Stan Smith: Not (Just) A Shoe 3/20/25

0:00Bring in show music please. Hi, I'm CNBC producer Katie Kramer. Today on Squawk Pod. Oil executives at the White House, over a dozen leaders in America's energy industry met in Washington, including U.S. Energy Secretary Chris Wright. He lays out the priorities from that meeting and the bigger picture of American power. The president's broader agenda for sure is to grow American prosperity at home and influence and power abroad. And energy is just a fantastic tool to do that. It's a shoe. It's a sneaker. It's Stan Smith. The tennis legend and author discusses his wearable legacy and how players today are pushing the sports business forward.

0:43It's not just a lonely game. And, you know, tennis is mano a mano, but you have a team. It's teamwork and there's relationships that are involved. Plus, the Fed holds steady, but Chair Powell says inflation is, uh-oh, transitory. When he said that, I was a little surprised that the markets really took the whole message in stride. And lock your March Madness picks today. The annual reminder that the odds of that perfect bracket, 1 in 9.2 quintillion. Wow. It's Thursday, March 20th. Spring is here. Squawk Pod begins right now.

1:26In support of our goals, today the Federal Open Market Committee decided to leave our policy interest rate unchanged. Federal Reserve Chairman Jay Powell speaking following a highly watched decision of the central bank to leave interest rates unchanged, keeping a key borrowing rate at a range of 4.25 % to 4.5%, where it has been since December. The chairman did indicate that reductions are possible later this year. If the economy remains strong and inflation does not continue to move sustainably toward 2%, we can maintain policy restraint for longer. If the labor market were to weaken unexpectedly, where inflation were to fall more quickly than anticipated, we can ease policy accordingly.

2:05But has uncertainty about inflation increased? The chairman went back to his greatest hits for another play of the T-word. It can be the case that it's appropriate sometimes to look through inflation if it's going to go away quickly without action by us, if it's transitory. And that can be the case in the case of tariff inflation. I think that would depend on the tariff inflation moving through fairly quickly and would depend critically as well on inflation expectations being well anchored. Good morning and welcome to the Fast Money slash Squawk Box program. Thank you for acknowledging that. It's going to have a fast money sort of an aura.

2:49As it usually does. She agreed to come back again. I don't know what it took. Melissa Lee is here. We're live on CNBC from the NASDAQ market site, which you know pretty well. This is down one floor. It's all really hidden. Yeah, we're in the upper level. But you are. You're above us. You are above us in so many ways. Melissa Lee, Becky, and Andrew are off today holding steady. The Fed kept its forecast for two rate cuts this year. but said uncertainty around the economy. The outlook has increased. And in a post on a social media network last night, President Trump said the Fed would be much better off cutting rates as U.S.

3:29tariffs start to transition. That's kind of interesting. Or ease their way into the economy. Do the right thing. April 2nd is Liberation Day in America. That's when a new round of U.S. tariffs on other countries are scheduled to go into effect. I mean, there's some that could happen. That could happen. That you combine doge with the effects of the tariff, and it might make sense. I asked someone yesterday, I don't remember who it was, Alan Blinder, I think, who knows a lot about the Fed, obviously, about whether, given the outlook for what these policies could do, is the Fed too restrictive right at this point?

4:11You could probably argue that they might be... You can definitely make that case. Yes, except that Powell yesterday was very clear that he believed that this inflation could be transitory. And that would be the base case. That is the base. I know. And so when he said that, I was a little surprised that the markets really took the whole message in stride, considering the last time he used the word transitory was really when they lost a lot of credibility initially in their fight against inflation. Do you think people watch every day? Watch. Yeah, I think they do. CNBC? Yeah, but I'm going to do it anyway.

4:41This was my imitation of Jay Powell. in his recent, remember that interview recently? Yes. He's like this. Yeah, we took him down, orchestrated a soft landing. Things are pretty good. I mean, the economy is really even in, and we may or may not do something, but it's not based on us now. It's based on exogenous things. We've done our work. Now we're going to sit back. Don't you agree that the economy has, you know, stuck the landing in the end, even though transitory was a... He was joking. He was relaxed. he would at that interview. And I would be too, because at this point, anything that happens is not going to be his fault.

