Sen. Thom Tillis, Charles Schwab CEO, & Fed Politics 2/4/26

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0:47Download the latest episode and subscribe at schwab.com slash marketupdatepodcast or find Schwab Market Update wherever you get your podcasts. Bring in show music, please. Hi, I'm CNBC producer Katie Kramer. Today on Squawk Pod. Charles Schwab, President and CEO Rick Wurster, with a pulse check on the American investor. Younger investors, Gen Z investors, are 46 percent more likely to invest before they're 21 than the generation before them. And a rare break from the Republican bloc. Sometimes, Senator, the truth will set you free. Unburdened from running for re-election, North Carolina Republican Tom Tillis is speaking freely and loudly about his concerns with the Trump administration's legal push against the Federal Reserve and its execution of platform policies.

1:38You have people like Stephen Miller and Kristi Noem undermining what should be a winning message for us. We have members who share that concern, but they also have to deal with the politics of re-election. Plus the politics at the Fed. Would Chairman Powell leave the Fed board once his term ends? If the president pushed to drop the Department of Justice's case against him. But the normal way things work is he doesn't stay after he's not Fed chairman anymore. But he could. But he could. He could. It's Wednesday, February 4th, 2026. Squawk Pod begins right now. Stand Becky by in three, two, one.

2:16Cue it, please. Good morning, everybody. Welcome to Squawk Box right here on CNBC. We are live from the Nasdaq market site in Times Square. I'm Becky Quick, along with Joe Kernan and Andrew Ross Sorkin. And here we go. It's hump day. Middle of the week. We made it to Wednesday. Yesterday was a tough one, particularly for the Nasdaq. In fact, the Nasdaq had its worst day since January 20th. If you were watching that, there were fears that AI could eventually replace the functions of key companies. that hit the software sector hard. Here are some of the biggest decliners, Intuit, Salesforce, Adobe.

2:52PayPal had its own issues yesterday. It's ended the day down by 20%. We talked about the new CEO who's coming in from HP, talked about some of the numbers that they had seen there, but really that company's got a lot of heavy lifting, so it's its own story unto what we saw with some of the pressures on some of those software companies. Those fears driven by a new tool from AI company Anthropic that helps automate legal work. And if you see here, Expedia down 15%. Equifax off by 12%, 15 % down for Thomson Reuters. LegalZoom was off by almost 20 % too. And shares of private fund firms also dropped.

3:29Those have invested heavily into the software sector. You can see Ares Management was off by about 10%. Blue Owl Capital, KKR, and Apollo all down as well. In time, President Trump signing a bill to reopen and most of the federal government after it was hit by a partial shutdown last weekend. The bill funds departments including Treasury, State, and Defense for the remainder of the fiscal year, which ends on September 30th, so it comes soon. It only provides two weeks of funding for the Department of Homeland Security, though, and lawmakers and the White House will use that time to try and negotiate over the guardrails on immigration enforcement.

4:04Democrats demanding new curbs following the killings in Minnesota of two U.S. citizens by federal immigration officers. Some Republicans pushing back, some maybe not. We'll see. I don't know what you think is going to ultimately happen. They lost a couple of Republicans in the House vote yesterday. It was picked up by four or five Democrats, which, you know, you're getting cameras. You're getting a lot of the stuff that you wanted. The ICE is funded until 2029. That's what I understand. If you do this, it's going to impact travel and TSA once again, which seems like a pretty tough sell to the American public.

4:38I was listening to Leader Jeffries yesterday, and he's on the same page as he was during the last shutdown. If we don't get what we want, we're shutting the government down. It has nothing to do with funding. It has to do with wanting policies. And it's weird because he continues to posit it as if it's normal. I can't imagine that's a winning strategy as you head into the November elections. If you continue to shut down the government. They've got plenty of breathing room. Democrats in the midterms, I think. Fed Governor Stephen Myron resigning his position as chair of President Trump's Council of Economic Advisers.

5:15Myron had been on leave from the CEA since last September when he was appointed to fill the unexpired term of Fed Governor Adriana Kugler. At the time, Myron said he expected to serve out Kugler's term, which expired on Saturday, then returned to a CEA post. But he said if his time at the Fed extended beyond January 31st, he would resign from the CEA. And it's February 4th, I saw the Democrats that he had promised those things to had already written a letter and said, hey, bud. They didn't say bud, but they said, hey, pal. No, they didn't really say pal. But they said, Mr. Myron, it's January 31st.

