Fast Food Economy & America’s AI Regulation 2/12/26

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1:06On today's episode, what the markets value in consumers. Can we talk chicken nuggets? Oh, yes. There's this debate about value versus money. Fast food company restaurant brands, the parent of Burger King, Tim Hortons, and Popeyes, sees how inflation is impacting consumer diet. Executive Chairman Patrick Doyle joins us. We've been very consistent with the values. So we've been doing five and seven dollars. Plus how the U.S. will end up regulating AI and staying competitive. Maybe they're more intertwined than we expect. Tech worker turned politician, New York's Alex Boris has a plan. I think the market actually currently is undervaluing trustworthiness of AI.

1:53The AI that will win in the long term will be trustworthy AI. And so it's easy for all of us to say, we don't want to use Chinese AI. That's obvious. If you're in Europe, why do you want to use American AI? It's Thursday, February 12th, 2026, and SquawkPod begins right now. Stand by in three, two, one, cue, please. Good morning and welcome to SquawkBox here on CNBC. We are live at the NASDAQ market site in Times Square. I'm Kelly Evans, along with Brian Sullivan and Steve Leisman this morning. We're all in for Joe, Becky, and Andrew. Yesterday we saw the struggle throughout the day with the jobs report.

2:30We started positive about it, ended a little bit less so. NASDAQ is now trying for its first positive week in five as we look to close out trading today and tomorrow. I'm getting a little ahead of myself. And treasury yields, well, that's, you know, that's kind of the, 417 on the 10-year. So remember, about 24 hours ago, we jumped up to 420 after the stronger jobs report. We circled much of that back, and we're still hovering right around those levels. $3.50 on the two-year. It's boring after a while, this 10-year thing, right? It looks like it's going to be a story, and then it comes back, then it falls, and then it's going to be a story, and then it goes back.

3:05I don't know, guys, if you have a one-year on this thing, but it seems like it's stuck in this range like a tire in mud. And Rick has talked a lot about it. There it is. Two years, but at the same price. I mean, it's fluctuated, but look at the yield. The story, of course, is that the Fed has been cutting rates in the 10-year, has not really responded all that wonderfully. Is the bond market going to bond market, Steve? It's going to do it at once. A layer of that is, I don't know, what was it yesterday? Probably around the time, Brian, you were sitting down, 2 p.m. When did that CBO story come out?

3:33At a power lunch, Eastern Time. Yeah, right after the exchange, 1 p.m. Thank you very much. Steve, when was the CBO? CBO was yesterday at 10 o 'clock. Okay, fine. I think that, look, it's going to be hard for this level to come down a lot while we're talking about deficits that are$3 trillion or whatever that number was that they gave us by 2036. I mean, fundamentally, that's why it's, I think, kind of hovering right around these levels. I mean, the administration tries to tell a story here that they brought down the deficit to 5.4%. And they have. It's down 15 % year on year, but it's kind of a one-off.

4:04Yeah, but it's still so high. And it's going back up next year. By the way, the administration, I finally got to the bottom of this, why the administration is saying one thing and the CBO is saying another. And you know what the boring answer is? The administration's using calendar year. CBO's using fiscal year. Oh, even for the deficit rate. October to October. Anyway, it ends up being$100 billion on a base of$1.9 trillion. So it's like, look, I get it. You take any victory you can get. But if you read the CBO report, the big, beautiful bill goes the wrong way on the deficit. Immigration goes the wrong way.

4:39The only thing that goes the right way are the tariffs. So here's, I'm glad you're here. Good morning, by the way. Not just because you're here. I'm glad you're glad. Yeah. Well, let's be glad. Because it would be terrible if you weren't glad. Let's be glad together. Right, okay. And here's the narrative. So during the former president's years, whenever the jobs number would come in good, those on the political right would go on the social media thing, and they'd be like, but it's all government jobs. It really doesn't count. Now the jobs number yesterday was double the expectation, and those on the political left are going online on the social media thing, and they're going, but it's all health care.

5:10It doesn't really count. Does it count? How do we read the economy right now? It absolutely does count. I will point out that it was Secretary Besant who criticized the Biden economy for all of its use of health care and as as a source of job growth. And he has pledged as part of the Trump overhaul of the U.S. economy to get out of that business. Well, they're not out of that business. Health care and social assistance has been the number one sector. It's a little dangerous, Brian. It makes me a little nervous when things are focused like that. But I'm giving this jobs number a pass and I'll tell you why.

5:45If you look at the job growth over the past year, that's a cue to the guys in the back if you can put up the job. It's a hint. It's 6.03 in the morning. And they didn't know we were going to go here, so apologies to them in the back. If you look at that job growth trajectory, you can see an effect of the tariffs. But then I see this little creep up, and it happens in January. And I am hopeful that what that means is business is getting its feet back under it when it comes to the uncertainty generated by the tariffs. I'm hopeful. But more than being hopeful requires some confirmation. And you just can't go from 40, 40, 130 and say, oh, we're not a new trajectory here.