5:18Except that he has to manage the policy. He does. But wouldn't you rather do that than managing yourself, your own mistakes? You'd rather manage the policy. It's true. You can point the blame to somebody else. He's done it. He's looking back at it. And, you know, we've been waiting, waiting, waiting, waiting for something to dispel the notion that he orchestrated the soft landing. I'm almost ready to say, not mission accomplished, we've learned our lesson. But I'm almost ready to say that they successfully managed through that. Look at the last eight quarters, what GDP was or the unemployment rate.

5:49It's only in the past month and a half, month or so. Where there's doubts. Where there are doubts. But I don't know if the doubts are, I don't know if they're real yet. Right. I mean, soft data, he called the UMich survey an outlier. You know, he's really dismissing the soft data, saying the hard data still shows the economy is solid. And that's why the markets rallied a percent across the board. Did you fill out a bracket? I don't know anything about brackets. Because you just said University of Michigan. And I just, I took them a long way. I think they're doing, they are, and they'll probably lose, you know, in the first, I don't know, but I think they're, anyway, you said University of Michigan.

6:25My mind immediately jumped to that. So I'm sorry. I was like, what are you talking about? I know. I know. I'm sorry. NVIDIA is one stock that rallied yesterday. NVIDIA CEO Jensen Huang says this company is set to spend hundreds of billions of dollars on chips and other electronics manufactured in America over the next four years. That's according to an interview Huang gave to the Financial Times. In it, he also said NVIDIA was now able to produce its most advanced systems in the U.S., partnering with Taiwan Semiconductor and Foxconn. NVIDIA coming off a day in which its CEO made a variety of headlines at the company's GTC conference in California.

6:58Huang said orders from more than 3 million flagship Blackwell chips from four top cloud providers actually underrepresented demand. He expanded on the demand the company is seeing later on on CNBC's Mad Money. The world's computing CapEx, it's on its way to a trillion dollars annually by the end of the decade. So we're fairly certain of that. We're also very certain that the vast majority of that will be used for AI. And so our opportunity as a percentage of a trillion dollars by the end of this decade is quite large. The NVIDIA CEO made a number of other headlines. He said NVIDIA sees only a little short-term impact from President Trump's tariffs.

7:46And on Chinese AI startup Deepsea, Kuang said fears that similar models wouldn't need to use as much computing power. those beliefs were misplaced. Really pretty interesting. I got to catch parts of the interview about the tariffs. He said, look, we're already onshore. We're enthusiastic about building in America as anybody. And so we've been working with TSMC to get them ready for manufacturing chips here in the United States. We also have great partners like Foxconn and Wishtron who are working with us to bring manufacturing onshore. So long-term, manufacturing onshore is going to be something very, very possible to do, and we'll do it incredibly scale.

8:29But the Chinese are still a key partner right now. You have a lot of businesses. I would say 17 % of your business. Yeah, in the near term, I would say, in the near term, tariffs will not, the impact will not be meaningful. We're going to be, within a couple of years, we're not going to think about tariffs at all. And it's like, that's the idea, I think. But he said, we're talking to TSMC, talking to others. Right. To start building everything here. And I saw one of the, he calls it a chip. I mean, it's a freaking, it looks like a laptop almost. They're so big. There's so much going on. So powerful.

9:00And it's just, and it's mind boggling to me. The architecture, the electronics that are, it's not even electronic. I don't even know what it is. Circuitry. Thank God for electrical engineers who, they let us all, like, maybe not you, But they let us all sort of screw around in undergraduates. You go out at night and, you know, while they were nose to the grind. They had to be nose to the grind. So did you take any engineering courses at Harvard ever? No. I barely touched on the surface and realized no way. It's very, thank God for that. Thank God for that. Look what the world is turning into. Well, that's, they'd all, you know, be displaced by robots, but.

9:42Including electrical engineers. Yeah, they'll be out. They'll be out of here, too. President Trump is weighing a reversal of his recent decision to order Chevron to stop pumping oil in Venezuela next month. That's according to The Wall Street Journal. It says Trump expressed openness to the idea of extending Chevron's license during a meeting with oil executives and Energy Secretary Chris Wright yesterday at the White House. As part of a possible extension, the journal says the Trump administration is looking at imposing tariffs on countries that buy oil from Venezuela. will speak with the energy secretary in an interview, so you will not want to miss that.