5:53That was Saturday. What are you doing still there? So he's answering by doing this. He's taking the job. He's argued for aggressive rate cuts in line with what President Trump wanted. Myron is only going to be there probably long enough to where Kevin Warsh is going to fill his position. If this doesn't get resolved with Jay Powell, and we have Tom Tillis on later today, Powell could stay on, and that would sort of thwart President Trump's ability to get the people he wants on the Fed. It's a seven-member board. If Powell were to leave, if this goes away, Powell does finally leave the Fed, that would give him, put him in a position, President Trump, to give Kevin Warsh a wingman and maybe answer some of your concerns, Andrew, about not having enough people that are with him to do some of the things he wants to do on the Fed.

6:49That's not my concern. I think Kevin's actually so good at what he does, he will ultimately convince them. Well, that seems like a change from what you've been asking everyone for the last day. No, but it's going to take, it's just going to take time. I'm just a believer that walking into it initially, it's going to take time to bring all these people together. I think he's a very, he's been with us for years. He can persuade a lot of people a lot of things. But I'm just saying you're walking into a situation where that's the challenge. Pam Bondi can tell Janine Pirro, and it's all summarized again in the journal today.

7:24Bill Pulte wrote something, and Jeanine Pirro, former Fox News host, and a big supporter of the president picked up on it. And Pam Bonney could tell her, drop this. Although President Trump doubled down this week. He's mad about too late Powell. So, you know, if not for nothing, he seems to want to extract things from people that don't go along with what he wants. we have seen that movie play out before. French Hill is coming on. I don't think Jay Powell will step down from that post. If he doesn't drop it. If he doesn't drop it. That's why it's in the president's interest probably to drop it.

8:05I don't think he's stepping down, even if he drops it. I think he'll step down if he drops it. And French Hill is going to make the case that, look, Jay Powell's a man of integrity. There's no way that the testimony in front of Congress rises to the level of a criminal probe. We've got to get rid of this. In the back of my mind, I think it's going to happen with them. matter of weeks. I hope so. You hope that Jay Powell steps down? No, I hope that the criminal investigation is dropped. I don't think there's a legitimate stance. Correct, but I'm not so... Just to be stubborn, he's going to leave.

8:40Unless he doesn't leave. Because by the way, then that would be... Then he's going to be vindictive back to President Trump. I don't think for Jay Powell. I believe that Jay Powell's position, I genuinely believe Jay Powell's is by trying to orchestrate some kind of deal where he steps down in return for not having to... I don't think that's what he's doing. I think he feels like... No, I think that he feels like he can't... I don't know what he feels like, but my guess would be he feels like he can't step down when he feels like the Fed's independence is still under question. You know, I would imagine he feels like he cannot possibly step down if he feels like the Fed's independence is still in question.

9:17But the normal way things work is he doesn't stay after he's not Fed chairman anymore. But he could. But he could. And the reason that we were even talking about it is because the specter of that investigation is causing people to say he might stay. I don't know if it's a quid pro quo as much as it's a feeling like the threats of the Fed's... You think he's just, the damage is done, he's mad and he's going to stay. I think the damage is done. Because the alternative is that it is a quid pro quo. Trump would make life miserable for him. Even more miserable. But he is not going to want to see the Fed come under more of an attack.

9:52I think there's that, too. I do think that Jay Powell has been operating from the perspective of wanting to do what's best for the Fed. I'm sure he's going to say, you know, Walsh, you want to do these things? Have at it. Get another person like-minded with you with Trump on the board and let's see what happens. I'm sure he's ready to rest on his, you know. I'll take the other side of that, but we'll see where it happens. The cheese will be next. Coming up on Squawk Pod, Republican Senator Tom Tillis was in the room during Fed Chair Jay Powell's testimony on renovations at the Federal Reserve HQ.

10:28The same testimony that's the crux of the DOJ's case against him. Now the senator says it's a frivolous endeavor and he'll keep speaking up. We've got some U.S. attorney with a dream trying to please the president coming up with a trumped-up case against Jerome Powell that could undermine the credibility of the Federal Reserve. That is worth going to the mat for.

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12:22Welcome back to Squawk Pod from CNBC with Joe Kernan, Becky Quick and Andrew Ross Sorkin. Here's Becky. President Trump's pick for Fed Chair Kevin Warsh will now face Senate confirmation. North Carolina Republican Senator Tom Tillis says that he will not vote yes unless and until the Department of Justice probe into the current chair Powell is resolved. And Senator, welcome. Thank you for being with us again. I know we spoke with you about this just a couple of weeks ago in Davos, but at that point, Kevin Warsh had not been named as the president's nominee to take over for Chairman Powell. What do you think of Kevin Warsh?

13:04I think he's a great pick. The problem is he's a person I've got a concern with the process and we have to let this process play out, which I think is either lawfare or inappropriate use of prosecutorial tools because you disagree with the Fed chair. Look, this is all about a building project. If we want to start subjecting every cabinet member, for example, to overrun some projects, then maybe we can create a new standard. But we know this is silly. We need to get past it. And I'd be one of the first people to introduce Mr. Walsh if we're behind this and support him, but not before this matter is settled.

