Wall Street Exec. Tapped for Treasury Secretary & European EV Market In Trouble?

0:00Tuesday on NBC, Jimmy Fallon and Bozma St John host the highly anticipated new competition show. I hired 10 creatives from all walks of life. They will be battling it out to see who can impress the world's biggest brands. This is a huge opportunity. This is the battle for the next big idea. This is not play play. We're spending millions of dollars. I'm so excited to embark on this adventure with all of you. Make the best I do win! On Brand with Jimmy Fallon. Series premiere Tuesday on NBC. Good Morning Brew Daily Show. I'm Neil Freiman. And I'm Toby Howell. Today, Trump finally picked his Treasury Secretary.

0:38Why Wall Street is celebrating, but Elon Musk is fuming. Then Northvolt was once the best-funded startup in Europe, but now it's bankrupt. It's Monday, November 25th. Let's ride.

0:54Today, President Biden will continue the bizarre White House Thanksgiving tradition of pardoning turkeys when he will absolve two large birds, Peach and Blossom, of their crime of being large birds. Why is this even a thing? The simplest answer is always the correct one. It's a PR stunt by Big Turkey. Since 1947, the National Turkey Federation lobbying group has provided turkeys to presidents to raise awareness for the industry. Initially, these turkeys were intended to be eaten, but in 1963, President Kennedy became the first on record to pardon one. Not to get all technical on you though, Neil, Kennedy wasn't actually the first official presidential pardon.

1:37For whatever reason, when JFK was presented with the bird, he said on Thanksgiving, we'll just let this one grow. I don't know why he said it, but he did technically pardon it. But it wasn't until 1989 under George H.W. Bush that the turkey pardon became an officially sanctioned White House event. So Peaches and Blossom, I'm not sure who you should thank for your lives being spared this year, but enjoy your time as agricultural ambassadors going forward. Now, a word from our sponsor, Yahoo Finance. Neil, it finally happened to me yesterday. I was thinking about this ad last night, and all of a sudden, I couldn't stop pronouncing it as Yahoo Finance in my head.

2:16Welcome to Team Finance. Things are much more cultured over here, more sophisticated. It does have a nice ring to it, but when you're actually using the site, you don't need some sophisticated understanding of the market. It's all there right in front of you, top gainers and losers at a glance. All the news headlines you need to stay up to date. And a full suite of tools that help you screen companies you have your eye on. So whether you're a finance guy or a finance gal, Yahoo has something for you. Head to YahooFinance.com to see more. Eczema isn't always obvious, but it's real. And so is the relief from EBCLIS.

2:52After an initial dosing phase, about 4 in 10 people taking EBCLIS achieved itch relief and clear or almost clear skin at 16 weeks. And most of those people maintain skin that's still more clear at one year with monthly dosing.

3:29new or worsening eye problems. You should not receive a live vaccine when treated with EpGliss. Before starting EpGliss, tell your doctor if you have a parasitic infection. Searching for real relief? Ask your doctor about EpGliss and visit epgliss.lily.com or call 1-800-LILY-RX or 1-800-545-5979. After an eventful search, President-elect Donald Trump named his pick for Treasury Secretary just before the weekend, tasking Wall Street billionaire Scott Bacent with the important cabinet position. Bessette will now be expected to help carry out Trump's economic agenda, which includes tax cuts, paring back federal regulation, and of course, enacting his signature tariffs.

4:05Bessette took a bit of a unique path to arrive in Trump's cabinet. He came up as a protege of George Soros, a billionaire philanthropist who has donated heavily to democratic causes and presidential campaigns. He wasn't really in Trump's orbit at all during his first term, but Bessette has been friends with the family for decades and is well-respected on Wall Street with admirers, including J.P. Morgan CEO Jamie Dimon. Bessette spent months laying the groundwork to win the spot by publicly offering Trump some recommendations, and one of those economic ideas he brings to the table that won Trump over is a 3-3-3 plan aimed for 3 % economic growth, a reduction of the federal deficit to 3 % of GDP, and an increase of domestic oil production by 3 million barrels a day.

