Tennis Coach Brad Gilbert Ahead of the U.S. Open 8/22/25

0:00Bring in show music, please. This is Squawk Pod and I'm CNBC producer Cameron Costa. On today's episode, it's the day global investors have been waiting for. Fed Chair Jay Powell gives his Jackson Hole address. But one other Fed governor is in the headlines for a different reason. Unpacking the mortgage fraud allegations against economist Lisa Cook with former Assistant Attorney General Jonathan Cantor. It does raise questions about whether somebody is being singled out simply because you don't like their policy positions. If that is the case, then that is an abuse of power. And tennis, anyone?

0:41Brad Gilbert, coach and former pro, on the unique challenges of playing a game that has exploded in global popularity. Again. The greatest thing about coaching is you're trying to help somebody fulfill their dreams, try to help them become better. Plus, the rest of today's news, like Musk and Zuck, strange bedfellows, and chips, chips, everybody wants a piece of chip makers. These companies didn't want the money and they don't want the equity stake. It's Friday, August 22nd, and Squawk Pod begins right now. Stand Becky by in three, two, one, cue it please. Good morning, everybody. Welcome to Squawk Box here on CNBC.

1:27We're live from the NASDAQ market site in Times Square. I'm Becky Quick, along with Andrew Ross Sorkin. Joe is off today. It's Friday. Here we go. Well, today's the day. This week's marquee economic event set to take place in just a couple of hours from now. Federal Reserve Chair Jay Powell, he's going to be delivering the keynote address at the Kansas City Fed's Economic Symposium in Jackson Hole, Wyoming, basically just known as Jackson Hole at this point. It's going to be Powell's final speech headlining that conference in the Grand Tetons. The Wall Street Journal reporting this morning that Powell is expected to detail changes to the Fed's policy framework and effectively move away from the central bank's recent focus on risks stemming from what was then near zero interest rates and low prices.

2:12In light of higher inflation, those are no longer seen as the most pressing issues. Powell is going to be laying out conclusions from a month-long review by the Fed when he speaks at about 10 a.m. Eastern time. And, of course, CNBC will bring you it all live as it's happening. And afterward, we're going to have a first on CNBC interview with Cleveland Fed President Beth Hammock. So we've got a lot going on this morning, and we'll be spending some time with Steve Leesman, of course, who is in the Grand Tetons with that beautiful shot behind him. It's been interesting hearing some of the differing opinions now coming out from some of these Fed officials, because as the conditions have changed, as we've heard more about what's happening on the jobs front, there is an expectation among some parties that you might see this Fed cut rates.

2:58But you're kind of seeing a Fed that's not nearly as unified as it had been to this point because of the differing data points. What did you make of all the retail numbers this week in that, to me, there was two things going on. You had the Walmarts of the world saying, look, we're absorbing the price tax, but effectively saying we're absorbing them as long as we can. Right. And so, which raises the prospect, do we get to the fall? And it's effectively what Doug McMillan is saying is price hikes are going to eventually come. Is that his sort of backwards way of saying that? And if that's true, how does that affect this?

3:34Yeah, I actually went back and forth with Matt Shea, the head of the National Retail Federation yesterday, just asking him what he's seeing on a broader point after we heard from all these retailers. And he said, look, consumers on the lower income levels are really struggling at this point. That's been the case for a while. You've also been seeing consumers in the mid-level trade down to go to Walmart. They've been getting more and more people who make more than$100 ,000 a year that have been shopping there. At the higher ends, you still have some pretty flush spending and people feeling good about things.

4:03You did see July numbers for most of these retailers that looked better than they had seen in the couple of months leading up to that. Some people say that's weather. That was certainly a factor with Home Depot and Lowe's because you did get some better summer weather. and that got people out to maybe spend things in the garden and the outside that they hadn't been spending on before. But I think it is an inflection point. I think it's hard to get your arms around where things stand right now. I think Jay Powell is very likely to lay out how difficult it is and the risks that they're facing on both sides, whether you're worried about the jobs market really slowing down or whether you're worried about the risk of inflation, how things pick up down the road.

