A Firing at the Labor Department & Musk’s $29B in Tesla Shares 8/4/25

0:00Bring in show music, please. Hi, I'm CNBC producer Katie Kramer. Today on Squawk Pod. Did you spend an August weekend thinking about statistics? Most of Washington did after President Trump fired the chief of the Bureau of Labor Statistics when he didn't like the Friday jobs number. Kevin Hassett joins us from the White House. I thought they had to be a typo or something. You probably thought so, too. The National Economic Council director on where the administration goes after a firing that seems to many to be politically motivated. But I think it's really important now that we get a fresh set of eyes over there to try to modernize the labor data.

0:39And former Labor Secretary Elaine Chao says the data collection process can be improved, but she stands by the department's integrity and she oversaw it for eight years. There were months in which I didn't like the numbers, in which the White House didn't like the numbers, but we basically never thought of it as, you know, somehow that it was not prepared correctly. Plus, the huge payday for the world's richest man, Elon Musk, gets his$29 billion at Tesla. Waited for the first trillion-dollar company. I'm still waiting for the first trillion-dollar individual. And people are saying it could come as easily as 2027.

1:15It's Monday, August 4th, 2025. SquawkPod begins right now. Stand back to you by in 3, 2, 1. Cue it, please. Good morning, everybody. Welcome to Squawk Box right here on CNBC. We're live from the Nasdaq market site in Times Square. I'm Becky Quick, along with Joe Kernan and Andrew Ross Sorkin. President Trump saying he's going to announce a new head of the Bureau of Labor Statistics this week. He made the comments before boarding Air Force One last night. We'll be announcing a new statistician sometime over the next three, four days. We had no confidence. I mean, the numbers were ridiculous, what she announced.

1:55President's comments coming, of course, in the wake of criticism over his firing of the head of the BLS after Friday's worse than expected jobs numbers. The president believes that BLS data has been politically manipulated, he said, though it's generally believed to be the gold standard for economic measurement. Economists and investors are now worried about the future of impartiality when it comes to U.S. economic data. National Economic Council Director Kevin Hassett yesterday defended the president's move. Is the president prepared to fire anyone who reports data that he disagrees with? No, absolutely not.

2:28The president wants his own people there so that when we see the numbers, they're more transparent and more reliable. And if there are big changes and big revisions, we expect more big revisions for the jobs data in September, for example, that we want to know why. We want people to explain it to us. I don't know how concerned you are or not. Where do you land, both of you? I think it was suboptimal. I use that word a lot. Suboptimal, petulant. But I didn't spend, you know, much time obsessing over the weekend about the end of democracy. I think we're OK. I will say that in recent quarters or months or whatever, the numbers have been awful.

3:07And I'm not saying that it has anything to do with her. And I don't know about the agency itself. I don't, the government itself is not great at certain things. I think they do their best trying to figure this out. And you know the way that these things are, or, or. Yeah, they're tabulated. The way it's calculated, there's, there's like millions of either gains or losses. And then they come, you come down to what the delta is. And it has, it has their big margins of error. There's been fewer. If the agency's really bad at doing things, do you blame the person at the top? probably wasn't, you know, she's probably not there crunching the numbers herself, but who do you blame?

3:46Well, there have been fewer and fewer businesses that have actually been reporting that they've been asking for these numbers. We've raised questions about the inflation numbers because when Doge came through and cut some of the jobs, it had fewer number of people who were going out to actually gather the inputs for inflation on some of these things, too. I think we've all complained about the numbers over recent years, just wondering if the government is the most efficient or effective at this because we have other sources that I think we rely on. number on Wednesday and it seems to differ materially from what you hear on Friday.

4:15It was a, you know, it was a snap. He snapped and, you know, lashed out and it's not the first time we've seen somebody. The question is who gets put in this job. And I think that's going to happen. By the way, I think when it comes to data, for example, I know maybe you're not worried about the end of democracy, but I think. No, I wasn't obsessing about that. No, but it's going to have an impact. I like that. If you don't feel. It'd be every weekend based on. If you don't trust who is providing the data. It's going to matter who's put in this position. By the way, that's not to say that this agency is doing it right.

4:44That's not to say that they haven't, there's probably more efficient and better ways for them to collect the data so that they're not the revisions, so they get as much data as they possibly can in one given month and they're not waiting and, you know, for this other information to come to them, which seems to be lagging and getting even worse. I don't want to be in a position. Like an operational issue. Yeah, and I don't want to be in a position where we have to put somebody like Leland Miller on to say, okay, here's what the government in China said and we know we don't believe them, so what do you really thing.

