SOTS 2nd Hour: Sen. Elizabeth Warren, MongoDB’s Massive Move, Mortgage Fraud Risks Rising? 8/27/25

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Carl Quintanilla (1:01)

Good Wednesday morning. Welcome to Squawk on the Street. I'm Carl Quintanilla with Mike Santoli, David Faber at Post 9 of the New York Stock Exchange. Sarah Eisen is off today. Waiting on Nvidia tonight, although Nvidia is down almost a percent, leading to some weakness in the NASDAQ today. Watching bonds, the long bond especially and the steepening of the curve, just about five basis points from the five handle. Today, Senator Warren is going to join us as she speaks out against the president's firing of Fed Governor Cook, calling the move, quote, an authoritarian power grab that blatantly violates the Federal Reserve Act. Plus, we're getting you set for the biggest moment of earnings season with a few hours to go until Nvidia prints. And we'll talk about this big pop for software today, MongoDB leading that with an analyst who sees even more upside ahead.

David Faber (1:43)

We begin with the latest on the drama surrounding President Trump's decision to fire Fed Governor Lisa Cook, the Fed saying it would abide by any court decision on whether the president has the legal authority to make that move. Let's bring in Steve Leesman, who spoke with another Fed member this morning, Steve, and he offered his thoughts on it.

Steve Leesman (2:01)

Yeah, I'm going to start off with what investors are most focused on, which is interest rates. Let's hear from Fed President John Williams in the exclusive CNBC interview, counting himself among those who think the Fed is in a position to cut interest rates and hinted it could be as soon as September.

John Williams (2:17)

We are still in a, I would say, modestly restrictive stance. I think the evidence shows that the economy is gradually slowing. As we talked about, inflation is gradually coming down. And so if things move in the way that I hope they do in terms of our maximum employment and price stability goals, then I do think it will be appropriate to move interest rates down over time.

Steve Leesman (2:37)

William's comments come of a fairly diversion of views on the rate setting Federal Open Market Committee with two dissenters in July who wanted to cut. Several Fed presidents and Jackson Holes saying they were reluctant to cut due to concerns about tariff related inflation. Asked if the Fed could cut as soon as September, William said that every meeting is live and at risk for coming more into balance, but he needs to see the data first. The probability of a Fed rate cut rising towards 91 percent, up a few points after William spoke with his comments appearing to align with Fed Chair Jay Powell and market expectations. William suggested the Fed may need to cut more than once to hit that neutral rate.

John Williams (3:12)

If you think the neutral rate is somewhere around 1 percent or a little bit below, we are still in a restrictive stance in monetary policy, and as inflation comes back down to 2 percent, you know, we're going to need to get interest rates lower than they currently are.

Steve Leesman (3:27)

He declined to discuss details of the president's firing of Fed Governor Lisa Cook. He said that Cook has brought, quote, integrity and commitment to her job and that the important issue is Fed independence, which he said leads to low inflation and economic and financial stability. With this thing tied up now apparently going to be an illegal issue, I think that's going to be a common refrain from Fed officials.

David Faber (3:47)

Steve, just for clarity, when he's talking about the neutral rate at 1 percent, he's talking about the real rate?

Steve Leesman (3:53)

Yes. John is one of the world's experts in this. John, there's a thing that I have in my computer which has the neutral rate every day and it's a calculation based on a formula that he wrote with a colleague and it's 0.7. So let's do the math together. 0.7 plus the 2 percent target rate gives you a nominal rate of 2.7 versus the current funds rate of 4.38 means the Fed is 1.6 or 160 basis points tight. But, do the 0.7 plus the 3 percent actual inflation rate and the Fed is not quite as tight as 50 basis points. The key, I think, with Williams and I think also with Powell is that you can bring it down a bit, still remain restrictive and be putting downward pressure on inflation while you're cutting. But that may mean the Fed is not, that 100 basis points is not going to happen this year. It may be more like set your sights on 50, which is kind of where the market's priced.