10:15I think we should fill the SBR, refill it at this price. At these levels, yeah. Not at 50. You drill, baby, drill. You can ask him that. I'm not calling you baby, but if you drill, baby. No, I understand that. You'd never do that. No. Not long to get, Melissa, to get your brackets in. If you need, if you have questions. I've never done a bracket in my life. Today I don't have anyone to talk to about basketball and sports. I'm sorry to fall short of you. Because Becky's not here. Normally I can talk to her at least about it. I can leave. No, no. I was making a different point. You joke about this.

10:55The NCAA men and women's college basketball tournament. I will help. And you can always just press automatic. I'll just go on ChatGPT and give me a bracket. Press automatic on this thing. You can get them all. Tips off today, the four number one seeds in the men's bracket, Auburn. I don't know. Florida, definitely should be there. Duke and Houston, all those I might take to the end. Teams are going to play the first two rounds of the tournament today through Sunday, making their way to the national championship game. That's on April 7th. The American Gaming Association estimates people will bet$3.1 billion on men's and women's games over the next three weeks.

11:34And, of course, the annual reminder that the odds of that perfect bracket, one in nine point two quintillion. Wow. Warren Buffett telling the Wall Street Journal he wants to give away some money this year during the tournament. Berkshire Hathaway's can win a million dollars. OK, now, if they correctly predict, 30 out of 32 winners in the first round. And I've said for a while, come on, Warren. It used to be a perfect bracket, though. a million dollars if you get a perfect bracket ought to be a billion dollars minimum so now he's changing that a little he goes to 30 out of 32 which is a little bit better better yeah he's a creighton guy i'm i see so many big east games that i'm i i think think john's has a chance i would take marquette for a while xavier's in yukon you could never count out right this so-called bracket i'm in the process of doing it actually during the show oh that's nice to know you're Like during the interviews?

12:33Yeah. After I ask a question, I go back to it and think. No, I need to ask a follow-up. I need to listen to the answers. And then that's when you point to me and say... Yeah. Sometimes I need to listen to the answers. Okay. Next on Squawk Pod, energy CEOs of the White House. The new Secretary of Energy, Chris Wright, underscores the power of power. And he argues net zero by 2050, a goal for activists. Everything in life has trade-offs. If you can reduce greenhouse gas emissions without raising prices or reducing human freedom, that's a big win. And that's what the rise of U.S. shale gas has done.

13:11We'll be right back.

13:17This is Squawk Pod. Stand by, Joe. Here's Mike. You're watching Squawk Box on CNBC. I'm Joe Kernan, along with Melissa Lee. Andrew and Becky are off. She's off again tomorrow. I know, because I'm here. Woo-hoo! President Trump met with top U.S. oil executives, including the CEOs of ExxonMobil, Chevron, ConocoPhillips, Phillips 66, and Marathon Petroleum to discuss the administration's plans to boost domestic energy production. Joining us now with the details, Energy Secretary Chris Wright. Mr. Secretary, it is good to see you. You know, around here, we don't like burying the lead. That's a reporter talk.

14:06So we did it right at the top because they have not been to the. Did they know how to get to the White House? Any of those oil executives? How long has it been since they were at the White House? Not in the last four years. Exactly. In fact, there were a few newer CEOs that had never been to the White House before. There were several that had been there before, but years ago. So, yeah, that was that was the first message. You know, they're no longer the scarlet letter on their foreheads now for producing over 80 percent of American energy. And the cost of that is just massively impactful on people's lives.

14:40So to pretend they're not important or we should somehow deny they exist. Just one of the many absurdities of the last administration and why President Trump was elected to bring some common sense back. There's a lot of of different depending on on where you stand on the issues, Mr. Secretary. It's under the Biden administration, we got back to all-time highs in barrels per day. Did we not? But then on the other side, you hear critics say that the counterfactual would even be more if we didn't have, I don't know, ANWR or not being allowed to open up some offshore leases, et cetera. What can you say about that?