4:50That, combined with the support of tariffs as a way to raise revenue and protect American industries, led to him securing the nomination. Right. I do think those two things, tariffs and taxes, could probably be the hallmarkers of Basen's tenure as Treasury Secretary because he is responsible for kind of carrying out this economic agenda, including these potential tariffs. And Bassett has shown some areas where he's likely to push back a little bit on Trump's proposals. He is generally in favor of tariffs, but has deflected them, saying it's obviously a maximalist negotiating strategy, but he said that they should phase them in to give markets some time to adjust.

5:31So he is seen kind of as this more level-headed character who, yes, generally is in favor of most of Trump's economic proposals, but will not be afraid to push back in certain areas. And Elon Musk, who has emerged as one of Trump's top economic advisors, was not a fan of this. And you mentioned there was a very intense competition that resembled almost Trump's old TV show, The Apprentice, for this position with a number of names throwing their hat in the ring, including Howard Lutnick, the CEO of Cantor Fitzgerald, who was the co-chair of the transition committee. He got tapped as the Commerce Secretary, which is maybe the B team of the Treasury Secretary.

6:12But Elon Musk called Basant the business as usual choice. And he didn't mean that in a positive way. However, this is a business as usual choice. And that is what Wall Street wanted. They wanted someone who would not ruffle markets. And with something like tariffs, which absolutely can ruffle markets, they were celebrating, As you mentioned, Jamie Dimon, the J.P. Morgan CEO, a bunch of other heads of global finance thought this was a great choice for being business as usual and not ruffling the stock market as much as a very hawkish on tariffs choice would be. One thing that has ruffled some feathers, though, is that Bessent made some waves this fall when he did float this idea of replacing Jerome Powell with what he called a, quote, shadow chair, which is someone that Trump could, like, tab someone early for the position of leading the Federal Reserve, which could technically undermine Powell's position before his term ends in 2026.

7:11That is a little bit – you keep saying ruffling feathers. That does ruffle some feathers because obviously the Fed is supposed to be insulated from this political conversation, this political maneuvering. So him saying that maybe we could find some way around Jerome Powell to steer markets in the direction that Trump wants him to go is a little bit more of a, I don't know, extremist position. But for the time being, I do think you're right. What the market wants is someone who is a little bit more level-headed in this role. And I think Bessent, with his ties to Wall Street, is someone that will placate the markets and these big money managers for the next few months.

7:48And you might be wondering, listening to this, what even does a Treasury secretary do? They are the top economic policymaker in the entire administration. A couple ways they've been called is a couple of nicknames is America's CFO, the quarterback of the economy. if you want to get a football metaphor. They have oversight of the U.S. government debt market. They're considered the chief bond salesman tax collection. So that could be huge come 2025 when there are huge tax negotiations and potentially new tax cuts coming in play and economic sanctions. The role is held currently by Janet Yellen, who has made headlines for parading around the world, eating weird foods.

8:32And during the first Trump administration, It was Steve Mnuchin, a former banker, who was one of the few administrative officials during that administration to to stay all four years. And he was the one who encouraged Trump to pick Jerome Powell as Fed chair. So we'll see how it plays out. Last week, the U.S. Department of Justice filed fraud charges against Guatam Adani, an Indian infrastructure tycoon who is one of the richest people in the world. The shocking indictment, which is one of the DOJ's highest profile cases in recent years, is already causing shockwaves across financial markets, the global economy and U.S.-India geopolitical relations.

9:11Firms under the Adani Group ownership lost$34 billion in market value the day after the charges were filed. Kenya's president halted a major airport project with Adani Group, and Adani's plans to invest$10 billion in energy and infrastructure in the United States are now up in the air. As a refresher on the fraud accusations, the U.S. charged Adani and seven other defendants with orchestrating a scheme to pay$250 million in bribes to Indian government officials in exchange for favorable terms for solar power contracts. Those contracts were expected to generate more than$2 billion in profits. So what does this have to do with the U.S., you ask?

9:50Well, the DOJ alleges that Adani and the rest of the schemers did not reveal this plan to bribe officials to the U.S. investors they were raising money from, which is, I guess, understandable. Adani has denied the charges and claims they are baseless. Toby, Adani's$169 billion global empire looks a little shaky right now. Yeah, you mentioned that this is one of the most high-profile cases pursued by the Department of Justice in recent years because think about just the amount of jurisdictions it spans. Think about the global and diplomatic effects that this case has because there are some pretty steep hurdles to actually get Adani to the United States.