5:10If they put somebody in this position who is impeccable, who is seen as unimpeachable, and who is not going to be seen as partisan, leading one direction or the other, that's a big question. If you can get somebody in there who doesn't feel like that, and we'll ask Kevin Hassett about that. Is this going to be somebody who's a loyalist to the president, or is this going to be somebody who is an expert at gathering data and who is going to just call it like they SEE IT. YEAH. I DON'T KNOW HOW YOU FIND SOMEONE THAT'S AN EXPECT. YEAH. THE THING THAT IS MIND-BOGGLING IS IF YOU LOOK AT THE WAY, OKAY, YOU PUT THE TARIFFS ON, THERE'S A GOOD CHANCE THERE COULD BE SOME UNCERTAINTY AND THERE COULD BE BUSINESSES DELAYING DECISIONS.

5:54DECISIONS. SURE. SO IT'S ALWAYS POSSIBLE THAT THERE COULD BE A SLOWDOWN IN THE LABOR MARKET. If you were playing four-dimensional chess, I'm not saying that Trump is, you'd start hammering the Fed chief so that he couldn't cut rates because it would look political. Then the Labor Department does weaken, and he's still resisting cutting rates. And then even though it might have been the tariffs that was causing the slowdown, you've got a fall guy that you've set up for. Jeremy Siegel says that Powell should resign now for that specific reason, so that the president will have no one but himself to blame if the economy drops off in a situation like this.

6:35BUT THEN AGAIN, IF YOU WERE OF THE BELIEF THAT IT'S A COST INCREASE, NOT AN INFLATION INCREASE WITH TARIFFS AND IT'S A ONE-SHOT DEAL, THE GREATER RISK WAS ALWAYS IN THE ECONOMY SLOWING AND THE FED COULD HAVE MADE, COULD HAVE BEEN FIGHTING LAST, YOU KNOW, THE LAST BATTLE THAT THEY GOT EGO IN THEIR FACE FROM. THEY COULD HAVE BEEN SO OBSESSED WITH THAT. I MEAN, IF YOUR DATA... EXCEPT FOR THAT, THAT WAS SUPPOSED TO BE... If there's a shock to the supply system, you would also think that that would be a one-off hit to inflation. And that's when we got, what was the word that they used? I can't even think of it.

7:12I think that that's longer lasting than just seeing a couple of months. Perhaps. But if you were data dependent, we've had, you know, you do the average for the past four months. Labor market has been, the data dependent on the inflation side has not been. If you're data dependent, there hasn't been any inflation. That's true. There has been weaknesses. SO THEY'RE NOT EVEN DATA DEPENDENT. NOT ONLY DO THEY NOT LOOK AHEAD. THEY'RE WAITING TO SEE WHAT HAPPENS. THEY CAN'T EVEN LOOK AHEAD, BUT SOMETIMES THEY DON'T EVEN LOOK BACK. THE BIGGER PROBLEM IS, LOOK, THE DATA, WE ALL COMPLAINED ABOUT IT ON FRIDAY WHEN WE SAW IT.

7:42IF IT'S DATA THAT YOU DON'T TRUST, HOW CAN YOU BE DATA DEPENDENT? REMEMBER LAST YEAR, EVERYBODY IS STILL TALKING ABOUT THE 900 ,000 REVISIONS. SUPPOSEDLY THIS HAPPENED BEFORE AND IT WAS TOTALLY ON A TECHNICAL REASON, BUT IT WAS THE SAME BLS. PRESIDENT TRUMP IS SOON GOING TO HAVE A CHANCE TO PUT HIS STAMP FURTHER PUT HIS STAMP ON THE FED. HE'S ALREADY GOT A COUPLE OF HIS APPOINTEES AND JAY POWELL. FED GOVERNOR ADRIANA KOOGLER ANNOUNCED LATE LAST WEEK SHE 'LL BE STEPPING DOWN FROM HER ROLE. SHE HAS GENERALLY EXPRESSED HAWKISH MONETARY POLICY VIEWS LATELY. Kugler didn't give a reason for her departure, but she said, who needs that?

