China’s Chip Supply & POTUS vs. Powell 4/17/25

0:00Bring in show music please. This is Squawk Pod from CNBC. On today's episode, two companies are in the spotlight. The first, NVIDIA. CEO Jensen Huang is in Beijing, just as the U.S. government is eyeing the company's supply of chips to AI competitors in Asia. We take a look at just how thin the line is between competition and national security. We went to the Met when Russia launched Sputnik. to make sure we got to the move. Where'd that get us? I mean, this really matters. And the second company in focus, United Healthcare. A bleak forecast and a sharp sell-off there. I mean, if it moves 5%, that's usually a big day.

0:47Yeah, that's big. Let alone 10. Then, harsh words for Fed Chair Jay Powell from who else? President Trump. And finally, an investor playbook that's less about play and more about the bench. Aperture chairman and CEO Peter Krause joins us. Markets don't react well to chaotic processes. I'm CNBC producer Cameron Costa. It's Thursday, April 17th, 2025, and Squawk Pod begins right now. Stand, Andrew, by in three, two, one, cue Andrew. Good morning and welcome back to Squawk Box right here on CNBC. We're live at the Nasdaq market site in Times Square. I'm Andrew Ross Sorkin with Joe Kernan and Kelly Evans.

1:33Becky is off today, but thank you for all week. I know it's four long days. It feels okay today. It's okay today? But then you started saying it felt okay earlier, and now you're fading again. Then after I sat down for hair and makeup, I was like, well, maybe it's nap time again.

1:49UnitedHealth falling this morning after quarterly results. Earnings of$7.20 a share. That's$0.09 below estimates. Revenue,$109.6 billion, also below expectations. UNH lowering its earnings guidance for the full year. And that stock off goes to 10 % this morning. Yeah, that's seven times 55, is that? 350, yeah. That's why I said when I sat down, we were gaining about half of what we lost yesterday. It's down almost 10 % on the results. And then that happened and it wiped out 350 points of Dow. I mean, if it moves 5%, that's usually a big day. Yeah, that's big. let alone 10. Wow. Do you think that they are going to be paying out more?

2:31Is that what's happening here? Is it utilization? I don't know what you'd call, I doubt it. And I'm not going to, you know, I'm not going to say, wow, Tim Walts, hey, I wake up in the morning, puts me in a good mood if UnitedHealth is down, something like that. I'm not going to take any, I mean, some people probably would look at that with all the stuff still swirling around, this crazy controversy about Taylor Lorenz and all this stuff, along with Sean Hannity last night, about Luigi, whatever his name is, Mangione. She went on the show to talk about it last night? She did. And she, you know, gave the normal excuse that, you know, I wasn't saying violence is good or that he was a good person.

3:10I was just saying that the overall view of how health care is with the insurance, you know, system is something that needs to be dealt with, and it causes a lot of anger. I wonder whether there's more pressure on the company. I would, I'm sure. In terms of utilization, in terms of putting bills through. By the way, I think we are all UnitedHealth. We are. Don't even. Don't even, right? And there, but that's, by the way, we just had a - What are you saying? No, because it's true. I deal with the Forbes all the time. They don't even exist as a company. If you want to talk to them, you have to go call a third party.

3:45You can't get anybody on. This is UMR. It's a part, but it's - But the place where it is rife, too, is Medicare Advantage, where they're supposedly going to give you a more holistic approach and find more things. But then the rap is that they're looking for everything. They find things that you can charge for that you may or may not necessarily have. I don't know. Is that where the crackdown is really going to happen on the fiscal side or not? Just looking through the results here. Yeah, I mean, that's a big market reaction. So they miss, like you said, top and bottom line. Ed Chair Jay Powell, but they're kind of getting tired.

4:26My take on this is going to be boring for people. Warning of fallout from President Trump's imposition of tariffs on countries across the globe. Powell made those remarks at the Economic Club of Chicago. The level of tariff increases announced so far is significantly larger than anticipated and the same is likely to be true of the economic effects, which will include higher inflation and slower growth. Both survey and market-based measures of near-term inflation expectations have moved up significantly, with survey participants pointing to tariffs. The inflation numbers we've seen have been cool, and this may be coming.