10:29The U.S. does have an international extradition treaty with India, but there is some delicate political maneuvering that will have to happen because President-elect Donald Trump has a pretty good relationship with Prime Minister Modi over in India. He sees India as kind of this good bulwark against the hedge money of China in that region. And so this will put a lot of strain on the relationship between the U.S. and India. And the final call ultimately is up to the Indian government here and how strong the diplomatic relations really are with India. So beyond just the business implications, there are some serious geopolitical and diplomatic issues as well.

11:08Absolutely. And I just want to highlight how intertwined Adani is in India's economy. He operates 13 ports there, which is 30 percent market share. He operates seven airports, which handle 23 percent of passenger traffic, nearly a quarter of all air traffic there. And he's also India's second largest cement business owner, which is 20 percent of the market, owns six coal fired power plants, largest private player in power. And that's just in India. He has projects all over the world, Bangladesh, Kenya, Israel, Vietnam. And he made this big announcement to invest$10 billion in green energy in the United States.

11:48What analysts are saying this is going to happen, what's going to happen is his empire will stay intact. It may not all come crumbling down, but a huge blocker from this indictment will be blocking access to capital. So they just scrapped a$650 million debt sale that Adani Group wanted to do, and the market value of all of his holdings, which it's a massive, sprawling conglomerate, has cratered in the event. And this is not the first time that Adani has come under scrutiny. Yeah, Hindenburg, the short-selling firm, wrote this big report last year saying how they think that it's calling into question, basically, Adani's group, saying that his company was probably overvalued at that time.

12:36And so Hindenburg's coming out of this looking pretty good because now you have this big indictment with more details coming out. One thing, just to zoom out one more time, this probably isn't going to sink a donning group, but what it might do is kind of stain India as a destination for global capital. Although a lot of people are saying there's a lot of headwinds or a lot of tailwinds actually pushing money into India. So it probably won't have any huge long-term catastrophic effects. But in the short term, it will kind of maybe dull the appeal of India as a destination for global investment.

13:09What is going on with the battery maker Northvolt? One of the best funded startups in the world went bust over the past week when the Swedish company filed for bankruptcy after running out of cash to fund operations. Northvolt was supposed to be Europe's best chance to compete with Chinese battery makers, raising$15 billion from investors to try and establish a foothold in the industry. But a turbulent year has all but sunk that dream. Everything from falling demand for electric vehicles to difficulty scaling pushed the loss-making company into Chapter 11 bankruptcy instead of into the big leagues of battery manufacturing.

13:45The financials just weren't making sense. Northvolt reported losses of roughly$1.2 billion last year with revenue of just$128 million. On top of the math not mathing, Northvolt rushed expansion efforts plowing forward with plans to build new factories in Canada and Germany to go along with its main gigafactory in Sweden. But while it eyed new business, it couldn't keep up with existing demand, falling behind on battery deliveries and losing a$2 billion contract with BMW in the process. So, yes, the idea sounded good on paper. Create a European stronghold for lithium-ion battery production, but it didn't quite work out that way.

14:23It didn't. But they had every, you know, source of support that they possibly could have. They raised$15 billion in debt, equity and grants. Every Western government was throwing money at them because to have a Western battery maker would be huge because all this industry happens in China. But maybe we're realizing why all the industry does not happen in the Western world, because it's really hard. You need to have a lot of know-how, a lot of capital to invest in making these plants. And it didn't seem like Northvolt really had the expertise. It was founded by two Tesla, former Tesla executives.

15:00So you'd think that maybe they would have some sort of know-how in the electric vehicle business. But it does speak to just the broader headwinds that this industry is facing, especially in Europe. Through October, electric vehicle volume sales fell by fell by 5 percent. We've been talking about them not growing as much as they used to, but they actually declined in Europe so far this year. Ford just laid off 4000 employees at 15 percent of its entire European workforce. So this transition from traditional cars to electric vehicles has not panned out in the way that was expecting. and a lot of funding just went up in the dust.

