Google’s AI Reshuffle, Calls to the Fed, A Great Wealth Transfer 08/06/26

0:00Trading at Schwab is now powered by Ameritrade, bringing you an expanding library of education with even more ways to sharpen your trading skills. Access new online courses, insightful webcasts, articles, engaging videos, and more. All curated just for traders. Plus, guided learning paths with content designed to fit your unique interests. And no sifting to find exactly what you need, so you can spend your time learning to trade brilliantly. Learn more at schwab.com slash trading. Hmm. Interesting. Something amazing is happening when teams brainstorm ideas. Devices are keeping the energy flowing.

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1:24The inflation pressures are not going to subside quickly enough. Aging baby boomers and rising house prices contributing to an unusual personal finance quandary. More than$120 trillion. What? With a T? What to do if you are set to inherit a house? Sharon Epperson with news you can use. Who's going to manage the house while you still own it? Once, if you do decide to sell it, how is that going to be distributed? Plus, the rest of today's news that got us squawking, Jamie Dimon on the markets, SpaceX investors' payday, and fears of a U.S. weapons shortage. The whole conversation about lowering the total defense budget through all this sort of new technology has gone out the window.

2:06It is Thursday, August 6th, 2026. Squawk Pod begins right now. Stand under by. Three, two, one, up and enter. Good morning and welcome to Squawk Box right here on CNBC. We're live at the NASDAQ market site in Times Square. I'm Andrew Ross Sorkin, along with Joe Kernan. Becky is off, so it is just the boys. Back to Maspin. When did you get back? I got back last night. I got back last night. You've already, I don't know, indicated that the aura ring's not great? No, I was just indicating I was traveling all day. And you're tired, you need a break. Yeah, so this is going to be my problem. No, I wasn't complaining about it.

2:48I was just suggesting that, you know, next time I need to be flying private. Yeah, you were in Aspen, and I'm sure you weren't back in a middle seat. I was flying United. They did a lovely job. By the way, a note about United. Yes, tell me. I actually think this is a big deal. You were flying United with whom? I was flying United Airlines. Oh, just the airline. Okay. They now have Starlink. I know that. And we've talked about this, but I think this is going to be huge for them. Seamless, isn't it? And mine was only on the short flight, not the long flight back from Aspen to Denver. You can't get there from here.

3:24But amazing. I thought you were putting you in a good mood. But my point is, I wonder what it's going to mean to the other airlines for the next couple of years. I think if you were traveling, for example, from New York to L.A. for the next couple of years, if you had a choice between Starlink or no Starlink, you'd choose Starlink. So what do you say that you would not sell your SpaceX shares? This probably, I don't know if it's a commentary on SpaceX shares, because that's a whole different valuation. I'm thinking more about the airlines themselves in this particular moment. But Starlink is a great service.

3:53Great service. So in that respect, it is a commentary on it. It's a great service. What I don't know about the valuation of SpaceX is there's so many important parts of what the company is valued at. We've tried to figure that out, what the universe is valued at. And this is just one universe, possibly. We could be having this same discussion in some other universe right now. And Andrew could be conservative and I could be a communist. Well, I don't know who you're referring to as a communist. I know. I'm kidding. That's that's the latest buzzword after this guy. I mean, this guy's are you OK with this guy?

4:33Michigan guy? I think we have to have some serious conversations in this country about what's happening. We need to find a way back to the middle. That's what I think. All right. Meantime, JP Morgan CEO Jamie Dimon warning that leverage across financial markets remains elevated. In an interview with CNBC, Dimon adding that investors should remember that hidden borrowing can amplify market disruptions. Margin debt is the highest ever been. There's a lot of margin debt you don't see because it's not called margin debt. It's called other things. So it's that kind of leverage, some hidden, some public.

5:05We see a lot of it and it's high. You know, it's not I'm not going to say it's systemic high. It's going to cause a disaster, but it's high. And Diamond pointed to borrowing through prime brokerages, hedge funds, ETFs and Treasury arbitrage strategies said that heavy leverage increases that risk that a single investor could trigger broader volatility. that JP Morgan has been one of the prime brokers for AI-focused hedge fund situational awareness, which, of course, suffered heavy losses in recent days. And when we had conversations both with Brian Moynihan yesterday at Bank of America and also with John Waldron from Goldman Sachs, who also, by the way, situational awareness was a client of theirs, they both said that there was a pulling back, a little bit of tightening of conditions insofar as some lessons learned about how much leverage they're going to allow some of these funds to have.