5:07So thank you, Chair Powell, for warning us that could be coming. But as you were taking the coal back right after the pandemic, and we were shoveling Nicole onto an already hot economy. Beep. Crickets from Powell. And then we get 40-year highs in inflation, which really were the second derivative, not just temporary pricing. Not a word. Not a word from him back then. So now he's more... I thought it was Biden's fault. It is Biden's fault. It was both of them. They enabled. But that's why now, because of... But not a word from him back then. But now, because that happened, they're going to be so trigger-having.

5:42I think it's more that than a Republican... Democrat. Don't you think it's a, you know, we're not going to let this happen again. I told you you wouldn't like it. I told you you wouldn't like it. But by the way, you know, Waller is saying they they did. They shouldn't repeat that mistake. You know, he's come out and maybe again. We all know there's a race for the next. Now we're for free speech. We shouldn't repeat those mistakes. Now we're for this. We shouldn't repeat those mistakes. Everything went for four years. Nothing happened. We didn't do anything. Didn't say anything. The media didn't If you say there's all these mistakes and you think that they shouldn't be repeated, why are you saying go repeat them now?

6:16Neither side is consistent on what they push. That's the problem. And the hypocrisy. I don't know if it's this deep, my friend. But maybe, maybe. I think if there was more accountability about the last time. Just never say that the hypocrisy applies to my family. That's all I'm going to tell you. It's from Godfather 2.

6:37President Trump now blasting Fed Chairman Jay Powell on Truth Social. The gloves are off. He says that Powell has been, quote, too late and wrong on interest rates. And Powell's termination cannot come fast enough. We have not seen this kind of language from the president directly since he's been in office about Jay Powell. He's made some comments prior to his election, but he is now officially the president of the United States and talking about trying to get rid of Powell. Of course, as you mentioned, Kelly, earlier, Powell's in this role until next May. The question is, when does he nominate somebody else?

7:19Right. There was always this idea, something that Scott Bessent raised. This is deja vu all over again. He did this repeatedly in the first presidency. presidency. 2019, the president said almost the same thing. Said lower rates. Yep. And then many, many people said no. And then they did. People said he was right. Yeah, they ended up cutting. And then the question about jawboning jawboning Powell into doing something. I don't know if he's going to. I think the market worries about the opposite effect, where the jawboning makes Powell want to dig his heels in and maybe not be as inclined or the Fed less inclined.

7:51But you remembered H.W. And when you actually look into it, it goes back much further than that The president's just reaming. Look, the very famous example is Volcker going to see Reagan. Yeah, exactly. Having said that. Who got shoved against the wall? Was that someone Martin? But the truth is, what I don't think we've ever seen is a sort of public condemnation of another official that is ostensibly in an independent role. I mean, it's the Trump administration. People wake up and have this for breakfast. It was probably behind the scenes. I'm not saying it's happened by the scenes. Volcroft is going back to ratings.

8:29Him and Besson have a weekly breakfast, which Besson talked about the other day. So I think the market also knows that line of communication is there. It seems open. It seems like an amiable relationship. I mean, do you think it's amiable? Between Besson and the Fed chair, a weekly breakfast? I mean, I think it's like working, you know, like forced working way. Like a hostage state. Like a hostage situation. There's Mayor Adams and there's President Trump. What do you think that relationship's like? Amiable. Amiable? Is that amiable? You're bringing up all your hair on fire moments. Again, we don't need a reprise of all that.

9:05Go back to Greenspan. Go back to Greenspan. Right. HW literally blamed him for losing to Bill Clinton. We would have never seen, I didn't have sex with that. We would have never seen that if Greenspan had lowered rates. The country would be a totally different place right now. He blamed him for that when? When he was the president? No, I guess afterwards. I'm just saying, have you ever seen a president... But it was really about read my lips, I think. I'm just suggesting the norms of what was normal is not normal anymore. Right, but I think by Trump standards, I don't want to say this was restrained, but I don't think it's unexpected.

