SOTS 2nd Hour: Trump-Lisa Cook Conflict, Jefferies’ David Zervos, & LIVE: Interactive Brokers’ Thomas Peterffy 8/26/25

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Carl Quintanilla (0:46)

Good Tuesday morning. Welcome to Squawk on the Street. I'm Carl Quintanilla with Mike Santoli, David Faber, live at Post 9 to the New York Stock Exchange. Sarah Eisen has the morning off. Bit of a mixed bag this morning. Pretty even tape. Dow is down 5 Got a few sectors up, a few down. But overall, watching for Okta, MDB and PVH earnings tonight. Long bond 493 The VIX is back above 15 Today the president says he's firing Fed Governor Lisa Cook. Cook says the president doesn't have the authority and that she's not stepping down. What all that means for investors in the future of the Fed independence. Jefferies strategist and Fed Chair Contender David Zervos will join us in a few moments with his take. And then Interactive Brokers being added to the S&P 500

Thomas Peterffy will join us with his reaction to that news coming up.

David Faber (1:29)

New consumer data just crossing. Let's get to Rick Santoli who has that for us.

SPEAKER_5 (1:33)

Rick.

SPEAKER_6 (1:35)

Yes, David, this is August 3rd on Consumer Confidence from the Conference Board. 97.4 is the headline, better than expected. However, not sequentially higher than the big revision. Last month 97.2 now becomes 98.7.

And if we look at the present situation, 131.2, that follows 132.8. And finally, expectations, 74.8. And it is following an upward revised 76.0. So not one is sequentially higher than our final July reads. Now, on Richmond Fed, on the manufacturing side, minus 7 That's a little better. We're expecting minus 11 What's interesting here is, that is the best read since it was minus 6 in March of this year. Comping to a negative number, never good. But if we go to the business side, the service side, a little bit better, a positive number, up 6 That follows minus 8 Up 6 would be the best. Well, just since June, we're positive 14 If we look at the market, right now we're at 369 in a two year. That's where the market was before the 8.3 data. And before this data hasn't really moved much. It's down four basis points, 8, 10 year at 428 Similar. It's really been hovering right at that level. We do have auctions at one Eastern. Today it will be a two year note, 69 billion. Tomorrow, five years at 70 billion, followed by Thursday, 44 billion, seven years. Mike Santoli, back to you.

Mike Santoli (3:07)

Rick, thank you very much. Well, President Trump says he is firing Fed Governor Lisa Cook over alleged mortgage fraud. Let's get to Steve Leesman. Hi, Steve.

SPEAKER_8 (3:16)

Morning, Mike. You have more questions and answers this morning about the independence of the Fed, the power of the president over the central bank, and of course, the more important outlook for monetary policy when it comes to markets. The president is saying he fired Cook for quote, allegedly making statements on one or more mortgage agreements. Cook, in a statement last night, responded quote, President Trump reported to fire me for cause when no cause exists under the law and he has no authority to do so. I will not resign. Questions include, is Cook actually fired now? We don't know the answer to that. Does the president actually have this authority? What will Fed Chair Powell do in responsibility? Allow her into the building or cut off her email or whatever? How and when will the courts weigh in here? How much controls does the president have over the Fed? Many both inside and outside of the Fed have viewed the attack on Cook as political part of an effort to force the Fed to reduce rates but also many wonder if the charges of mortgage fraud have substance that should force a resignation. Cook has not responded to the charges per se.

If the removal stands, the Board of Governors would have only five of its regular seven members. Chair Jay Powell appointed by both Trump and President Biden. Biden appoints Jefferson and Barr and Trump appoints Bowman and Waller. The president has nominated CEHR Stephen Myron to a vacant spot. So replacing Cook would give Trump a majority on the board. Fed probabilities changing only slightly in the wake of the firing. September remaining at around 82 percent of a rate cut. The probability that is in October at 42 percent for a set cut up a little bit. Overall, the market reaction you said this morning is modest. Could suggest for now this is seen as a limited action by the president who has some rationale for it and that it does not concern the more important issue of the Fed chair. It could also mean markets don't think that much about Fed independence.