reserve building in Washington. They better have good food. At the Fed cafeteria? After this, yeah.

4:26Mar-a-Lago probably already has decent food. I think he was, you know, the president exaggerates. Stephen Moore was saying that yesterday at times, but kept hammering on the most expensive building ever constructed, that$4.2 billion. When he was confronting Jay Powell a couple of months ago and they were together walking around the building, I think he was talking about something that had already been spent, and Jay Powell was just sitting there going, no, no, no. While he was talking, Jay Powell was going, no, no. But he got more. He's angry. I'm not sure why they just cut. Maybe because they've got.

5:09You know, they've cut 175 basis points with no recession in sight over the course of 15 months. But, you know, I guess it's just you wouldn't seem to be responsive at times in one year or nine months on pause, you know. So I guess that's, you know, it just doesn't sit right. Well, also, it's still unclear whether he'll stay on, you know, post-May, whether he'll stay on the board. Yeah, not as chairman. And he said yesterday, I mean, any normal person would resign. I think that's what Trump was saying. If we had no inflation, if it was anchored at two, it wouldn't matter if there was a recession on the horizon.

5:49No, that's right. Yeah, exactly. You'd want cheap money for people to build. Right, or you just get in a hurry to neutral, whatever you think that is, which is definitely lower than where we are. And there may have been, I mean, we have had recession scares over the last year. That's right. Again and again and again. And by the way, September of 2024, the first cut was a deep recession scare. If you look at every market base indicator, it was a mini panic. And, you know, even in October of that year, Kevin Hassett said it was the right thing to do to cut. Right. That's why there's that saying that, you know, market predicted nine out of the last four recessions.

6:27Lululemon responding to its founder launching a proxy fight and nominating several independent directors to the company's board. Lulu founder Chip Wilson made his move two weeks after the company announced the exit of CEO Calvin McDonald without a successor. Wilson nominated three people to Lulu's board, including the former co-CEO of On Running and ESPN's former chief marketing officer. Shares of Lululemon have fallen more than 44 percent this year. In a press release, Lululemon said, quote, In the interest of avoiding a costly and distracting proxy fight, the board requested from Mr. Wilson the names of his director nominees to evaluate their qualifications and backgrounds.

7:05But Mr. Wilson declined to engage further. Now that the names have been submitted, the board will evaluate Mr. Wilson's director nominees in due course. The company said it's encouraged by his strength it's seeing in the U.S. and internationally, but it said it recognizes there are more opportunities to realize value across the company. When you say Mr. Wilson, I guess it's from my childhood. Mr. Wilson! Cheese will be next. Coming up on Squawk Pod, California's tech elite are up in arms over a potential wealth tax. Ben Narison, founder of Tenacity Venture Capital, joins us right after this break.

7:46Everybody uses the example of the Bezos' of the world. But what about the dry cleaner that opened one store and then two and then five and then ten? and 100 % of his or her net worth is in that asset.

8:06Welcome back to Squawk Pod from CNBC. Today with Joe Kernan, Leslie Picker, and Mike Santoli. California's tech elite are angry over a potential wealth tax in the Golden State. the heated debate played out largely on X, where some tech leaders have called out Silicon Valley Congressman Ro Khanna for supporting the idea. Y Combinator's Gary Tan has even called for a primary challenge for Ro Khanna. In a statement, Congressman Khanna's office said he has always supported a modest wealth tax on billionaires to deal with staggering inequality and to make sure people have health care while also advocating for common sense workarounds.

8:49Joining us now, Ben Narison, founder of Tenacity Venture Capital. This is just such a multifaceted discussion we can have, Ben. We've had Roe on many times. I don't think he always did support what he's now calling a moderate wealth tax. I think in the past, he's come down on the side of a lot of his constituents and not. But and then I think about does California need more money to waste? I mean, is that really the answer for how to deal with things out there? It's pretty tough to be so, I don't know, proven to be poor at your job of spending money that isn't yours. And then to ask for more, you know, California's own accounting group said that they found nine point six billion dollars worth of waste and inappropriately spent capital and fiscal malfeasance.