4:39My guess is, and I don't know this, but if you listen to Leisman, he'll say a lot of these things, too. My guess is he'll try and steer clear of either completely taking a cut off the table or guaranteeing and locking one in. They've got one more jobs report they can take a look at before their next meeting. So maybe they lay it out those ways. But obviously, so many people are riding on this because normally this is where the Fed will really lay out their vision for how they see things over the coming months. In the meantime, the Justice Department is going to be investigating Federal Reserve Governor Lisa Cook after she was accused by a Trump administration official of mortgage fraud.

5:15Ed Martin, a lawyer at the DOJ who has investigated Democratic officials in the past, wrote to the Fed chair, Jay Powell, that circumstances surrounding Cook's mortgages require further attention. He also asked Powell to remove Cook from the Federal Reserve Board, saying, do it today before it's too late. After all, no American thinks it is appropriate that she serve during this time with a cloud hanging over her head. In fact, the Federal Reserve chair does not have the authority to remove Cook. The Fed declined to comment when contacted by CNBC, but we are going to talk more about this story.

5:50And NVIDIA has reportedly asked some of its component suppliers to stop production related to the H20 chip, which is less powerful than the company's high-end processors and is engineered for the Chinese market. A report from The Information says that NVIDIA told Samsung and Arizona-based Amcor technology to halt production. A separate report from Reuters says that NVIDIA has asked Foxconn to stop working on the H20 chip. China has reportedly pushed for domestic tech companies to hold off buying those chips over security and other concerns. In Taiwan today, NVIDIA's chief, Jensen Wang, reiterated to reporters that NVIDIA's chips don't have security backdoors.

6:30That's been a big issue. There's been a lot of talk about it. But NVIDIA has been very forward in kind of saying, no, we don't do that. There is no backdoor. There is no way into any of these chips. You can see NVIDIA shares this morning down by about 1.1 percent. Samsung up by about 1.1 percent and then Amcor Technology off by 2.2 percent. But I think the bigger thing with this piece of news, if we make the implication that the Chinese government may actually be trying to get away from NVIDIA chips, that's the other piece of this, is ultimately when you get into this sort of, you know, Eric Schmidt, I think, coined the term many years ago, splinter net.

7:05This idea that the Internet was going to be completely splintered, which it basically already is. But now we're going to get into a splinter net as it relates to hardware. Well, yeah, no, as it relates to hardware, which is to say, I think ultimately the Chinese, even though they kind of want these chips now, and the NVIDIA chips now are ultimately going to stop buying our chips. I think that's embedded in that whole story that I was looking through last night is this idea that the Chinese would prefer not to do business ultimately with NVIDIA if they could. Look, the other part of the problem, and they talked about this yesterday on Squawk on the Street, is that Howard Lutnick, the Commerce Secretary, has been pretty open about saying, hey, we're just giving them garbage chips.

7:42These aren't second-rate chips. They're not third-rate. They're fourth of the line. So the idea that he was talking about that very openly and bluntly, saying we're only allowing really old stuff like our hand-me-down hand-me-downs to go to them. I think that's part of the pushback on this, too. We don't want fourth-rate hand-downs. And there is this push to build a new chip that would not be as outdated as the H20. And you get into the security questions again. So it's a very difficult line to walk between pleasing American authorities and Chinese authorities at the same time, too. Now to the government potentially taking stakes in businesses that receive chips or receive money as part of the Chips Act.

8:21The Wall Street Journal reporting the Trump administration now considering those stakes, but not for large chip companies that are increasing their investments in the U.S. So the journal saying that executives from Taiwan semiconductor have spoken about giving back money to the government as it asks for an equity stake. This is the point that I've been making all week, Becky, about this, which is that these companies didn't want the money. and they don't want the equity stake. And we could have never gone to them two or three years ago when this was first put into place and said, hey, you want the money?

8:53Give us an equity stake. These guys, even now, with the tariffs, are saying, talk to the hand, we don't want this. We don't want you to take an equity stake in us. Separately, Reuters reporting the White House that is considering a new plan to try to divert, effectively, some of the$2 billion of CHIPS Act funding to projects dealing with critical minerals. It's unclear if the administration would use that money for grants to businesses or equity stakes in mining companies. So a lot of different twists and turns this is all taking this morning. It is interesting to see some of this money being diverted.