15:22Was it full bore for the oil company? Were they able to do maximum production under the constraints of the Biden administration, or can they even do more? Oh, definitely can do more. And you're right. It was record high productions of both oil and natural gas. But the counterfactual is, of course, it would have been higher. No federal lease sales for the first couple of years of the Biden administration. Slow rolling permits, not allowing pipelines or gathering lines to be built. That just means this stuff isn't developed. didn't mean people didn't drill for oil and gas. But one of the points I made in my testimony to Congress a year ago was if you put barriers and at the margin you reduce the production of oil and gas, even when it's at a high level, if you reduce it by only a little bit and you do nothing to change demand, you're just guaranteed to get higher prices.

16:12And we saw four years of that, higher oil, higher natural gas prices than we should have had. Not high, but higher than we should have had. Do you think that that what was the impetus for that LNG? It seemed like a bone to to the green lobby. The the I don't know, no new facilities or is that been reversed? And can you talk about the I mean, LNG is one of our greatest strengths in the United States for exports and for our own domestic energy use and everything else. Oh, spot on, Joe. Look, it is the fastest growing export. of the United States and our second largest export. Only oil and oil products do we export larger in dollar volume than liquefied natural gas.

16:59It's the fastest growing energy source on the planet over the last 15 years, and we're by far the biggest producer. So this is just a win all the way around. You know what the Biden administration did here is just actually crazy. They did a study, because they were, remember, all of government about climate change. They did a study to see what would be the impact of growing LNG exports on climate, not on people or humans or allies, but on climate change. And the result was the more LNG you exported, the lower greenhouse gas emissions went. They should have done cartwheels and doubled down. Instead, they buried that study.

17:35It didn't acknowledge its existence. Four months later, announced a pause to investigate the climate and price impacts of natural gas. And then did a new study that was more fiction than fact and then released that, you know, weeks after they left the door and said, oh, geez, the data shows it might be negative for Americans and for the climate. Just I mean, just undermining government, undermining trust in science and facts and data. But we've reversed those days on day one. We got rid of the LNG export ban, permit ban. And I've already signed five actions in less than 100 days to get more of these terminals permitted under construction, more American jobs, more American energy and greater security for our allies around the world.

18:22So, Secretary Wright, getting back to the meeting with Mike Wirth, the CEO of Chevron, is the administration closer to extending that license? And what is the thinking behind it? I mean, what is the most compelling reason to do so? Is it because you want to box China out? Because if Chevron pulls out, China will step in? Look, the president's broader agenda for sure is to grow American prosperity at home and influence and power abroad. And energy is just a fantastic tool to do that. So the vast majority of the dialogue that we had in that room was about how can we unleash American energy? How can we make it easier for people that want to invest and have specific projects to go ahead and develop them?

19:05So look, yeah, I won't go into any details there on some dialogues that are ongoing. But one of the things that was dialogued, the Biden administration did over 60 specific actions reducing development in Alaska, not just for oil and gas, but for mining or minerals or any economic activity for that state, far more sanctioned and restricted than Iran or Venezuela. You know, and then when oil prices went up, they asked Iran and Venezuela for more oil, drained our strategic petroleum reserve, and didn't remove a single sanction on Alaska or the rest of the Western United States. So again, the main point was, go ahead.

19:42Sure. But in terms of unleashing or lifting sort of the bureaucracy on drilling in new sites, I understand for other things other than oil. But with oil at 66, it's a very different equation here. Oil companies, I would imagine this is what Mr. Worth told you also, they don't want to drill more. They want to be disciplined about their capacity. Yeah. All prices of oil and natural gas and all commodities, they're dictated by supply and demand. You know, nobody decides the price of oil. It's just supply and demand. But I think we've seen a market discounting the fact that clearly it's going to be easier to produce oil and gas in the United States.

20:20The restrictions and impediments we had in the last four years, they're gone. And so the market is discounting, yes, more supply is going to come. And that's pushed down prices of oil, gasoline, home heating fuels, everything across the board. That's a win to the American people. it'll become, it'll remain a win for the companies as well, as if their costs are lower and their risks are lower, their break-even cost, above which they're profitable, that's going to move down too. In fact, it's already moved down. Mr. Secretary, do climate change advocates have reason to be worried? I've even seen some Republicans talk about a carbon tax.