8:23No, she didn't say that, but she's going to return to Georgetown University as a professor in the fall. Georgetown is awesome. Great restaurants. It's, right? Go back to become a professor. College life on the campus. I think her term was up in January. Yeah, who needs it? Kugler was one of former President Biden's Fed nominees. Her term was set to expire at the end of January. You'll remember back in 2018, Tesla had put together a compensation package for Elon Musk that was struck down by a judge now twice, despite shareholders voting twice in favor of that deal. Well, the board has approved a new deal, a bit of what they're describing as a make-good deal.

9:09They've approved a plan to pay him 96 million shares temporarily as this case and their appeal continues. Now, 96 million shares is the equivalent of about$30 billion. This would be a$30 billion make good. it represents about 3 % of the entire company's shares as part of the original transaction or compensation deal that was agreed upon back in 2018. He would have received, given the milestones that he surpassed, the equivalent of close to$90 billion or 9 % of the company. And you'll recall that we talked about how at the time the package seemed almost impossible to achieve. He did achieve it.

9:59The shareholders voted on it twice, but a judge has disagreed with that. This plan would be, quote unquote, prospective rather than retrospective. You're not effectively allowed to pay for previous work. As part of this deal, he would be paid and those shares would vest over a two year term. As part of that, he would not be allowed to sell the shares, however, for another five years. So even though he'd be paid those shares today, he can't sell those shares for the next five years. He can pledge those shares so that he can effectively take out loans to pay for the taxes on the vesting of those shares.

10:42So it actually mirrors very similarly the way the original 2018 plan was set up. And if you remember, he has not been paid a dollar since the 2017 plan effectively ended. I remember talking to both of you that morning in Davos when I ultimately broke that story, that to me this was the most shareholder-friendly plan that exists. You either get paid or you don't, and it's a true pay for performance. They are saying, though, this is just a down payment. And if, in fact, the court were to approve the appeal, meaning if they were to win on appeal on the original deal, which is still in flux, this deal would go away.

11:25So effectively, there would not be a double dip in terms of how the transaction would take place. And I would also just point you to a sentence that I do think is interesting because clearly they're starting to think not just about paying him a third, which is this$30 billion deal, but they're trying to think about what the future holds in terms of what comes next. And there's an allusion to the fact that they are reading everybody's tweets and X's. These are shareholder tweets and X's and how they're thinking about all of these things. And also what they say is important to Elon in terms of trying to focus his energies.

12:03I think there's going to be a lot of people reading that sentence saying, well, what is it that they can do to align? They're saying that they hear that they want to keep Elon focused and it's a first step towards achieving that goal. You might say, well, what's the next step? And they say that they are working on next steps to address that issue. There's been a lot of speculation. We've talked about it on the air before about whether potentially a Tesla could make an investment, for an example, in an XAI as another way to potentially, you know, focus his energies. He's talked a lot about AI being the future both of Tesla, but of course he owns XAI.

12:43XAI now is actually a service that lives to some degree inside of Tesla because they have some of those features now available on the cars. It wouldn't surprise me if that's what that sentence ultimately means. We're going to see how all this plays out in November, of course. What's the sentence, Andrew? There's a sentence towards the end about trying to refocus his energies and what they're going to do to work to address the next steps of all this. and so what the next steps could ultimately be. That's all for now. We could have to read through the rest of this, but it's fascinating. $30 billion.

13:26By the way, it would have been a lot cheaper to allow the original plan from an accounting perspective to take place. I know money's fungible, but if you think about how it was accounted for back in 2018 and how you now have to account for it today, meaning it would actually cost you$30 billion if you did it. WE WAITED FOR THE FIRST TRILLION-DOLLAR COMPANY. I'M STILL WAITING FOR THE FIRST TRILLION-DOLLAR INDIVIDUAL. AND PEOPLE ARE SAYING IT COULD COME AS EASILY AS 2027. AS EARLY AS 2027. WE KNOW WHO IT WOULD BE, MOST LIKELY. PROBABLY NOT GOING TO BE ANYONE HERE AT THIS TABLE. BUT THIS, I GUESS, THIS FACTORS INTO THAT POSSIBILITY.

14:02WELL, THIS IS ONLY 30 BILLION. I KNOW. IT TAKES A LONG TIME TO GET TO A TRUG. I KNOW, BUT IF HE GETS THAT, AND THEN THE STOCK, THE STOCK OBVIOUSLY HAS TO DO WELL. He's got to pay$23.34 a share for it. It's not given away for free. That was the price that it was under the original exercise price in 2018. But even before this news, they said it could be by 2027. There'd have to be some outsized gains in a lot of his companies, I would think. Then you'd have$1 ,000 billion. It's hard to comprehend. $1 ,000 billion is hard to comprehend. I would definitely fly private. That's the first thing you'd do.

