Tariffs with the USTR & Prediction Markets with the CFTC 6/2/26

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0:47So while others are busy talking, we're busy building. That's Venture Global. That's unstoppable energy. Bring in show music, please. This is Squawk Pod, and I'm CNBC producer Cameron Costa. On today's episode, on the ground in Washington, the team catches up with D.C. leaders like U.S. Trade Representative Jamison Greer. There's been more nuance to it than people realize. The tariff strategy so far, and the changes still to come, like in Brazil. We're investigating specific unfair trading practices by different countries. Chairman of the CFTC joins us too, Michael Selig, on how he views his own role in the market of prediction markets.

1:37I do believe that the intent of Congress was for the CFTC to exclusively regulate these products and to have discretion over certain areas, sports, gaming, all of that. We have authority to prohibit, potentially, if we choose to use that authority. Plus, Anthropic is officially going public. Google is selling$80 billion worth of stock to fund its AI build-out. Short seller Andrew Left was found guilty of securities fraud. And Bernie Sanders has a proposal to democratize AI ownership. If we as a country can invest in companies like Intel, why not have a stake in the upside? You go to Bernie Sanders for any type of economic proposals?

2:21No, no, never, never, never, never. It is Tuesday, June 2nd, and Squawk Pod begins right now. Stand Becky by in three, two, one, cue it, please. Good morning, everybody. Welcome to Squawk Box. We are live from the CNBC CEO Council Summit in Washington, D.C. this morning. Big show for us. I'm Becky Quick, along with Joe Kernan and Andrew Ross Sorkin. AI Giant Anthropic has filed confidentially for an initial public offering that could put it on track now to go public this fall. Multiple reports saying that rival OpenAI also preparing to submit its own IPO filing imminently. Yesterday, OpenAI CEO Sam Altman telling David Faber he didn't think there was a race to go public and his company would do it when it makes sense.

3:09I think there is a race to deliver the best technology and build the best business. But, you know, going public is a financing event. And I don't think that's one that we're focused on the timing of. We'll do it when we think it makes sense. But you will do it as well. I assume we'll do it someday. And shares of Google's parents Alphabet are lower this morning. It looks like they are off by about two and a half percent,$366.80. This comes after the company says that it's selling$80 billion in stock to fund investments in artificial intelligence. That includes$10 billion from Berkshire Hathaway through a private placement.

3:44That position for Berkshire Hathaway adds to a position in Google Class A and C shares that Berkshire has been building over the last three quarters. In fact, as of the most recent filings, it looks like they had$21.76 billion in shares of Alphabet. This, again, adds another$10 billion to that, so just over$31 billion. Alphabet says that it plans to spend somewhere between$180 and$190 billion on CapEx this year. They upgraded those numbers in April. Before that, they had been saying$175 to$185 billion. And at the time when they upgraded that CapEx spending number, Sundar Pichai was asked what keeps him up at night.

4:23He said compute power. This is the race to try and make sure they have enough money for compute power. Google already had$126 billion in cash on hand, according to the most recent filing. So it is a company that has plenty of access to cash. It kicks off a lot of cash. But look, if this is a flex move, if you can go ahead and secure that capital, a good way to do it right now under these terms. A federal jury has convicted prominent short seller Andrew Left of securities fraud. Prosecutors accused him of using his reputation in media appearances to manipulate shares in a way that would reward his trades.

4:59They said he made bold public calls on stocks and then exited a trade minutes or hours later after inciting small price moves that would yield a quick profit. Left testified in his own defense, arguing his statements were authentic and attributing his conduct to being an active trader. Sentencing is set for August 31st. The main securities fraud charge carries a maximum 25-year prison term. Left said the jury got it wrong. He also said he plans to appeal. But, Andrew, you brought him on Squawk Box to talk just about. Yeah, I think he came on, was that about a year ago before the case began? It was before.

5:36When did we have him, guys? A year, a year and a half? A year ago. About a year ago? Look, the complicated part about this case is, from afar, I think it looks like a case about can you talk about your investments either going long or, in this case, going short or a combination of both. And to some degree, I think Andrew left position the case as a free speech case. The real question of the case was, was it a manipulation case? And I think in certain instances, there were elements of free speech, meaning you want people to be able to talk, especially short sellers. You want them to be able to do investigations and come out publicly and say what they found.