9:43And, you know, we went from a surplus to a deficit of court. But, you know, this is just the same as always. This is political pandering to the proletariat. It's a let's tax the rich and help you little guy and gal. It has no basis in anything that works. There's no country in the world where a wealth tax has worked, with one exception, that's Switzerland. And they do it in an extremely logical and fair way. You know, it would take you 20 years of paying Swiss wealth taxes just to equal what you would have paid on a game in the United States through capital gains. So, you know, this is a bunch of chess pounding.

10:19I really hope it doesn't pass. We had this conversation when Kamala was running. It's just an idiotic concept that is nothing more than than political positioning. Having said that, Mondami won in the same way. So, you know, I'm worried about that. Ben, there's two issues here, I think, if you boil it all the way down. And one is, if someone accrues a lot of wealth paying, and I've seen people say, I paid 53 % to accrue all this wealth. Now I've got it. It's private property. There's no way that you can just say, now I want some of it. That's confiscatory. You've already paid taxes. Then there's founder shares.

10:57The people that found a company, let's say it's at a dollar and now it's at a thousand dollars and they borrow money against the gains to live off those. Then they die and their heirs get it. And it's never taxed, basically. And I almost can see in Bill Ackman's got a way that you could maybe address that. I don't know how much money it would raise. It's not going to solve California's problems. You know, it's so that don't forget the fact that there's well documented cases where people, countries and states create wealth taxes and you see massive fleeing of wealth. You do. But it's in 1989 lost by their own numbers, 10 to 12 ,000 millionaires when millionaires mattered, you know, back in the 80s.

11:39But it goes against everything we learned about about property rights and John Locke and everything else over the years that it's basically confiscatory. And if you go down this slope, I don't know where it ends. But I do at least understand the notion that if you never sell anything and you're a founder and you're worth$20 billion and you just live off borrowed money like a billionaire, I can understand how the optics of that make it right for trying to change something. Buy, borrow, and die philosophy upsets a lot of people. It is a tiny, tiny, tiny fraction of the planet. To worry about something that impacts one or two bips of the population.

12:23And by the way, these are exactly the people that have the flexibility to go wherever they want. So, you know, you've seen this when people change trust law, they move to another place. When people change corporate law, you know, you've seen all the things Elon Musk's been doing about anti-Delaware. Now we've got to be in Texas. Money is fungible. People can move. You know, when you're at that level of wealth, you have an enormous amount of flexibility. I mean, I've heard so many tales and I've seen people that have had sort of have become or coming into the billionaire class that have almost immediately moved to a tax free state.

12:54I mean, you just saw I don't think it's because he's a billionaire, but George Clooney is now moving to France. So, you know, you're just making it really hard on people. And yes, it is confiscatory, because if you take out that tiny, tiny, tiny fraction, drawing attention to the one in a million to try to make a case for something that might impact even 1 % is totally unfair. And one of the things that goes on Twitter, a lot of people are talking about, I don't understand property taxes. I'm paying rent for the house that I own. There's plenty of versions of wealth tax already. Property tax is a great example.

13:27When I moved to California, I paid cash for my house because having been an entrepreneur for 25 years, I worried that I might risk it all again. It is really, really hard to address the sort of unrealized capital gains. First of all, everybody uses the example of the Bezos' of the world. They're borrowing against their public stock. They're spending it. They'll eventually die. Their heirs will get a step up. But what about the dry cleaner that opened one store and then two and then five and then 10? And 100 % of his or her net worth is in that asset. And now it's worth$50 million. You know, if you penalize one extreme, you're going to penalize the hardworking person that's sort of getting there.

14:06Switzerland has made it work because they take a small 10 basis point to 1 % wealth tax every year, which is negotiated and generally relatively low. But keep in mind, they don't have capital gains. And their income tax is like 11.5%. So you can't stick it to us everywhere. I mean, you've got to sort of pick your battles. Otherwise, it's just totally and completely unfair. What do you think it means for entrepreneurship? Obviously, California and Silicon Valley, a lot of important companies were founded and still remain headquartered there. You know, I get the point about billionaires leaving if this does come to pass.