14:45I would ensure that I would. Because you wouldn't care if it's 50 grand to go to. And there'd be some good food on board. Berkshire Hathaway reporting a small decline in second quarter earnings. Operating profit at Warren Buffett's conglomerate dipped 4 % year over year to$11.16 billion. Those results were impacted by a decline in insurance underwriting. Railroads, energy, manufacturing, service, and retail all saw higher profits versus a year ago. The company did warn of potential adverse impacts and what they called considerable uncertainty stemming from President Trump's tariffs. Berkshire also wrote down a loss of$3.8 billion from its Kraft Heinz stake.

15:29That has performed pretty miserably. I think it's down 60 percent over that period of time. One thing that they did say was that currency actually hurt them because they have a lot of loans they take out in things like euros and yen and in other products too. Most multinationals, it helps them, but it was something that pulled down the earnings results at Berkshire. That doesn't, it's not something you would anticipate or expect. It's like, remember when oil prices fell and there were some airlines were like, oh, this is killing us because we were heavily hedged. We really screwed up.

16:03Coming up on Squawk Pod, top economic advisor to the president, Kevin Hassett. He's been named on a possible short list for the next Fed chair. He joins us from the White House on the economy, tariffs, and the Friday firing of the Labor Department's top statistician. All over the U.S. government, there have been people who have been resisting Trump everywhere they can. And so to make sure that that's not going to happen in the data agencies to make sure that the data are as transparent and as reliable as possible. We're going to get highly qualified people in there that have a fresh start. We'll be right back.

16:41This is Squawk Pod. Up in Andrew. Hugh. You're watching Squawk Box right here on CNBC. I'm Andrew Ross Sorkin, along with Joe Kernan and Becky Quick. We've got a whole bunch of big stories. The fallout continues after President Trump fired the commissioner of the Bureau of Labor statistics following a dismal jobs report. Joining us right now is White House National Economic Council Director Kevin Hassett. Kevin, I want to thank you for joining us. Let's just start with a very basic question. The president said on Friday that he believed that these numbers were rigged, that they were politically motivated.

17:14Do you believe that to be true? You know, as an economist, I like to go for what I can prove. And what I can prove is that the data have become very unreliable. As you know, I've been on this show on Squawk Box before I was here at the White House pretty much every jobs day for the last 20, 25 years, right? We would come up to New York and I'd be on set and we'd talk about the jobs numbers. And when I looked at the revisions that came out last week, I thought they had to be a typo or something. You probably thought so too. And, you know, it's something that has been a work in progress for us at OMB and CEA here at the White House to try to understand why the data have become so unreliable.

17:53You know, there's some part of the story about response rates and so on. But I think it's really important now that we get a fresh set of eyes over there to try to modernize the labor data because it has to be transparent. It has to be reliable. It has to be something that market can make big bets on. And right now it's not. When the revisions are bigger than the number itself, then you know you got troubles. Kevin, here's the question, though. And I think we can agree that there could be a modernization effort, an effort to improve the way the numbers are collected so you aren't getting into this revision scenario.

18:22Perhaps the model itself needs to be rethought. I think there's probably a wide agreement on that. However, Janet Yellen said over the weekend that this is what happens in a banana republic when it's considered to be political to remove somebody like that. And as I mentioned, the comment, at least initially, was that this was a rigged effort, that these numbers were being politically manipulated. And so my question to you is, to the extent you want these numbers to have credibility and you want this department to have credibility, who do you think would be the right kind of person that would be able to reestablish whatever credibility you think was lost on Friday, recognizing that the credibility, if you will, of that group may not be as high as you'd want it to be on the sort of metrics of the numbers and your views that the numbers are not as good as they should be, but not that they're being politically manipulated?

19:18Right. Well, first of all, they could be politically manipulated because they're so untransparent. There's a black box system out there making the jobs numbers that needs to be improved. Indeed, the UK saw a similar circumstance like this a few years ago, and they actually shut down the data agency for a month or so until they got their ducks in a row. The fact is that we had these blockbuster numbers for Joe Biden last year that suddenly we lost about a million of them after he dropped out of the election. The fact is that, you know, I'm an economist. I'm not a politician. But when politicians look at numbers that make them wonder, then that suggests that there needs to be more transparency.