6:28That was the administration wants me. How many months does Steve Leisman need to see for you to be convinced? At least, there we go. So you can see, by the way, look at those three numbers, those three bars to the left. We were doing okay up to January. And then you can see the up and down that happened. And now, okay, that's a possibility to be hopeful. But the administration tried to call me last night and spin me a little bit on this. And they had at least one point, which was that the seasonals were a little tough on the number yesterday. It could have been even higher if not for the seasonals.

6:58They got a little bit of break, though, in the birth death. Helped them out a little bit if you look at that. Anyway, that's hopeful. It's possible. It's there, but I've got to see it repeated. There's a lot of David that says the jobs market weak before I'm going to go crazy. Can we talk chicken nuggets? Oh, yes. Because the other thing, so there's probably, let's go back to the 10-year. One piece of that is the whole deficit thing we were talking about. The other piece of it is the fact that a McDonald's chicken nugget value meal used to cost$10 after the inflationary thing a couple years ago, which brings us into their earnings today.

7:25I wouldn't know. I say sarcastically. Yes. That's a six-piece. They, the value, the difference between what you'd pay at Chipotle and McDonald's, to Chipotle's credit, they tried not to move from a slot higher, got a little close there. And it was a real headwind for them and for Pepsi and for Silicon. Now Pepsi's cutting prices and what is McDonald's talking about? Let's talk about this. McDonald's reporting fourth quarter sales and profit, Kelly, which was above analyst estimates as the company's value push wins over customers. Same store sales increasing by 5.7%, fueled by gains in the U.S.

7:59Wall Street was projecting comps below 4%. McDonald's chief financial officer saying the company is off to a strong start in 2026, but executives expect weaker first quarter same-store sales growth versus the fourth quarter. Last month's winter storm keeping some diners away and caused temporary restaurant closures. So I got a lot of questions. I think we've got a lot of fans here as well. I would say this. I posted a picture a couple years ago. I have a car that's old enough to have an actual key. like a I do not a fob it's like I got a if I don't have the key that's just the push and I posted a picture of a McDonald's burger next to the key and I thought is my key getting bigger or is the burger getting smaller I don't know and it was like now I know well you know I two bites and I was gone so I don't I'd love to know is there any shrinkflation in there as well right there's they can lower the price or keep the price steady because things are getting a little bit smaller and maybe it's not a bad thing and maybe they're not I'm not saying McDonald's is shrinking maybe my key or my hands are getting larger in my old age.

9:00I know my gut is. Once you call it a quarter pounder, Brian, I think you're a little locked in. Well, then you're locked in. Well, they call it Royale with cheese in Europe. Oh, okay. Well, maybe they, and they use the metric thing so they can do anything they want. They can do anything they want. On this vote, the yeas are 219 and the nays are 211. The joint resolution is passed. Without objection, the motion to reconsider The sitter is laid on the table. The House weighing in against President Trump's tariffs on Canada. Emily Wilkins joins us now with this surprising vote that broke last night, Emily.

9:34Yeah, Steve, good morning. Look, one of the strongest rebukes from Congress to Trump's tariffs policies, we saw it last night, House lawmakers voting to revoke the tariffs, this one specifically on Canada. Now, the measure that passed the House would end the national emergency that Trump used as the legal basis for the tariffs. So that measure now going to the Senate. And remember, senators have already approved a similar resolution to end the tariffs in Canada last year. Back in the House last night, six Republicans voted with all but one Democrat to overturn the tariffs. One of the six, Congressman Jeff Hurd of Colorado.

10:10He said that farmers and steel workers in his district have been negatively impacted by the tariffs. But he was also concerned about the balance of power in the U.S. He tweeted that if we normalize broad emergency trade powers today, we should expect that a future president of either party will rely on the same authority in ways many of us would strongly oppose. Institutional consistency matters. The Constitution does not shift depending on who occupies the White House. Trump, of course, has already threatened retaliation against Hurd and the other five House Republicans, as well as any senators who plan to vote for the legislation when it hits that chamber.

10:51He posted on Truth Social last night that any Republican in the House or the Senate that votes against tariffs will seriously suffer the consequences come election time, and that includes primaries. This tariff measure that passed last night is not likely to be the last one, House Democrats also plan to force votes revoking tariffs on Mexico, Brazil and globally in the coming weeks. Guys? Let me ask you this question. What is the chance that this ends up passing in the Senate? And then even so, does it have a veto proof majority in either chamber? Two really good questions, Steve. I mean, yes, there's a great chance this passes in the Senate because you only need a simple majority.