5:53I got to tell you that watching in recent sessions, I've started to think about what Tom Lee said, because I don't know how this continues to go at this point with so many people suddenly sort of thinking this is normal. These types of gains and being comfortable with it. You're sort of OK. I mean, there's a certain complacency that's like, well, maybe we deserve this. Tom Lee's thesis is we get before we get to eight thousand at the end of the year, we take a trip down to the six to the six handles. That would that might be you could take a trip. But it's not clear you have to end the year at eight thousand either.

6:28No, it's not. But that's his thesis. And I'm I mean, I'm boss, but I just think right now it just can't go up like this every year. We're going to be at nine thousand on the S &P. Oh, yeah. No, at this rate, at this rate. So how do you shake out the complacency right now? You do something scary, I think. And this is these things are a lot of these things are so, you know, asymptotic, asymptotic. When you say you do something scary, what does that mean? I don't know. A quick break. A quick break of 10%, 12%, something like that. But what's going to cause that? Nothing ever does. There's an excuse for what causes it.

7:05What causes it technically is that there's too much bullishness and acceptance. Too much acceptance of the rally. For example, if there's a rate hike or if this situation in Iran doesn't really get solved. Did we know that it was going to be situational awareness? And speaking of situational awareness, jumping back into investing just days after being forced to unload many of its AI related bets. Bloomberg says Leopold Ashenbrenner's fund has put 400 million dollars into an unnamed private company following a 100 million dollar investment in the same firm last month. Ashton Brenner's fund has lost tens of billions of dollars in recent weeks due to falling prices for its investments in public technology stocks.

7:52The fund loaded many of those shares to Ken Griffin's Citadel. And speaking of SpaceX, which was also our topic just moments ago, we're also watching those shares very closely because the first share lockup is expiring. That means that insiders who acquired stock before the company had gone public will have a chance to sell and realize potential big gains. Shares well off the post-IPO highs. They were priced at$135 originally. They ended the first trading day back on June 12th. That was$161. Then hit a high of$225 shortly thereafter. And then they began a decline. They're now down close to about 20 % since the IPO.

8:36SpaceX also falling close to 14 % yesterday following its first quarterly report. Selling expected today as more than 900 million shares are unlocked. The question is whether some of this might already be marginally priced in, meaning we've all known this date. You know, if you were a SpaceX shareholder, this has been on your calendar for quite some time. And so the question is, does this, from a price discovery perspective, somehow change the game? And we will see at$109.78.

9:10SoftBank reporting better than expected first quarter profit, fiscal first quarter obviously, driven by a large gain in its stake in Intel. The Japanese conglomerate saying net profits for its June quarter totaled about$2.2 billion. That beat estimates, but it was a nearly 20 % decline year over year. SoftBank saw a roughly$8 billion gain on shares that it owns in Intel following a$2 billion investment last year. Intel shares have surged almost 400%, but not to worry over the past 12 months, with most of that coming after the Trump administration announced an investment in the U.S. chipmaker. In its vision fund, SoftBank said it saw no gain or loss from its investment in open AI.

9:52This went from, you know, a Pat Kelsinger sort of not being up to the task of being a foundry in this country, it went from that to up 400%. So compared to where it was, compared to what it now is now, is it that different than what it was? Well, I would suggest that there's one piece of this, and this gets to the government story. No, no, hold on. Suddenly the fortunes of the company are much better, not just because of the government. Supposedly now they're competent at building chips. So here's the question. Are they all of a sudden competent at building chips? Or because of the relationship with the government, are other companies doing business with Intel today because there has been pressure that has been put to bear on them, suggestions, you should be doing some business with Intel in a way that did not exist before?

10:50And I would suggest to you that that's got to be one part of the puzzle. Maybe. One part of the puzzle. Okay, but they had a, you know, they already had a loan from the CHIPS Act. Right. You know where Amtrak is profitable? One place, the Eastern Corridor. How long has the government been involved with that? Just think, okay, how about things like Solyndra? How'd that work out? But I don't believe that back then we had a president who was calling up, like doing sales calls, on behalf of the company and suggesting you really should be doing some business with Intel. I think it's great that now you think this is really good, what Trump is doing.

11:30I'm suggesting to you that that is part of the puzzle. It's one piece. Awesome, because we're all richer for it, because we're all owners. Coming up, right, we all got some intel. How much, if you figure, I think I've got like one zillionth of a share. I haven't done the math. What's a zillion? I don't know. You know what's after a trillion? Quadrillion. You've got to, I think, and then, well, we better look it up before. So scientific notation is a better way to do it. President Trump trying to tamp down some of the fear of U.S. weapon shortages in an overnight social media post. The president saying, quote, the U.S.

12:07has massive amounts of munitions, especially of certain types. Additionally, large amounts are being manufactured and shipped to the U.S. as needed. Now, that follows a Washington Post report from last night that said the president confronted Defense Secretary Pete Hegseth at Camp David just last week over shortages of missiles and air defense interceptors, telling Hegseth he thought the issue, in his words, was, quote, hadn't fixed. Now, White House Press Secretary Caroline Levitt telling The Post the story was 100 percent fake news. In his Truth Social post last night, the president said the leakers of these treasonous statements are being hunted down.