9:45Didn't you live in Trump 1? No, I'm... You barely survived, but we know it's not. I also think if we don't recognize and just identify to what's happening and pretend it's normal, then it becomes normal. God, I don't want to go over the last four years again. I can't. I just can't do it every day. And again, is there a market? I mean, that's what I would look to. It's like, is it are we going to see a, you know, is there we saw the sell off yesterday. The market's more concerned that Powell is not going to be quick to cut. Watch jobless claims, watch the labor market. I mean, it's kind of why he gets elected, because it's not business as usual in the political, you know, the feckless and spineless politics that we're used to.

10:32This guy just like a bull in a china closet, right? The disruption is sort of why you want all seven swing states and the popular vote. That's what happened. And we'll see how people feel about things now. I think that there's a. Well, that was what we were going to do after the first presidency, and now he's back with a vengeance, even after all those trials and all that lawfare. Right. And the economy is doing spectacularly as a result of all of it. We don't know about the economy yet. Because we can't measure it? No, because it's only a stock market phenomenon so far. Okay. I know you're hoping.

11:05I'm not hoping anything. I'm hoping for the best. I really am. I think. I pray for the best. Don't they always say that? And then every time there's something bad, it's like, yes. I think we all do that. Both sides, every side. It's hard. Both side is.

11:21OK, let's talk about this other story. And I know that everyone's got thoughts. So here we go. Report saying the IRS now can. I have to go to the bathroom. I'll be back. Considering. I have to leave the set. Here we go. Kelly and I can talk about it. We probably have a lot of. Kelly will take. Listen. I'm actually very curious where we learn. Elise, are you back there? Stefanik, can you. Let's just tell the audience, for those who are just waking up trying to figure out what's going on, let's explain what's going on. So the IRS is now considering revoking Harvard University's tax-exempt status.

11:54This follows a post on Truth Social from President Trump on Tuesday who floated that idea. This after Harvard rejected what it called an unlawful demand from the White House to overhaul its academic programs or lose federal grants. So the Trump administration threatened the university and actually other universities as well with funding cuts over pro-Palestine campus protests and threats to Jewish students that erupted following Hamas' 2023 attack on Israel and Israel's military response. As of now, there's apparently been no formal request yet for the IRS to change Harvard's tax status. But late last night, the White House Deputy Press Secretary said any forthcoming actions by the IRS will be conducted independently of the president and investigations into any institution's violations of its tax status were initiated prior to the president's truth social post.

12:47Just for context, it is illegal. It is a criminal penalty, with criminal penalties, for the president or anybody in the administration to direct or indirectly suggest, not just suggest, but effectively create investigation or go after a company via the IRS. It is illegal. There are laws on the books about this. Oh, my God, and you don't remember Obamagate. I understand your perspective on that. Every single... company that had Patriot in its name got audited by Louise Lasser, whatever her name was. Nothing happened. I understand. Thought we're being consistent again. Now you have a problem with it again.

13:31You've told me that - What if it's not explicitly directed into the point about what happens if the IRS - Do you not think - Why was it okay back then? But what if it's not explicit? When it was Democrats doing it, why was it okay back then? Okay. It's not okay. And my question - It's not okay. Okay. We are in agreement. It is not okay. Okay. But if you don't look at this in some semblance and say this is what they call lawfare, which I was told during the campaign repeatedly, this is the Trump campaign, that they were trying to get rid of lawfare. Right. And you don't look at what's going on and think this is like lawfare on steroids.

14:06I don't know what to say. It is. It's empirical. It's in front of your eyes. You can watch it. I thought yesterday you walked away from that conversation with Stefanik totally converted because she seemed to just answer every one of your concerns. I thought you totally were on board with what was happening after yesterday because she was so effective in countering all of your arguments. By the way, I like her. I don't dislike her. By the way, I can have a great conversation with President Trump. I think he's charming. I thought you came around yesterday. I thought you came. I thought you were going, geez, I've been wrong.

14:44No, no, no, no. I didn't plan there. You basically said that at the end. No, what I've said over and over, especially with the Harvard situation, is that the anti-Semitism piece of this on Harvard campus is terrible. Violence is terrible. We need to get rid of that. We can't have disruptions of class. People can't feel intimidated. All of those things we need to end. There's no question about that. And if the government wants to work with Harvard and press them on that specific slice of it, they should be. And they should use their leverage in that way. I don't know if they should use the IRS leverage in that way.