20:55I think they're talking about a carbon dioxide tax. But if you say carbon dioxide, you know, carbon sounds black and sooty and horrible, whereas carbon dioxide is this liquid colorless gas. So they always say carbon. But carbon taxes, carbon sequestration, the IRA had giveaways to the green lobby that would blow your mind. Are those all going to be reversed or somehow frozen? I mean, how do you view the whole subject? Are you going to get the net zero by 2050, Mr. Secretary? Absolutely not. No country on Earth will get the net zero on 2050, But the urgent efforts trying to do it have just driven up energy prices, move industries out.

21:39Look at what Germany's done. This is an industrial powerhouse. Most of their manufacturing industry has left the country. They've tripled their electricity prices. And they went from 80 % of their energy from hydrocarbons to 74%. That took them over a half a trillion dollar people impoverishment, industry exporting. They got down to 74%. Net zero by 2050, of course, is just nonsense. It's an activist thing and it's a top down big government justification to do mostly anti-human things. But what I will say to that, maybe not to the climate activists, but to the thoughtful people about climate change, we will follow the math and the science and be honest about the tradeoffs here.

22:18Everything in life has tradeoffs. If you can reduce greenhouse gas emissions without raising prices or reducing human freedom, that's a big win. And that's what the rise of U.S. shale gas has done by growing LNG export. We share that economic and reduced greenhouse gas benefit with the world. But we're going to treat things like they're real serious topics and not not not a quasi cult religion where we'll justify anything in the name in the name of climate change, even when it's a reversing benefits from climate change, as the Biden administration did with the LNG pause. Return of common sense, I should say.

22:54I was going to ask about the SPR. What's a good price for you? Where would you say I'd buy with both hands? What price? $50? Oh, I never comment on oil prices because you just don't know where they're going to go and what they're going to have. You've got to refill it. That was no crisis. That was no crisis. That was a crisis of a midterm coming or something. That was the crisis, and oil prices were too high. Absolutely, 100%. And, yes, we have stated right up front we will refill the Strategic Petroleum Reserve. You've got to get budget approval to do that. But 100 percent, that's going to happen.

23:31Unfortunately, you can refill it a lot slower than you can drain it. But we've got to get going on that, and we will be going on that very soon. But, yeah, it'll take years, but the Strategic Petrolling Reserve will be returned to its original use. Very good. Secretary Wright, thanks for being on this morning. Appreciate it. Cheese will be next. Coming up on Squawk Pod, Stan Smith, former professional athlete with a long legacy. Tennis legend who I remember well, Melissa has no idea. I thought he was a shoe. He thought he was a shoe. Stan Smith.

24:10Welcome back to Squawk Pod. Get your clean white kicks ready. We check in with the famed tennis pro whose face launched 100 million sneakers, Stan Smith. In his long career, which started in the late 1960s, Smith was a pioneer in the business of tennis, going back to the founding of the ATP Tour more than 50 years ago.

24:34The sport is facing an inflection point. Yesterday, the Professional Tennis Players Association, founded by 24-time Grand Slam champion Novak Djokovic, filed an antitrust lawsuit against the sport's governing bodies, alleging that tennis athletes have little control over their schedules, their bodies even, and are not compensated properly. The PTPA's executive director, Ahmad Nasser, joined our TV broadcast yesterday. It really was an unprecedented series of sweeping legal actions in the U.S., U.K., and E.U., challenging the entire system, which certainly includes the schedule, but also includes rigging and fixing prize money illegally.

25:16It includes a global conspiracy. You mentioned the word cartel before we went into break, and that's exactly right. From the biggest tournaments to the smallest tournaments that are held on six continents, really across 12 different months of the year, but it includes anti-doping, onerous anti-doping regulations. Those have obviously been in the news a lot in the last few months. It includes the schedule, prize money, and really an overall rigged system that stifles innovation. With Stan Smith on Squawk Box today, here's Joe Kernan. Littlewood Rackets. Our next guest is a legend in his sport and his insights into managing business and relationships both on and off the court.