9:26The rare earth's minerals was a huge deal. China's been able to get some leverage because of that. So we see other areas in the supply chain that we really need to beef up a bit and go through some of these things. I did hear an interview earlier today with the former vice president, the former vice president, Mike Pence. You know, he's a hardline conservative, old school conservative. He's opposed to any of these issues where the government is getting involved in these things. You know, he's old school conservatism where you want to keep an arm's length distance between the government and businesses.

10:04But again, it gets wrapped up in the security question, this national security question. And we saw how important that was during COVID. We saw how weak some of our supply chains were and how reliant we were on other places for things that we had no ideas about. Even remember some of the pieces like you couldn't find the pieces to go through for shots to give to people. We don't manufacture any of those things here anymore. So it's a lot. This one may come as a surprise for you. Elon Musk tried to enlist Mehta's Mark Zuckerberg to help finance a nearly$100 billion takeover of OpenAI. That's according to court filings in a case between Musk and OpenAI.

10:45Now, Musk helped found OpenAI, as you'll remember, which back then was a not-for-profit in 2015. In February of this year, he floated that proposal to buy the AI giant. Musk had earlier sued OpenAI, upset over its attempt to transform into a for-profit entity. Now, OpenAI has made counterclaims against Musk. As part of its complaint, OpenAI has filed to subpoena Meta for communications between the company, Zuckerberg and Musk. The new court filing says that neither Meta nor Zuckerberg signed a letter of intent offered by Musk and his AI company, XAI, when they were pursuing that bid for OpenAI.

11:23Meta's spokesperson declined to comment. Musk's attorney didn't respond to a request for comment, but in the continued strange bedfellows, I have a vision of them fighting in the Coliseum or in a cage, if you remember, Musk and Zuckerberg. And then you can imagine them hugging it out and trying to take on Sam Allman. The enemy of my enemy is my friend. Somehow. It's a bigger enemy when it comes down to it. I know they've had this long and torturous relationship. I think it goes back even farther, like eight years back to when a SpaceX explosion blew up in a Facebook satellite. And you're right, the cage match probably was peak animosity between the two.

12:04But again, strange bedfellows are made because you have to go after your bigger competitor, your bigger enemy. And they didn't sign the deal anyway. And they didn't sign the deal anyway. Next on Squawk Pod, former U.S. Assistant Attorney General Jonathan Cantor. What's at stake for Lisa Cook, Fed governor in the hot seat amid allegations of mortgage fraud? To establish criminal fraud, you would have to establish beyond a reasonable doubt, not only that she did something that was incorrect, but she had the intent to commit a crime. That's a very high standard. It's not a typical DOJ case, he says.

12:41More to come after this break.

12:48And we're back. This is Squawk Pod. You're watching Squawk Box right here on CNBC. I'm Becky Quick along with Joe Kernan, who's not here today, and Andrew Ross Sorkin. Andrew and I are holding down the fort, right? Summer Friday, summer Friday. It is. The Department of Justice is investigating Federal Reserve Governor Lisa Cook over allegations of fraud related to her mortgages. A letter signed by DOJ attorney Ed Martin also urging Fed Chair Jerome Powell to remove Cook from the central bank's board. though, in fact, he doesn't have the power to do that. Joining us right now to help us understand the allegations against Cook, some of the rules, and how this could all play itself out.

13:28Former Assistant Attorney General Jonathan Cantor, he's a CNBC contributor, a distinguished law professor at Washington University in St. Louis, and you have a beautiful shot of Washington right behind you, my friend. It's nice to see you this morning. Help us understand. I just want to know, when you first heard this news, did you immediately say this is a terrible crime? Did you say there's something else going on? Did you think about weaponization? What was going on in your head? Yeah, the first thing that jumped out to me, Andrew, is that this is not something that the Department of Justice would normally investigate.