6:11The question is, when does it turn into a manipulation if, in fact, within minutes or hours? Are we going to have a guest on the day that recommends stocks? Well, we will. And the question is, are they coming on the air? They shouldn't sell right after they get you a company. Two or three hours or five minutes later. Or I believe in potential, in some cases, there was suggestions that there were misstatements completely. completely, meaning could you say that you owned something and you didn't? Now, could have you forgotten that you owned it? By the way, hopefully you don't. But, you know, could have a trader traded something the day before and you didn't know?

6:51Yeah, but those are disclosures. And we ask our guests for disclosures, too. These are a lot of those issues. If they're going to be talking about things, we ask if they are long or short. And so the question is, are they manipulating the stock? And this wasn't from the short, like, people have this weird, you know, notion that if It's on the short side. Oh, my God, he's talking, you know, and then he sold, you know. Well, it's mostly CEOs. But it's fine to come on. We have no problem with talking. Well, in this case, it was about long-end charges. That's what I mean. So that's not it either. We have people come on and talk about SpaceX ahead of an IPO there.

7:17By the way, increasingly, I think the more complicated place is actually all of the talk about private companies and then what's happening as it relates to secondary investments and everything else. And when we get into a universe of tokenization and prediction markets and everything else, But that's where this gets very complicated. We don't want a line where people can't talk long or short, but probably specifically short. No, you want everybody. Exactly. Enron was uncovered and many other major frauds within companies. But there's a secondary question, which is, do you believe, for example, that there should be a rule which says if you publicly put out a letter saying that something is happening or that you're investing in this and you believe in this, that therefore you have to own it for 24 hours?

8:02Right. For 72 hours? What's the line? And that becomes part of the whole debate. If you dig even deeper, you know my problem with sell-side, these people we have on that are sell-side. They're giving advice to the financial advisors that are in their firm. They don't remember what they said the month before that they were on. And sell-side analysts that don't have any skin in the game, compared to a buy side, someone that knows where he bought it or he or she bought it, knows where he sold it, knows how long he's been in. He's got receipts for what he's done. They have to have accountability. I would take a buy side any time over a sell side.

8:43And this is what we're talking about here. Someone that actually is recommending a stock that they have a vested interest in. Those are the people that you want, I would think. It's like when a CEO... Well, so I have a very mixed view. When a CEO buys a stock. Because sometimes you want somebody who's an impartial person. It depends. A lot of analysts, sell-side analysts, are supposed to be completely independent and are not supposed to be talking their book, if you will. Are you talking your book or are you putting your money where your mouth is? In good old days, you could have a sell-side analyst that was also doing some banking.

9:14That's not all. That was really a good deal that ended. I just wanted to let you know I got an email from Andrew Left overnight in right after he was convicted. And I wanted to read it to you because it made me speechless to get an email like this right after you get convicted. He wrote effectively to me the following. He said, I'm a bit speechless. He said, what does this do for the future of free speech is chilling. can individual investors not talk SpaceX? Wow, still shocked. He then went on in a separate email to say it's chilling that the government can regulate a private citizen's trading and speech, even if no false statements made or manipulative trading.

9:59The crime was the intent to profit, he said. The idea is what's the definition of market manipulation here? I mean, we had this conversation earlier. How soon after you go out and you say something is terrible, can you then get rid of your shorts on it, or how soon after you say something is wonderful, can you then turn around and sell it? And clearly, there's, I mean, look, there was evidence, there were things he was saying, and then relatively quickly, there were things that he was then either selling or buying as a result on the other end. Yeah. This was illegal in ancient Greece, too. I mean, this is pump and dump.

10:33This is the oldest thing, right? And what we're talking about here is just a classic pump and dump is what he's being accused. And I'm not convinced, to be honest, that there's merit. Yeah. Yeah. Senator Bernie Sanders says that he will introduce a bill to give the American public a direct ownership stake in the largest AI companies through a sovereign wealth fund. This legislation would give the public a direct ownership stake in the largest AI companies in America through a one-time 50 % tax, not on profits, but on stock. Then he said that the billions, if not trillions of dollars generated by the fund would provide direct payments to the American people.

11:23I don't know if it's as crazy as you might ordinarily think. If there are going to be massive job layoffs because of AI, this might be a way to go back at it. I don't know about how you fund the sovereign wealth fund or how much you end up putting in it. But if we as a country can invest in companies like Intel, why not have a stake in the upside for something that could be positive? I interviewed Dean Ball yesterday. Oh, yeah, on stage. On stage right here at this conference. Dean was an advisor to President Trump, wrote the AI task force plan effectively in terms of what that plan, action plan was supposed to look like.