11:34You don't need 60 votes, you need 51. And again, we saw a similar measure get those four Republicans needed to actually pass the Senate as well. But as you correctly point out, Trump is able and will be vetoing this. And clearly, there's not the support in Congress to overturn that veto. Still, I mean, a president having to veto a bill that his party sent him, they control both chambers of Congress. I think this is showing right now that as you get into midterm season, as lawmakers are more focused on affordability, There is concern about some of these members, particularly in competitive races, showing that they are trying to be attentive to some of the high costs and the high prices that they're seeing and push back, given that some of their industries are being hurt because of these tariffs.

12:19Emily, would you say in a word, though, this is theater and positioning ahead of the midterms, which is information in and of itself? Or is there any real likelihood that the administration faces, you know, being boxed in by Congress on any aspect of the tariffs they've implemented so far? You know, Kelly, of all the issues that have kind of come up between Congress and the White House, where there's been a bit of disagreement, tariffs have always stuck out to me as really unique. I mean, last year when we were around the deemed Liberation Day, there was a lot of frustration in Republicans that I was speaking with in the halls of Congress.

12:55You know, a number of them said we want to see this play out. Obviously, a lot of those tariffs were rolled back. Right now, Mike Johnson was telling his members last night, hey, let's just have the Supreme Court see what they rule on this before we try to weigh in. So there's been this whole wait and see, wait and see. At the same point, there has always been a level of uncomfortableness on Capitol Hill with the tariffs that Trump has put in place. And I think now that you're getting to a point where members are looking at an election, the calculus is changing a little bit. Given last year where maybe everyone kind of fresh off a huge win for Republicans was feeling the unity and everyone trying to move in lockstep.

13:31I'll make one very quick point, which is that it seems to me, Emily, that Congress is learning a lesson here. when it provides the authority to the president or to the executive branch to make these tariffs, clawing it back is very, very difficult. And it has the ability to override them. Did they provide him with the authority or did he just take it? Yes, of course they did. The IEPA, the emergency tariffs. You mean decades ago. That's a provision they provided to the president to do these tariffs. But clawing it back, you can see here, is very difficult. You not only have to get a majority, but then you have to get a veto-proof majority.

14:07Yeah, or the Supreme Court. And this has been the story of Congress for a decade now, giving power to the executive branch because one party wants their president to do a thing, and then, as Jefford points out, but then the next party's president comes in, and suddenly you're stuck with the precedent, and suddenly things are happening that maybe you didn't agree with or didn't intend to happen. Well, you're approaching year two of a second term, and there's going to start to be pushback because people are going to realize that this president will not be president in a couple years. They're going to start to angle for the new person, whoever that may be.

14:39Let us thank Emily before we lose that opportunity. Emily, thank you. Let's talk about Cisco Systems. That stock is down about 8 % right now, the company beating earnings and revenue estimates. So what's the problem? Well, in focus for investors was a slight miss on the margins because of increasing prices, what we just talked about with burgers. But this one is for computer memory. Cisco's adjusted gross margin, 67.5 % in the second quarter. The company expects that number to worsen in the current quarter, down between 1 and 2 percentage points. On a call with investors, Cisco CEO Chuck Robbins said the company has raised its prices because of increased cost of memory and is revising contracts with partners.

15:20Now, let's be clear. I don't want to make too much. The stock's down 8%, but let's be clear, OK? The stock has been soaring the last year. It's up 11 % this year and has, like, doubled in a year. This is so ironic. So Cisco was one of the last of the old tech giants to finally reach its new highs. We were just celebrating that fact while also going, wow, look at the memory trade. You know, I wish I had connected the dots. I'm sure some other investors feel the same way. The very same reason that we've seen hardware like the Western Digitals and the SK Hynix's and stuff of the world is the best.

15:51The Korea stock market is doing what it's doing. Here's the collateral fallout from that. Cisco is down 7.5%, almost giving up its year-to-date gains now. Well, to be fair, it's doubled in five years, not one year. But, you know, I was here 100 years. Before you were born, Kelly, I was standing at this wall when they had these things called fractions, Steve. I don't know if you remember that. There was all these companies that no longer exist anymore. But at that time, Cisco was the largest company in the world. It hit$600 billion in market cap, which now seems quaint. It would be like$6 trillion today.

16:20And people are like, oh, my God,$600 billion in Cisco systems. And that was the peak for 25 years. It's wild. And here they are finally having a comeback thanks to some of this AI and so forth. And, of course, the rebound in memory is taking some heat out of that. There's a cool new box they have. Did you read about that? It's going to use an NVIDIA chip and help the chips talk to each other faster where there's overload in the AI system. And I think they're putting a bunch of their hopes on that. I don't know. Can we quickly show Apple shows? I mean, while that is, you'd think, again, that makes them an AI beneficiary, although this is the flip side.