15:39Yeah, some big names were attached to this company. Goldman Sachs will write off almost$900 million that it plowed into Northvolt. It was Northvolt's second largest shareholder. VW also was its first largest shareholder. It had a 23 % stake in Northvolt that it is now writing down to zero as well. This company just blew through cash. Again, we call it, it was Europe's best funded startup at one point, $15 billion. dollars but last week it said it just had 30 million dollars in cash remaining which it said was enough for one week of operation so you said that battery making is a capital intensive business 30 million dollars a week run rate is capital intensive but you're right it's just hard to create a a good system for building batteries outside of asia one of their issues was they were one of the first european buyers of asian manufacturing equipment and that just led to some cost overruns and cost delays.

16:34So just a lot of issues, even though on paper, this sounds like a great idea. Let's build this stronghold of battery manufacturing. But in reality, it was much more difficult than it appeared. Up next, some winners of the weekend for you.

16:51When did making plans get this complicated? It's time to streamline with WhatsApp, the secure messaging app that brings the whole group together. Use polls to settle dinner plans. Send event invites and pin messages so no one forgets mom's 60th. And never miss a meme or milestone. All protected with end-to-end encryption. It's time for WhatsApp. Message privately with everyone. Learn more at whatsapp.com. This episode is brought to you by State Farm. Checking off the boxes on your to-do list is a great feeling. And when it comes to checking off coverage, a State Farm agent can help you choose an option that's right for you.

17:29Whether you prefer talking in person, on the phone, or using the award-winning app, it's nice knowing you have help finding coverage that best fits your needs. Like a good neighbor, State Farm is there.

17:45Welcome to Winners of the Weekend, the segment where Toby and I pick two things that have a lot to brag about when they see their high school friends the night before Thanksgiving. I won the pre-show turkey carving competition, so I get to go first. And my winner is Wicked for scoring the biggest box office debut for any Broadway adaptation ever. The movie musical that explores what happened in Oz before Dorothy arrived and messed everything up earned an impressive$114 million in North America, the third biggest opening weekend of the year behind only Deadpool and Wolverine and Inside Out 2. That sound you hear is movie execs breathing a huge sigh of relief because the stakes were high.

18:26Not only did Wicked have one of the most expensive promotional budgets in Hollywood history, but like any good musical, there's an encore. Part two of Wicked is coming out next year, so making sure people like the first enough to see the second is key. Of course, Wicked wasn't the only big budget movie to arrive this weekend. Gladiator 2 hit theaters as part of a double bill some people called Glicked, which didn't turn out to be a thing like Barbenheimer. the R-rated Gladiator, survived a battle in the Coliseum, but didn't exactly win, earning$56 million in domestic ticket sales, a tad below expectations.

19:02Toby, what was your takeaway here from a big weekend at the box office? I think it shows that you can't really force a meme to happen. I mean, Barbenheimer worked because it was just internet culture at its best. It just took that meme and ran with it. Glickin' was a little bit more, yeah, I'll say forced from a promotional perspective. Manufactured. Yeah, manufacture. People are just smushing the word together. That doesn't actually make a trend. People as in Neil and Toby. Yeah, I mean, we are part of the issue, let's be honest, because it does roll off the tongue quite well. But I do think it speaks to a broader trend of maybe eventifying movies, if you will.

19:35I mean, showing up in costume. This mostly applies to Wicked because it did have a bigger opening weekend where you go there, you buy the merch, you dress up as the Wicked Witch of the West, and you probably sing a little bit in the theater. I think people do want this experience outside the home. So long term, I think it is bullish for the movie theater industry because the only way you can have that experience is by going to a movie theater. You can't have it watching at home. So I do think movie execs are breathing a sigh of relief, even if it wasn't as big of an event as Barbenheimer. And there was an expectation that these movies would break down heavily along male-female gender lines, and that absolutely panned out.