12:43Long-term jail sentences will be sought. But nonetheless, I think all of the reporting that I've seen, not just this Washington Post piece, but you talk to folks in the defense industry and ecosphere, and they say, we don't have enough munitions. The defense is tight, and the most high-end missiles, but you could go to bombers. We have a lot of munitions there, but it's more high risk, and you're risking... We just don't have the stuff that we need. Some of it we do, some of it we might be short of. And you've seen people say if we were to destroy more of the offensive capabilities of Iran, you wouldn't need as much of the patriots in the defensive ordinance at that point.

13:27Look, a lot of the criticism, though, coming from places that if you try to increase the defense budget, they start whining and crying about that. So you just can't win. You know what I mean? You're going to get criticism. Well, look, the defense budget is practically doubling. Yeah, it's like, you know, dragging, you know, like pulling hair out. Well, look, for a very, very long time, I believe President Trump, before he was the president, often talked about, could we lower these budgets? Others have talked about lowering these budgets. But he ramped it up in his first term. Uniquely, you know, so many of the tech, the sort of new weapons tech companies, and this is Palantir, Andrew Roll, a lot of the kind of folks.

14:11No, no. They used to talk about their whole selling point in the past was we're going to lower the cost of defense for America. And because we're going to use new technologies, we're going to create new munitions. We're going to be going to drone war for all this. And instead, though, that the whole conversation about lowering the total defense budget through all this sort of new technology has gone out the window. That has been removed from the conversation. You do not hear the defense tech companies saying we should have a lower, we're going to be able to lower the budget over time. In fact, it's the opposite.

14:45No, but you do hear that we need to transition away from a$100 million weapon that can be taken down with a$100 ,000 drone. So the math just doesn't work. So we're going to shift towards that stuff, I'm sure, but that's going to be expensive, too, obviously. All I'm suggesting is that no one's saying it's a one-for-one order coming down. I'm writing it down right now. Now, you are a big defense budget increased person. This is the opposite day? You're not going to let me write that down? Okay, so you're not a big defense budget person. I would like to find a way to maintain the budget and over time through technology, frankly.

15:24Lower it. To lower it. Okay. I mean, I look at what's going on. Then we're on the right side. I look at what's going on. I'm ready to double it. I look at what's happening in Ukraine, for example. It's all drugless. And they're doing an astonishing job and a very good job for a marginal amount of money relative to what we need. They need a lot more money. More, more, more. Cheese will be next. Coming up on Squawk Pod, a new report that the president likes to call the Fed chair Kevin Warsh to catch up, maybe ask for advice, is ruffling some feathers in Washington. Former Fed vice chair Roger Ferguson on the central bank in Trump's America.

16:00We know this president has been very clearly dismissive in some sense, certainly critical of their policy. And the task for the new chairman. Kevin Worsh needs to show, as he has, a strong degree of independence.

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16:58Access new online courses, insightful webcasts, articles, engaging videos, and more. All curated just for traders. Plus, guided learning paths with content designed to fit your unique interests. And no sifting to find exactly what you need, so you can spend your time learning to trade brilliantly. Learn more at schwab.com slash trading. Hey, Chicagoland, the Wayfair store is in your neighborhood at Edens Plaza in Wilmette. Finally, you can feel the fabric, sit on the sectionals, and even open the refrigerators. Plus, our in-store designers will help you bring it all together with free one-on-one design support for any project on any budget.

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17:51You're listening to Squawk Pod from CNBC. today with Joe Kernan and Andrew Ross Sorkin. President Trump making a habit of reaching out to new Fed chair, Kevin Warsh. This is a Wall Street Journal report. Said the president has spoken repeatedly with the chair since he took over as Fed chairman. Initiating a series of calls before sometimes not calling for a while. The president has reportedly asked Warsh for his opinion on how the Iran war, or how the rise of AI all affecting the American economy. One source the president said has not brought up the topic of interest rates, but this is all hearsay, and we weighed in on this kind of already, and I don't know if I can still talk to Warsh, really.

18:41It's hard, right, with his position now, but I would ask him. I'd ask him about golf. You can ask him about anything, and he's a smart guy. he's a very smart guy and it's going to be interesting to see how he positions look, part of what he needs to do in all of this is position himself with the president too it's not just the president needing to influence him at some level he's going to probably have to make some hard choices about raising interest rates and how he manages that is very important he is very good with people I know, but how long is his term? he has a four year term as well that's how it works but it extends out And the president's already gone.