16:54I don't know how much of the business it'll ever be, but it's part of their problem. Here's another one. Yes, it's done well over two decades. This is the other name that people are focused on having to pay more for memory pricing. Apple? Yes. They have a phone, right? Yes, they might have to raise iPhone prices 15 % later this year. That's partly why I look at the stock had been on a losing skid, but doing a little bit better lately. Just curious if that reacted to this. And then, only because I feel ashamed and embarrassed, I don't want to be left out of the conversation, is let's look up GLW.

17:23Corning. Because this is another Cisco-like name. Yes. You know, the phoenix comes out of the ashes. Corning has been one of these, and I'm using, and I say this very politely to all my friends up there in Corning and Elmira area, Horseheads, New York, where they're based, which is where you're from, I think, originally, Kelly. Raised in Syracuse. There you go, which is this is one of those companies that people kind of didn't think about. Then they realized who makes all the fiber optic cables that connect all these things. And the screens, right? Yeah. Yes. The Gorilla Glass on the phone. I love this Corning story.

17:56Do you know why the ticker is GLW? Glassworks. Correct. Glassworks. But I actually don't know much more beyond Glassworks. I'm amazed the company is still there, still thriving, still part of the whole story. And Wendell Weeks is still the CEO. So, Wendell Weeks, and I know he's been on Squawk Box many times, was the CEO of Corning 25 years ago. Am I right? They're still in Corning? The town of Corning. They're still in Corning, but there was some talk about them maybe picking up and leaving a little bit. Was there a story about that? Anyway. The Finger Lakes region of New York. Wendell, feel free to join us.

18:30By the way, I know you're a big fisher. Do you fish in the Finger Lakes? They're the deepest lakes in America, the second deepest in the world. I never have. Lake Seneca is 953 feet deep. Skinny Atlas is the one I grew up near. You realize they're never going to put us together if we keep talking like this. All right, let's check out the cheese. It's 6.20 in the morning. You don't really want to come back. Cheese will be next. Coming up on Squawk Pod, the fast food executive who leaned into technology when he was CEO of Domino's. Restaurant brand's chairman, Patrick Doyle, on what he sees in American wallets.

19:03If you look at the U.S. consumer, it's what you've been hearing. It's very bifurcated. We'll be right back. 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. It works more like real money and less like something locked in an account. For a limited time, new customers can get$10 added to their balance. Just use code CASHAPP10 when you sign up. And don't forget this part. Send at least$5 to a friend in the first two weeks.

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21:07This is Squawk Pod. All right, we are halfway down with Squawk Box. Good morning, everybody. Thank you very much for joining us. I'm Brian. We've got Steve here. We've got Kelly here as well. The whole gang has just swapped out. Do not adjust your dials. They'll be back, most of them, tomorrow, right? I know. Why are they all gone? Joe's in California. He does his golf. It's a lot of big guests. You saw that board. A lot of big guests. Yeah, yeah.

21:35Restaurant Brands International reporting better than expected earnings, better than expected revenues, and same-store sales jumped by 3.1%, powered largely by growth outside the United States. But let's talk about it all. Bring it together. Patrick Doyle is Restaurant Brands International's executive chair. Patrick, great to have you on Squawk Box at CBC. Thank you very much. What are you seeing from the consumer, and how is the consumer here in the United States different from the United States? on the consumer outside of the United States. Yeah, I mean, Brian, there is real strength outside of the U.S., no question.

22:08Our international business put up a six comp. Tim Hortons continued to be very strong in Canada, almost a three. So we feel very good about that. And that's kind of 70 percent of our cash flow. If you look at the U.S. consumer, it's what you've been hearing. It's very bifurcated. If it's a household income over$75 ,000, it's positive. If it's under, they're still being a little conservative about how they spend. Patrick, I want to interrupt you right there because we have a lot of data on that point. Has that always been the case? Or are you seeing it more the case now, this bifurcation than it usually is?

22:47No, much more. Certainly in the last year, year and a half, that's a relatively new thing. But I'll tell you, I'm optimistic. As As long as the employment picture stays good, then I think we're going to see that come back around. Is there any we were debating earlier from one of your competitors. They've got like this golden arch thing. I won't mention my name. You might have heard of them, Patrick. But there's this debate about value versus money. Right. What do people feel if they feel like they're getting something that is worth their dollar? they are more likely to go to that at your restaurants, Tim Hortons, right?

23:25At Firehouse, at Burger King, at Popeye's. What have you learned in the last couple of years about the consumer that was the most eye opening? Yeah, I think the interesting thing there, Brian, is we've been very consistent with the values. So we've been doing five and seven dollars with Burger King. That's working for us. We haven't been pulling a bunch of different levers. What we're focused on is giving better value by having better food, better service, renovating our restaurants. So we're really very focused on improving the experience that our customer is having and doing that for a consistent price.