12:01And he made, I think, a very smart argument, which is, I don't think we're there yet in terms of UBI and knowing where this is going to go and whether it's going to take employment or whether it's not. I think we all have lots of different views. There's also, by the way, another view, which is that we, the taxpayers, already own, ostensibly, some major percent of these companies insofar as if they are successful, they should hopefully be paying taxes. They should to be creating jobs. I mean, there's a whole plethora of things that can happen. On the flip side, yes, maybe if they start taking the jobs.

12:34But then the question is how do you... I don't know about how Bernie Sanders just proposed to fund it. That sounded a little crazy to me. But the idea of having some skin in the game and some upside potential on it doesn't seem insane. Are you ready to go to Bernie Sanders for any type of economic proposals and public policy? No, no, never, never, never, never. I mean, let's start with that. I would never agree with him. But this doesn't sound... The idea of having an upside in the AI doesn't sound as crazy as I would anticipate. I know. I should actually listen and give it a chance. I'd just tune out.

13:02Cheese will be next. Coming up on Squawk Pod, we'll take you behind the headlines for the latest in the Iran war talks. And then details on the proposed 25 % tariff on Brazil and the tariff strategy overall with U.S. trade rep Jameson Greer. Grocery store owners and others saying we can't buy bananas anymore because we don't grow them here. And every country that does, we've got these huge tariffs. I never heard they couldn't buy bananas. There was never a banana shortage in the U.S. That's what Target's CEO told us on IR. I never heard anyone having a banana shortage. We're talking trade right after this break.

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15:44Welcome back to Squawk Pod. We're turning to international headlines now with Joe Kernan, Becky Quick and Andrew Ross-Organ. President Trump now saying yesterday that indirect talks with Tehran were continuing at what he called a rapid pace. It's coming after he shrugged off the potential collapse of negotiations, telling CNBC he didn't care if they were over. CNBC's Dan Murphy joins us from Abu Dhabi this morning with the latest. Dan. Andrew, good morning. Well, let me tell you what's happening behind the headlines here, because the last 24 hours have really been a white knuckle ride for anyone watching this conflict.

16:20It seems as if quiet diplomacy overnight appears to have pulled the US and Iran back from the edge. And we're seeing that reflected in the oil markets today. The picture from the region this morning is a little more status quo. But of course, don't mistake that for stable. We saw Iran threatening to walk on Monday. Officials telling the semi-official Tasnim news agency that no talks with Washington resume until Israel stands down in Lebanon, which Tehran calls a direct violation of the U.S.-Iran ceasefire. And they threw in a threat for good measure as well, the Iranians threatening retaliation in the Strait of Hormuz.

16:57Now, that sent oil prices up. It also sent the president straight to the phone, first with CNBC's Eman Javis, and then to Israel's Prime Minister, Benjamin Netanyahu later in the day. There's new reporting from Axios this morning that says Trump put the prime minister on blast with an expletive heavy exchange, pressing Israel to stand down. Now, we have not independently verified what was said on that call, but publicly, the president had a completely different tone. On Truth Social, Trump called it a very productive call, saying no Israeli troops would go to Beirut, any en route had been turned back, and that even Hezbollah had agreed that all shooting would stop.

17:38Netanyahu then put out his own statement, the prime minister saying the IDF would keep striking southern Lebanon as planned. And Al Jazeera reports today that some strikes have occurred. So you've got two leaders, one call, two entirely different readouts. The view here in the region today is that Washington did successfully push Israel back from a major escalation in Lebanon, the kind that could have potentially blown up the Iran negotiation entirely. So a win, at least for now. But you also really get the sense here, the market is wrestling with several questions like how long will Israel actually hold off?

18:16How quickly can the US and Iran get a deal across the line? And of course, what happens if they don't? And then ultimately, what will any agreement mean for the day after here in the region as well? the market trying to price all of these potential scenarios simultaneously, it would seem. Back over to you. Hey, Dan. So I was texting with a hedge fund manager last night and we were discussing if we had a sliding scale with a chart on it, where we were today relative to where we were, where we are versus the last three, four, five, six, seven weeks. Where do you think we are? What do you think the sense is in these negotiations, in the end of all this?

19:00In terms of timeline? In terms of does this end? I mean, you have to be... Go ahead. Yeah. I mean, it's hard to put a point on it, right? It depends what type of graph you're looking at. I mean, for the region, it's looking maybe two-thirds of the way through. But then again, the timeline is anyone's guess here. The day after is the real question. You can put the ceasefire on a piece of paper, have a signature at the bottom that opens up this negotiation window for what happens with Hormuz and the nuclear program. But this is a region that's been completely reset as a result of the last four months of conflict.