13:40The entire matter is potential for perjury, we hear the criminal investigation perjury in front of the Senate Banking Committee on which you've served. You were there when Powell testified that day. Did you hear anything that rose to the level that might warrant a criminal inquiry? Absolutely not. And actually, I think you should go down the dais and ask anybody, any Republican or any Democrat, if they thought there was criminal intent. It sounds like they're trying to create some sort of a perjury trap. the chair's responsibility is primary focused on achieving the dual mandate. He does have administrative responsibilities, but for somebody to come up with this amateurish gotcha because he didn't get the numbers right, even if they're right, and frankly, we've teased through his answers, and I'm not sure that any of them were factually incorrect.

14:32So I think it's vindictive, I think it's frivolous, and I think it's like the president. I agree with the president this week. We need to let this play out. And I'm willing to let it play out for the remainder of this Congress if that's what's necessary to get to the truth or to get back to a process that makes sense and that keeps the Fed independent. I kind of hear two different things. And I was going to say you're not running for your election. And sometimes, Senator, the truth will set you free. And it's just not usual for someone in your position to comment on an ongoing investigation. because you're going to get criticism because this is the game.

15:12We see so many kabuki dances in Washington all the time. And a lot of times people never really say what they mean or never really say things that are totally unvarnished. But it's unusual for a sitting senator to say a Justice Department inquiry is, I don't know what you just said. It's almost you called it, I think, a sham and a couple other things. Think if that was done all the time about all kinds of different investigations. You'd be, you know, you'd be pilloried for that. But in this case, and I'm not saying I disagree with your, you know, with what your conclusions are, but it's unusual to make such, you know, sort of incendiary remarks about something that the Justice Department has decided is worth pursuing.

15:56OK, well, let's back up. Number one, I've had disagreements with the president and Trump won. There were a lot of people that thought he wouldn't endorse me when I ran for reelection because I've been independent. Obviously, I'm not running for reelection. But even more important than that, this is the first time I've seen any evidence of an attempt to try and force somebody out of the Fed board because you disagree with their policies. I mean, if you take a look at the subject, we're not talking about the reason why I feel like I can speak on this and I haven't spoken on other things is I was there at the scene of the so-called crime.

16:27I heard the testimony. I saw the answers. We played it back. That's why I think that this is silly. It sounds like to me we've got some U.S. attorney with a dream trying to please the president coming up with a trumped up case against Jerome Powell that could undermine the credibility of the Federal Reserve. That is worth going to the map. It's not supposed to say it. You're not supposed to say what's actually happening. Why not? Because it normally, like I said, he's not running for your election, so the truth will set you free. I mean, you are judging the results of the investigation. You're prejudging exactly what's going to happen.

17:05That's your opinion. I was an eyewitness. I know, but that's still your opinion. I was an eyewitness to what they're charging. And what I'm simply saying is, okay, I'll stipulate at face value that the legal course has the case has to go through. Fine. Let it go through. They are the ones who chose to do this. All I'm saying is let's see the subpoena, let's see the case, and let's let it run through. If they've got a compelling case, I'll stand corrected. You just said it's unusual for a Republican to tell the truth. Is that what you're saying? It's unusual in Washington to be so factual about something that, you know, at this point it's the senator's opinion.

17:47that this is. It's also unusual in Washington to actually try and undermine the independence of the Federal Reserve. Find one more example in the history of the Federal Reserve. Well, this is a historic and consequential position. LBJ threw some Fed chair up against the wall and said, I'm going to, you know, you're throat out or rip something off. So, I mean, it's been done before. Did he indict him? No, no, no. But again, but to conclude that it's lawfare, you have to be absolutely correct that there's no merit to the investigation whatsoever. And that, you know, most people would wait for the investigation to be over before they'd have a foregone conclusion.

18:29That's all I'm doing. I'm saying they've decided to launch a process and I've decided it's appropriate to see it play out. And the chair Powell has a chairman role and he also has a federal reserve role. And the perverse consequence of this is maybe federal chair Powell will think about being on the board for two more years versus following that tradition. That's what this is untraditional. Senator, that's what I wanted to ask you. There is the question about whether he would remain as a governor. And also this idea that, you know, some people have talked about could a deal be brokered where he agrees he's stepping down from the governorship, meaning he doesn't continue for two years afterwards in exchange of sorts for this investigation going away.