19:19So he's right. He will. And then you'll see who's outlast. You'll see who's in office then. Right. And you'll see. I think we have a pretty good idea. You know who's going to be in office in 28. Good idea. Either AOC or Kamala. If you get your way. If I get my way. Go ahead. My goodness gracious. You saw you saw the Tucker is apparently going to be running. You see that speculation. That'll work. You know what? But that had set up a battle royale between Tucker Carlson and Don Lemon. OK, let's see. Apparently, all of his friends are saying, Don, you got to run because there's a groundswell. Is it just a groundswell?

19:56I had not heard that. Yeah. Groundswell. Meantime. Swelling ground. Well, let's let's let's see where things are in 28.

20:07Google shuffling its A.I. divisions. This is big news, folks. The company is saying that its chief scientist, Jeff Dean, leaving the company after 27 years. And Demis Asabas will become chairman of Google DeepMind. He has led that unit as the CEO, spearheaded nearly all of Alphabet's foundational AI work. Demis will become also the chief scientist at the parent company, Alphabet. He really is the OG of the AI movement, really, more than anything else. And so many of the people who went on to OpenAI and Tantrop, including Dario Amadei, started or at least worked for some period of their time at DeepMind.

20:48This is really where it all began. Alphabet shares falling about 4 percent yesterday following this news. The idea that Demis is stepping down slash up into this sort of chairman role so he's not going to be operating. And Jeff Dean, who is really also one of the OGs, also not in position. This is going to raise all sorts of questions about just where Google is going with AI in this moment as it's trying to compete against open AI, of course, and Anthropik. I defer to you on this. And this may be a really stupid question. Don't worry. What's the difference between Google AI when I just hit use the AI mode versus going right directly to Gemini?

21:28So what's happening when you use classic Google search, it's providing… I want the AI mode. You're right. And it's very good. At the top, effectively, it's providing an AI overview of its answer, and then it's also providing search results, right? If you're on Gemini, sort of classic Gemini, it's much more of a chat experience, much more similar to what you're doing with ChatGPT or with a cloud. I think it's really good. You know what? All three of them are really good, but they're all good at doing slightly different things. Okay. All right. Well, you know, my first order of business is grilling.

22:08Grilling. I thought really guess. Huh? Guess. Nope. Nope. Nope. Although I can do that on my own. I think, no, this is a reverse sear filet mignon on a two zone grill. You know, and so you've been asking your questions. How to do it. Yeah. Dry brine in the refrigerator or a wet brine. Do you use the tenderize the chicken? I'm going to get you the cooking app. That's what I'm going to get you. The New York Times. You've got some stupid hibachi out on your deck. You don't have any drilling. Is it electric? What do you got? You got anything? We've got a lot going on in the Sorkin family. Take it away here.

22:45You've got the George Ford. We've got an alphabet board member here. You can ask him about all this. You may not want to answer it, but you can ask him. You can grill him. I'm not going to grill him. You're going to grill him. Our next guest is an alphabet board member. We're going to get him to weigh in on what we were just talking about, not the grill stuff, the stuff before that, and some new data out from the conference board in collaboration with the Business Council. Their latest Measure of CEO Confidence Survey shows an uptick of optimism in the C-suite. Joining us now, former Fed Vice Chairman Roger Ferguson, Vice Chair of the Business Council.

23:18So much in addition to all that to talk to you about, Roger. Bank America thinks three rate hikes. I don't think it's going to, I think they're wrong. I think they're going to have to say, oops. Do you think we get three rate hikes? I don't think we get three, but I have come to learn a possibility of two this time or this year or early next year, because I think the inflation pressures are not going to subside quickly enough. And I think the kid in the committee, particularly this year, want to hold on to their credibility. Do you think that that that is consensus right now? I still don't. I think most people are thinking no change still.

23:57Do you think that that has shifted in recent weeks? And it shouldn't have because the inflation numbers have been have been more friendly. But the war obviously has ramped up and now oil is back to 75. So I don't know what you're assuming to get it to. You must be making some assumptions about Iran. I'm making some assumptions. I'm assuming that oil does not come back down very quickly. And even if it does, there's inflation in the pipeline. You know, I think there have been other disruptions as well. And then finally, you know, while we had one good reading, let's see how the others work out.

24:33Now, everybody's predictions are data dependent because I think the Fed is very data dependent. And the market last time around saw a pretty good read and, you know, expected maybe a 30, 35 percent chance of a move. But I think it's not over yet. And it's just too early to say for sure that this inflation is back in the bottle. And finally, you've got the fact that the chair has been very clear that five years of missing the target is really unacceptable. And I think the market is expecting to hear from him something clear about his framework, how he thinks about all of this, and how he, now it's his watch, is going to respond to it.