14:03There's a difference between the court of law and the court of public opinion. In the court of law, this is small ball and very difficult to prove. You'd have to establish not only that she filled out the form incorrectly, but she had the specific intent to deceive, to defraud banks, as opposed to just making a mistake. And so it's not something ordinarily the Department of Justice would investigate and use its scarce resources to address. Now, that's separate from the question of public opinion. People might feel that this makes her unfit for the job, but that's usually something that comes up in the context of a confirmation hearing.

14:41or, again, a question about whether she's fit for the public trust. Jonathan, let's separate then, because I think there's a couple things going on. Let's separate the legality issue from the prosecution of this issue, from how this might have all started. Let's just separate them as separate issues. On the legal issue alone, you do agree or believe that it's illegal to lie on your application. I know you said that it's hard to prove, but I would imagine typically in this kind of context, unless there's a reasonable excuse for it, that the reason you would be saying that you have two primary homes at the same time is because you want the lower rate and you would know that that's wrong.

15:31Right. So there's really a question about whether there is a technical legal violation and whether somebody engaged in criminal fraud. So to establish criminal fraud, you would have to establish beyond a reasonable doubt, not only that she did something that was incorrect, but she had the intent to commit a crime. That's a very high standard, and appropriately so. It means that we're not going to take away someone's liberty rights unless they're really a criminal. Hey, Jonathan, can I follow up on this, though? Because I've spent a lot of time trying to think this through. I've got multiple mortgages.

16:03It would never occur to me to say that one of these other houses was my primary residence because, first of all, I wouldn't think that the lenders wouldn't figure that out anyway, but it's wrong. And the reason that there are higher mortgage rates on second or third mortgages is because you are much more likely to walk away from that and leave the bank holding the bag. So it doesn't feel like it's a victimless crime any more than insurance fraud feels like a victimless crime. Insurance fraud causes everybody else's rates to go up. Mortgage fraud causes everybody else's rates to go up because the banks have to realize that there's going to be a certain amount of failure that comes through on this.

16:38The circumstances are strange. And I've tried to think through. I know there are some cases where a mortgage lender will say, yeah, it's OK for you to do that if you were buying a property for an elderly relative or for a disabled child or if you really had job circumstances where you were going back and forth. I don't know all the facts on this, but what Bill Pulte has put out suggests that she put one of those properties. She did these within a couple of weeks of each other and then soon afterward put one of those properties up on the rental market. I would anticipate that, you know, someone who's sitting on the Federal Reserve Board would understand what a primary residence is.

17:18And you're right. I don't know how they got about. You may look askance at how any of this came out. You may doubt the whistleblower accusations on some of these things. You may think it was an inactive investigation. But as Andrew said, let's separate the two. So it doesn't seem to me, and it may be widespread, there may be 22 ,000 cases of this, but it doesn't seem to me like a victimless crime, and it is something that we should crack down on. Yeah, and to be clear, Becky, I don't necessarily disagree with the underlying premise of what you're saying, which is that if you defraud the bank, it is and can be and should be a crime.

17:54The question, I guess, that I'm trying to address is, realistically, what has to go into proving that in order to establish beyond a reasonable doubt that somebody violated the Title 18 and should be subjected to prison or such fines or large fines. And as a practical matter, it's not something typically the DOJ would investigate because there's a lot of this stuff. Whether they could, they certainly could if they wanted to, and they could certainly bring a case. Just in my experience, it's not the easiest kind of case to prove in the absence of a broader evidence of ongoing fraud. Let me ask you a separate question.

18:36Unrelated to the politics of it, do you think that somebody's role in society changes whether they should be prosecuted or not? So you might say, OK, typically we don't go after these things. But in this instance, if you were on the board of the Fed or the CEO of a bank and you were doing this, you know, part of what I imagine, and you and I have actually talked about, you used the word deterrence many years ago. I remember we talked about the word deterrence. Do you say to yourself, OK, well, we don't normally go after this, but this is a, putting the politics of it aside, a high value target from a deterrence perspective?

19:18Yeah, there's a question of what should be the case and what is the case. I mean, we can look back and you can look at Martha Stewart and a whole bunch of other notable prosecutions where you might shrug your shoulders and wonder why the government used its resources for something that might not have been victimless, but relatively insignificant in the grand scheme of the problems that we suffer throughout the world and the kind of crime that goes on on a daily basis. As a legal matter, as a technical legal matter, that information in a criminal case would be prejudicial. It's probably not unless it related to her job.