20:11About 72 % of ticket buyers for Wicked were female, while 61 % of Gladiator 2 spectators were male. So maybe there wasn't so much overlap, which they were expecting that sort of counter-programming concept. But let's run the tape against Barbenheimer, how Glicked fared against Barbenheimer. So Barbie did$162 million in its opening weekend. Wicked did$114. and then when you're comparing Oppenheimer to Gladiator, Oppenheimer did 82 million, Gladiator did 56 million. So across the board, Barbenheimer kind of romped. A little bit lower, but I do think we got Thanksgiving weekend coming up, so I think we'll have a good boost this next time.

20:52I don't know why I'm rooting for Glick it so hard, but maybe it's because we pushed it so hard, but I do think they're saying that these will have a pretty decent shelf life, especially with this big weekend coming up. My winner of the weekend is the game of chess because the oldest game in the world has got some fresh new drama on its hands. The World Chess Championship kicks off today in Singapore, pitting reigning champion Ding Loren against 18-year-old upstart Gukes Domoraju. But the best player in the world isn't going to be there, and neither will the second best. That's because Magnus Carlsen and Fabiano Cararana, the two top-ranked players in the world, hosted a match of their own last week, playing a variant of chess called Fisher Random Chess, where positions of the back rank pieces are randomized every game.

21:37Their tournament is seen in the chess world as a bit of a protest against the current state of the game. Carlson, who is probably the best chess player to have ever lived, vacated his spot as world champion two years ago after five years on top because, quite simply, he was bored with the state of classical chess where games and matches stretch on for days and weeks. Instead, he spends most of his time playing faster-paced online tournaments and Fisher Random Chess because he thinks it is a better test of pure chess skills in contrast to the long-memorized sequences that are required to excel at classical chess.

22:11So while Loren and Damaraju sit down for a two-week slog to crown a world champion, Carlsen has his eyes on the future after raising$12 million in VC money to start Freestyle Chess, a new tour launching next year, he thinks will bring more excitement to the ancient game. Yeah, are we seeing like the TikTokification of chess? I don't know if that's too glib, but certainly there is a push to make the game faster and create more randomness and create a little more strategy than the game that has been played for a few thousand years. If you look at chess.com, 13 of the 20 most watched events haven't been those classical matches.

22:51They have been a different style of the game. So perhaps what's happening between pickleball and tennis right now is happening with Magnus Carlsen's new league and classical chess as a way of freshening up a game for a mobile and streaming audience, which has absolutely blown up in the past few years. Chess.com has become a very big app. In January 2020, before the pandemic, it had 51 million users. Now it has 190 million users worldwide. One in 10 Americans, according to Chess.com, have an account. So the game has blown up, but it's blown up in a way that maybe expands its reach. and Magnus Carlsen as the top chess player ever possibly and a person with a very big entrepreneurial mindset is trying to disrupt the game.

23:42Right, I think Magnus Carlsen is the X factor here. I mean, the world of chess kind of goes as he goes because part of the reason he stepped down too wasn't just because he was bored with the state of classical chess. He literally said, like, no one is good enough to play me. I'm not going to play the same people over and over again. I know I am better than them, so I want to move on. He still loves chess and plays a lot of chess, but he's just not playing in the World Championships anymore. I do say that you should still tune in to watch the World Championship because it is, crowning a World Champion in chess is still just one of those things that you should pay attention to.

24:12But Ding Loren, who is the current reigning champion, has gone through an absolute funk and has dropped to number 23 in the world. He's lost tons of tournaments since he was crowned World Champion. So it is going to be, potentially, we'll see the youngest chess champion crowned ever if Damuraju does get crowned as an 18-year-old. So I think a lot of drama still a lot of drama. And the prize money is two point five million dollars, which is about as much as the winner of Wimbledon makes. So there is money on the line. So tune in if you can bear to stomach these long classical chess matches. All right.

24:46Finally, here is your preview of what to expect in the week ahead. It's going to be a short one because it's Thanksgiving. Many of you are probably planning to travel in the next couple of days to see family or friends. About 80 million people are projected to hit the road or the airways this Thanksgiving, a new travel record and surpassing pre-pandemic numbers. But the weather doesn't appear to be cooperating. Forecasters are calling for rough weather across the country this week. Rain and snow on the radar for California, the Midwest, and the Great Lakes region. Get to the airport early. Get some TSA pre-check action.