14:43Does it disincentivize people from starting companies, building companies before they get to that billionaire status? Sure. I mean, you're already seeing a material amount of companies and certainly investors that have moved to for a little while, Florida, Austin, Texas. Anybody with big dreams and aspirations usually is pretty long-sighted in terms of what they want to achieve. And so this could definitely impact that. You also have a pretty material. I've already seen big dog VCs leave the state. And so that impacts it as well, because all of a sudden, if you have this diaspora of capital that goes out of Silicon Valley to all these little pockets, Austin, Miami, et cetera, then maybe it's just as easy for the entrepreneurs to raise there.

15:27You just don't really want to push your best and brightest out of the area. If you look at all the, I think out of all the trillion-dollar companies on the planet, the only ones that aren't from Silicon Valley are Microsoft, Seattle, pretty darn close, tax-free, by the way, and Saudi Aramco and TSMC. But the vast majority came from here. 11 % of the jobs in the United States come from venture-backed businesses. It's just really, really tough to sort of like basically kill the golden goose. You want to make some goose fillets this year, it's not going to help you very much. California's never been the lowest tax place to start a business.

16:10And yet you've decided those numbers. Yeah, but a lot of people have already left. I mean, it's been a growing level of issue. I remember I was having a conversation over dinner. I used to live in Incline Village, Nevada, for a period of time. I moved from New York City. New York City used to be the highest tax in the country. So I moved from there to Nevada. and then I moved on to California. You know, a lot of great things here. I mean, we have some of the most beautiful terrain in the world. It's just a wonderful, wonderful place to live if you look at the physical environment of what we have here, the natural resources.

16:38But it is extremely expensive. You know, it's a horrific tax rate. And, you know, look, a lot of people are figuring out where they base their companies, whether it was a Delaware Corp or now. Maybe if you've got it, instead of a Delaware Corp, you've got a Texas Corp, Austin becomes more appealing. I've had founders that started from day zero in Austin. But there is a special serendipity here. You're not going to get anywhere else. You're not going to lose everybody. But on the edge, what's more likely to happen is the companies will start here. But when they get to the level where if this were to pass their line of sight to that billionaire status, they're going to move.

17:15And that's going to hurt us. It's a one-time tax, right? Well, when was the last time you saw a temporary tax in the US? any government ever be temporary. I mean, if they do it once, they're going to do it again. It's just, it's not obviously past and hopefully it won't be. And all this will just be a classic tempest in a teapot waste of time. And people will be trying to drum up the votes they need and they'll move on. All right. Ben, we're going to continue to talk about it and watch it play out out there. I don't think Newsom, hasn't Newsom's, I mean, Newsom's not even for it, Is he at this point?

17:54Well, it would be a little, I mean, in the past, he has gone against these sort of offerings. I mean, you know, let's remember he was backed by and is in office because of one of the wealthiest people in the country. Getty, you know, is assumedly still a very close friend of his. And I think he's probably realistic enough about looking at those. Look, Gavin's got issues, but he's a relatively logical person. And this is not a logical thing to try and get done. If you lose Gavin on this, I don't know, I'm not sure what that means. that they picked up Roe. We were going to be on a ticket together.

18:26I'm going to have to tell him that that's not happening. The Rojo ticket. Or Joe Roe. He wanted Joe Roe, but I don't want to be president. Vice president looks good to me. Not a lot, right, Ben? I think you should go back to curing cancer. I thought that was pretty cool. I had no idea that would go back. Yeah, exactly. Anyway, good to have you on. Thanks, Ben. Next on Squawk Pod, the big business and potential artificial intelligence opportunity of your post-holiday retail returns, reporter Courtney Reagan joins us. They're trying to personalize either the offer that you get or your window of return, your availability of return versus exchange.

19:04And top tech stock picks for the new year from analyst Dan Ives, including the AI revolution he sees coming to Apple, some of us have other concerns. But if someone does have green, is that not an apple when you're texting them? We usually delete that from our text chain, right? I mean, when someone's a green. So that's always a red flag.

19:35This is Squawk Pod. Stand Joe by in three, two, one. You're watching Squawk Box. on CNBC. I'm Joe Kernan along with Leslie Picker and Mike Santoli. If you didn't get exactly what you hope for this holiday season, expect to wait in line for returns, which are again expected to peak for the year this week, according to Adobe. Sure, returns are annoying for consumers, but the rising cost of returns is a true pain point for retailers. Courtney Reagan joins us now with more. This is one of my favorite topics, reverse logistics. I know it sounds so sexy, right? But seriously, returns is really fascinating to me.