19:56It's not likely a court would allow evidence of somebody's position to come in, especially in this case if the conduct occurred before she was on the board of governors. It's kind of like a stoplight. It doesn't matter if you're in a yellow Ferrari or a champagne Corolla. You still have to stop at the stoplight. The law applies equally to everybody. Right. It reminds me of, remember all the government officials who got chased out because they were hiring nannies under the table and not paying them on the books? You can go back, that was probably 15, 20 years ago. But there were a series of them who had done things that were pretty commonplace among other people.

20:32But if you are a public official, you're going to be held to a higher standard. Yeah, Becky. So this is why I think it's important to distinguish between the court of law and the court of public opinion. These kinds of things do come up quite frequently in confirmation hearings to discern whether somebody is fit to hold office. That's usually the proper place to have this conversation, including the one we're having right now. Although if we find out somebody lied about their resume after the fact, they've gotten chased out for that, too. They have. But again, the question is, how are we going to enforce that fairly across the entire federal government?

21:10or are we just going to use it when we disagree with somebody over a particular policy question? So, Jonathan, the next sort of political piece is, look, there are some people, Democrats, you're a Democrat, who look at this and say, this is a weaponization of the government. We don't know exactly how this allegation first emerged. I believe that Pulte suggested that it came from a tip. Who is the tippy? Is that somebody inside? Is that somebody outside? Is it Pulte himself? I mean, right, like these are the other questions that have emerged, which then raise questions about sort of how this government is using its authorities.

21:53How do you think about that? If you could somehow take any of your politics out of it? Yeah, so I had a very powerful position in the government where I would be able to bring cases, sign indictments that would effectively take away people's liberty rights. When you're in that position, it's an awesome responsibility. And the power that you have is incredible and can have significant effect on people. You have to use it without fear or favor. And so as much as you might want or have instincts to be political about it, when you're talking about criminal prosecution, you have an obligation as a prosecutor really to look at things in very neutral terms and make sure that you are giving people their due process and using the great force of the United States government and the court system appropriately for the right reasons, which is to enforce the law.

22:46Again, I'm not taking a position on whether they should or shouldn't here. It does raise questions about whether somebody is being singled out simply because you don't like their policy positions. If that is the case, then that is an abuse of power in and of itself and is something that raises huge questions about its appropriateness. And what is your sense in this context? Do you have an early take? Well, again, you really don't want to prejudge these things. The context here raises questions about, again, whether somebody's being singled out because of their policy positions. If that is the case, and I take no position, I don't know whether it is or isn't, then it's a problematic.

23:25But taking Pulte for his word, If it's simply an ordinary referral, that's fine. But the Justice Department has an obligation to make sure that it's using its responsibility and its prosecutorial discretion and authority appropriately, not simply in retaliation for a policy position. All right. Jonathan, it is great to see you. Enjoy the weekend. Thanks again. Thank you. You too. Talk to you soon. You bet. Cheese will be next. Coming up on Squawk Pod, Grand Slam Tennis Tournament, the U.S. Open, kicks off this weekend. Coach and former pro Brad Gilbert joins us for a lively discussion of the game and its impact way beyond business.

24:05If you play tennis two, three times a week after you're 35 years old for the rest of your life, you'll live 9.7 years longer than everyone else. Wow, forget it, OZM. Play tennis. You gotta hit the court. The more you know, we'll be right back.

24:26You're listening to Squawk Pod today with Becky Quick and Andrew Ross-Orkin. Here's Andrew. Up in Andrew, Q. Welcome back to Squawk Box. Tennis taking over New York City. This is the start of it. The U.S. Open starting next week. Players compete for the biggest payday in tennis history. $5 million for the men's and women's singles champion. And Fan Week and Mixed Doubles competition kicked off this week. For the latest, I want to bring in former tennis pro coach Brad Gilbert. It is great to see you at the table, sir. Good morning. How are you? And Fan Week has become massive. They had 78 ,000 for the two days of Mixed Doubles Tuesday and Wednesday.