19:40And exactly what it is going to look like, how these regional leaders are going to respond, I think we haven't even started to scratch the surface. All right. Dan, I want to thank you. Appreciate it.

19:54The Office of the United States Trade Representative is proposing 93 or 25 percent tariffs on Brazilian goods. The agency accusing Brazil of engaging in practices that are unreasonable and burden or restrict U.S. commerce. U.S. Trade Rep. Jameson Greer said the investigation was conducted under Section 301 at the direction of President Trump. Greer said negotiators from the U.S. and Brazil continue to have substantial differences in resolving the issues identified in the investigation. The U.S. Trade Representative's office is going to hold a hearing about the 25 percent tariff proposal on July 6th.

20:37And join us now ahead of this appearance on stage at the CNBC CEO Council Summit, U.S. Trade Representative Jameson Greer. I'm sorry you didn't get to. I wish you would have had an earpiece. And we've been talking about you. Maybe your ears were burning. But I read with great interest the op-ed that you wrote about tariffs. It's not just a defense of tariffs. It's almost a zealous endorsement of tariffs and sort of correcting a lot of misconceptions that are pervasive currently. Can you just summarize what you say? Because we've used them in the past. Suddenly, it just became almost a factual statement that they're bad, they're taxes, they hurt the consumer, and if you tax something, you get less of it.

21:23Why do you think that's more nuanced? Well, the article you're talking about, I really address two economists, because I think fundamentally for many years, particularly following the end of the Cold War and this idea that history has ended. And now there's this inexorable march to everybody becoming a market based democracy, which, of course, is false. We look now, we see where we are. We know we see some of the largest economies in the world. China, not a democracy, not market based. India, certainly a democracy, but quite statist in its approach. So all of the underlying assumptions of economists during the past 30 years that efficiency was going to win out in economics and global trade, none of that really came to pass.

22:08Because we live in the real world. And in the real world, countries are operating with power. They're pursuing economic policies for reasons other than economic efficiency. And so they get ahead of us. And we end up becoming, we have to just accept whatever policies they make. So our view is these markets can sometimes be broken. If you have China that goes in and they undermine everybody, they have a lot of subsidies or state direction. It eliminates the possibility of free trade. Therefore, we have to use whatever tools are available to us. Tariffs, as you mentioned, are a tool that have been used for over a century in the U.S.

22:47We didn't use it as much in the post-war period and certainly not in the post-Cold War period. But it's a tool of industrial policy. It's to be used carefully. But we have seen over the past year very good results. We're exporting more than we've ever exported. We're seeing green shoots in manufacturing. And we're seeing expansion in manufacturing. So all of these things that are happening, it's not just theory. The data are backing up what we're doing. is used efficiently and almost surgically. Would you say that's what's been done? Because critics would say it has not been surgical. Well, it's interesting that you say this because it is simple for people to say, well, they've just been applying tariffs wildly.

23:29And that's simply not the case. We have a set of tariffs that are sector-specific. Automobiles, steel, aluminum, copper, sensitive supply chains. And if you look at those, they're applied to different countries differently. depending on the level of problem we have with those countries. And then we have other types of tariffs. Last year, we had what we call reciprocal tariffs that were designed to get at a lack of reciprocity in trade. But even in that situation, we didn't have tariffs on oil and gas. We didn't have tariffs on fertilizer. We didn't have tariffs on food that we can't even grow here, tropical fruits and that kind of thing.

24:01So there's been more nuance to it than people realize. Just last night, we released a proposal on tariffs on Brazil bill for a number of unfair trading practices they had. And again, that was something that was quite nuanced. So we're trying to go very carefully to change the terms of trade between the United States and the rest of the world and also be careful. But Jameson, to be fair, I think that's a more recent approach to it. When we had Liberation Day last April, those were exactly the complaints we were hearing from grocery store owners and others saying, we can't buy bananas anymore because we don't grow them here.

24:35And every country that does, we've got these huge tariffs on it. Is it fair to say that it's become more precise as you've gone along? Well, I never heard they couldn't buy bananas. There was never a banana shortage in the U.S. That's what Target CEO told us on air. I never heard anyone having a banana shortage. We never saw any news of that. We did have tariffs on other products for those first six months or so. These served as leverage. And when we were able to finally get deals with a lot of these countries that produce those types of product, you know, the Equadors of the world, Indonesia, Vietnam, and others, those who make coffee.