19:16But invariably, once you say that sentence aloud, you get into a quid pro quo in which I think it appears from anybody who's watching that that leverage, lawfare piece that you're describing is still effectively in effect. Do you believe that's true or not? Meaning if somehow this investigation is dropped, do you think all of a sudden that release that will that will influence Powell to say, OK, then I'm I'm out of here? Well, I tell you, I know I know how I would react to this. I'd be there for the remaining two years because I don't think you reward bad behavior. But that's a decision that that Chair Powell makes.

19:58He's probably a little bit less confrontational than I tend to be. But at the end of the day, I had a reporter ask me yesterday, what if the president gave him a pardon? I said that that would almost suggest that I don't think that Chair Powell would do that because that would suggest that he was at fault. Any reward for this, short of them coming out and recognizing they got ahead of their blockers, they didn't consult with the adults in the room when they decided to do the subpoenas, and then to ramp it down or have it adjudicated, that's the only way we get out of here, as far as I'm concerned in this Congress for the next 333 days.

20:35I also just wanted to ask you what your reaction is to the reaction of the president by your comments. Not, I don't think, necessarily just in this particular case, but he called you a loser recently because of some of the comments that you made about Kristi Noem and also Stephen Miller. Yeah, I said that obviously qualifies me to be the Homeland Security Secretary and Senior Advisor to the president. Look, these are the people who are losing. Stephen Miller is the one who went down the rabbit hole of Greenland before he went down the rabbit hole of plussing up resources in Minneapolis and creating a horrible situation there.

21:12Kristi Noem has failed both in terms of her ICE role and in terms of her response to Helene in North Carolina. I mean, they're behind by about a year and a half. There's no comparison between Kristi Noem in this administration and President Trump's first administration, which was extraordinary. So you want to use that kind of language? You know, I'm fine. If that qualifies me for at least two senior positions for the president, because I consider them losers, then we'll move on. Otherwise, we could act like adults, use adult language and get things done. Senator, tell us, 333 days left. You sound like you're invigorated.

21:48You sound like you are ready to say whatever you think on these things. It's refreshing. Well, you know, the reality is I had to make a decision when I disagreed with the president. We did the analysis. No one disputes the impact that we're going to have on Medicaid and the reduction or the elimination of state-directed payments. They're going to happen in about two years. It's going to be very difficult for states like North Carolina. But I made the judgment that in this role, in this position, where I know the Senate organizing resolution, and I know what kind of tools that I have on the committees that I'm on, that I could be more productive over the next year and a half, dating back to July next year, than I could be in the next six years if all I did was count a pressure and not go after big issues like this.

22:31So I'm going to have a productive year and a half, and then I'll be moving back in the private sector. And that's great for me, my wife, and my grandchildren, and my family. Senator, you are obviously speaking out and saying whatever you think. I'm curious what you think your peers think. I mean, it goes to what Joe was saying, which is these are things you're not supposed to say aloud, he said. Well, it happened. Poor Senator Fetterman is totally ostracized when he says anything that has any scintilla of common sense about Democrats. And so my question to you is what do your colleagues privately say to you?

23:02Refreshing from both sides. What do they say to you privately about these issues relative to what you're now, you feel, able to say publicly? Well, you know, I think what I can do is create some room for members. Obviously, I don't know why anybody would be critical of people who maybe are holding back a little bit when they've got to manage the three. If you're in North Carolina, you've got to get about three million voters to win a Senate race, right, in a very purple state. Obviously, if I was running for reelection, I would have to attenuate my language more than I have to now. And so other members are doing the same thing.

23:39But trust me when I tell you there are a significant number of members who are concerned with trying to undermine the independence of the Fed. There are a number of members who think that we had the immigration issue until we had amateurs implementing. The politics of failed execution is real. Republicans should be on front, just like we were in the election for President Trump, on the immigration issue, securing the border, which he did. And now you have people like Stephen Miller and Kristi Noem undermining what should be a winning message for us. We have members who share that concern, but they also have to deal with the politics of reelection.

24:18I don't know why anybody would be critical of that. That's the reality of getting elected. And I don't want political martyrs because martyrs all have one thing in common. They're dead. So they have to manage the language and they have to get reelected. Senator, I want to thank you. Sounds like you got a lot to talk about over the next 333 days. We hope you come back soon. Yeah, I'd like to be back in Davos, I think it was warmer. In North Carolina, I know you're retiring back to North Carolina where you got all the good skiing and all the good snow. 12 inches of snow, 5 degrees. I know. Senator Tillis, thank you.

24:55We appreciate it. Up next, the CEO of investment giant Charles Schwab on being a one-stop shop for today's modern investors. The average person over 40 years old has seven financial services relationships in their life. We want that number to shrink and we want it to shrink. Well, because you want them to come to you. We want them to come to us. SquawkPod will be right back.