19:55So, for example, if I'm running the BLS and I have the biggest revision, really think about it, the biggest revision outside of COVID in 50 years, then it's incumbent on me to explain why in a very transparent way, to show how the numbers add up to show exactly where the revision came from and what you're doing to address it so it doesn't happen again. If you don't do that, then you create a circumstance where politicians are going to wonder. And for goodness sakes, we know that hopefully not much of the data area, but all over the U.S. government, there have been people who have been resisting Trump everywhere they can.

20:29And so to make sure that that's not going to happen in the data agencies, to make sure that the data are as transparent and as reliable as possible, we're going to get highly qualified people in there that have a fresh start and fresh eyes on the problem. So, Kevin, what I was wondering was the I'm ascribing all kinds of conspiracies now, there's to the president and calling for Jay Powell for months to be fired. Do you acknowledge maybe that I mean, there were two risks from tariffs and I don't know which one you think was more of a risk for the Fed. One is that the uncertainty that businesses had might cause something to slow down, hiring, capital expenditure.

21:14That might affect the labor market or the economy in terms of growth. And the other one was whether the one-time cost increases. You know, there could be retaliation and it ends up being a second derivative and it ends up being inflation. But I could see the president wanting lower rates as sort of to go hand in hand with a tariff regime. And then I thought if he insisted on it enough, which Bach basically put J-Pow into a corner, he couldn't cut. Then when the economy does slow down, you've got a fall guy ready-made for the president to point to for why it's not the tariffs. It's that J-Pow didn't cut rates.

21:59Do you acknowledge that maybe there was a slowdown to be expected from the tariffs? that maybe you foresaw? Well, I mean, what we talked about on your show, Joe, is that we think that, especially at the beginning, that a lot of the tariffs are going to be borne by foreign producers and foreign countries. And that's something we've seen in the data. Again, inflation data are down now at the lowest level that we've seen in over five years. And so the bottom line, as I say, the frustration that the president has is that he believes that other countries have cut rates and the U.S. hasn't. And he worries, just as with the BLS, He worries that maybe there's some partisan calculus going on here.

22:34And if you look at the Fed votes, it's very disappointing, I think, as a person who's long believed in the independence of the Fed, that we would have Fed votes that were separated along party lines. It's very disappointing to me that the Fed would be putting an explanation out there for these unusually high rates, that there's this massive uncertainty and massive inflation coming from tariffs without actually showing us their work. So give us the work so that we could actually give us the work. Show us why you think it is. And maybe we'll be convinced and know it's not. Chuck Schumer wants you fired.

23:08So I just I don't know. I don't know. He hasn't said that he wants you like taken out like like the Supreme Court. But he says you need to be fired because you're a flack, which is unheard of with people in your role. We've never seen that before. You're serious. You're reading an actual. Yeah, no, this is where I was going to go with it. Because you read the whole thing. Kevin, just because you probably haven't seen it, unless you did before you saw it. Kevin Hassett should be fired. He's defending Trump's lies about the jobs report and the firing of Erica McAver. The business community should demand a flack like him has no role at the Fed.

23:46Interestingly, you don't have a role at the Fed, but that's a separate matter. Yeah, I'm sure President Trump's going to rush out to fire me today. He has such high regard for Chuck Schumer. Hey, Kevin, let me ask you back to Joe's point, though. Just the markets seem to believe the revisions in the numbers more than they believe the original numbers. That's why you saw bond yields tumble on Friday. Are you in agreement with that? Do you think we are starting to see a real slowdown in the jobs market? Yeah, I think the jobs numbers were slower than we expected. I think that like one of the explanations for revisions is they have more complete data.

24:22And so I think it is likely that the revisions are a better read of the data if the data are not being manipulated. And so, yeah, I would say that it's a little bit weaker. But don't forget, this is before the big, beautiful bill is really kicking in. And so with our eyes on the horizon, we're highly optimistic about the future of this economy. We've got the big, beautiful bill. We've got expensive factories, got no taxes on tips. We've got incomes going up$10 ,000 for a typical family. And we've got all of that happening while the budget deficits declining rapidly because of the tariff revenue.

24:54And so there are a lot of really good reasons to be super optimistic about the second half of the year. But absolutely, that jobs number, if the revision turns out to be true, does suggest that there's less momentum than we thought. And, you know, you could say that the dissenters at the Fed saw this coming. They specifically mentioned that there were signs of labor market weakening. They were pointing, I think, to the ADP release as much as anything. And so, yeah, I think that the pressure on the Fed to get its policy in order is going to be higher because of this. And that's proving that the president was right about it.