20:14That hot pink sweater, not really you, or maybe you don't really need more cheese knives from your in-laws. Or maybe that's just me. But the NRF estimates almost 16 % of total 2025 retail purchases will be returned. That's$850 billion worth, and it'll cost retail$75 billion. The cost to return an item can be anywhere between 20 % and 65 % of its original value. Why? Well, because a return triggers a decision tree of sorts. Software, and increasingly AI, determines the path to recoup the most value at the lowest cost, from restocking it in-store, shipping it back to a fulfillment center, selling to a liquidator, or throwing it away.

20:51And as online shopping increases, so do returns. 22 % of online purchased apparel is returned. That's almost four times the rate for in-store bought apparel. This, at least according to an ICSC survey, some estimates actually put that much higher. because consumers are bracketing or they're buying more than one size or color and rarely intending to keep more than one, but expecting free shipping each way. Blue Yonder manages supply chain and returns for 23 of the nation's top 25 retailers. CEO Duncan Angrove says few retailers have one person that owns returns, but those that do see a significant, well, return.

21:30You're talking about double digit improvements in gross margin. You're talking about improvements and sales. Like I said, I mean, if you're in apparel and one third of your inventory is being returned, that's basically your largest supplier that you're not managing. You've got inventory coming back in. A lot of it, which, you know, almost a third of it doesn't go back on sale. It goes into a landfill. Higher returns hurt margins. So retail return policies are getting tighter, even personalized. Returns management firm Loop says the number of brands charging for returns is up 6 % year over year.

22:03That's the fourth straight year of increases. Some brands are shortening return windows or maybe saying you actually can't get a refund. You actually have to do an exchange. AI is helping making those personalized person to person in some cases. Yeah, that 22 % number is really eye popping. I mean, I'm a culprit of this. I return things all the time. But if it does charge me for it, oftentimes I'll be like, well, I guess I can kind of make this sweater work or the cheese nice, which, by the way, I'm happy to take off your hands if you need anything to make eating cheese easier. But do you expect to see retailers building that into the price of items?

22:40With a number that high, it almost, I wonder if it gets to the point where retailers start increasing the prices of the items that they sell online just to kind of compensate for the hit they expect to take to their margins in the future. I absolutely think they have to. If you think about it, we are now conditioned as consumers to want free shipping, but then if we return it, we want that to be free. So imagine the loss, even if you take one sweater, right? A retailer shipped to pay it to you. You try it on, you don't like it. Now you're shipping it back. They have a loss on that one item, right?

23:10Flat out. I mean, how long can they really expect to do that? And so it's a delicate balance because they also want you, the consumer, to be able to feel like that you have the option to try it on and if it doesn't work to send it back. And that's why I think AI and these different software companies are trying to personalize return policies by person if they deem you're someone that maybe abuses things. That was going to be my question. Is your pattern of return frequency taken into account? Exactly. It very much is by a lot of these retailers and these companies. Whether you got a really deep discount maybe on the sale and, you know.

23:45Exactly. Exactly. And so there's all different ways that they're trying to personalize either the offer that you get or your window of return, your availability of return versus exchange. It is a very, very interesting situation. I don't know if you've, I returned something recently to a store and they did ask for my ID. And actually they, they said, oh, you know, they brought up a previous return that I had returned something that was a large, a big price item, basically, that I didn't have gift receipt for. And because of that, they weren't like, they weren't going to let me do it again. Yeah, I wonder too, if, you know, AI will ultimately be used in a way that it makes people more satisfied with their online purchases, that the AI technology evolves to the point where it can say like, this size sweater will fit you, you know, don't worry about it.

24:29And then people will be more inclined to keep it. That's such a smart thought. And that is exactly what retailers are hoping that it can be another use case for AI. Better reviews, you know, that are not obviously prepaid for where people talk about the fit. I don't know if you've noticed on Amazon, but they are in some cases starting to flag this is a commonly returned item. And I've seen that a couple of times, which has given me pause thinking, well, I wonder why maybe I should look at a different option, which obviously then could be a loss of a sale. But maybe it's worth it if they end up sending it back anyways.