15:18Should the IRS itself be able to consider the tax-exempt status? Well, unless you think that then we're going to have to do this to, you want to do this to every college and university in the country. The ones that have these issues. But here's the issue. In this case, what's happened is the government came to Harvard and said, we have this five-page letter. You've seen the letter. You can go get it online. You can Google it right now. And you can see what the government is effectively requiring of Harvard. It goes far beyond simply the anti-Semitism issue. But it implies all the programming that it thinks are contributing to the anti-Semitism.

15:55But it gets into a free speech story. That's, to me, the issue. Is there free speech? It's all about the government funding piece of this, right? A private institution can do whatever it wants. It's only if they accept federal funding. taking away their... Well, no, the IRS now is going to take away their tax status as well. Right, but that's still not taking away the First Amendment. It doesn't take away their First Amendment, but this is how... Can I answer you, with$55 billion in the endowment, why are you crying the blues when they hit... What do they spend that money on,$55 billion? There are people that say this is a hedge fund that has a college just so it can stay, keep its tax-exempt status.

16:36That's all Harvard is. It's like a hedge fund that happens to have a school attached to it. Well, first of all, that's a terribly disparaging remark because I would suggest that that money is somehow... What do they use it for? No, is somehow they're profiteering off of this status. But your description was the influence peddling. Meaning whatever the mission of the enterprise is, whether it's selling influence or if they have a successful trading arm. When we keep giving all these grants, it's just, You get inflation. Suddenly the colleges don't need this money in student loans. Everyone gets those.

17:14No one wants to pay him back. That's why we have this horrible conversation about whether the government should be providing either. Or you think the government should be providing grants. Part of the problem. Part of science for science. Right. And by the way, at MIT as well. And all of these universities, if you think that we should be out of that business and maybe Doge thinks that I don't know. They don't have to be. We can have that conversation. I don't think. Hire one conservative at Harvard. That's all you got to do. There was a letter from Ways and Means Chair Smith last year before the election where he says, you know, tax exempt status is a privilege and not a right.

17:49In exchange, organizations must operate for stated exempt purposes. And they outline the same concerns that we've heard from the Trump administration. But I mean, this this predates, you know, Jan 20. there have been people raising concerns about whether they're using that status for stated purposes or for more nefarious ones that would violate the spirit of their tax exempt status. So it's it's not just a Trump thing. I just think that then you I mean, I'm just suggesting to you. I don't really there are there are organizations that are not for that have not for profit status all over this country, some of which, by the way, have a conservative bent and others that may have a liberal bent.

18:27There are theater organizations. There are enterprise, new enterprise organizations. There are all sorts of not-for-profits. And if you want to change not-for-profits across the country, go with God and do it. But to target ones this way, I think, again, goes to this sort of lawfare situation. Yeah, but when you said this is against a criminal threat, you once told me that the governor, Hochul here, that they were going after a criminal indictment of her on fraud. That was absolutely not true at the time. They were going after civil. It was civil, and it wasn't her. It was, you know, her administration writ large.

19:06But you... All I'm suggesting to you... This is criminal if the Trump administration says to... No one did any time when Obama did it. Nobody did, and maybe they should. Maybe they should. Okay, and you wish we looked at the laptop, and you wish we said Biden or Cena. You did. Cheese will be next. Coming up on Squawk Pod, a deep dive into deep tech. NVIDIA CEO Jensen Huang is in Beijing, and here at home, the administration is putting pressure on the company, attempting to limit its chip sales in Asia, and Congress, for its part, has launched a probe into how important NVIDIA chips are to OpenAI competitor DeepSeek.

19:49The question is, will it work? This whole idea that you can get into a protectionist state and somehow prevent everybody from doing this. Still worth trying to slow it down. I'm not saying we shouldn't slow it down. The question is whether this really does slow it down. We'll be right back.

20:08Welcome back to Squawk Pod from CNBC. Today with Joe Kernan, Andrew Ross-Sorkin and Kelly Evans, who's in for Becky Quick. NVIDIA CEO Jensen Wang is saying China is a very important market for his company. and that he hopes to continue to cooperate with the country. This is according to China state broadcaster CCTV. He's in China just a day after Nvidia shares plunged nearly 7%. The drop followed news the company will take more than a$5 billion charge related to canceled orders for the H20 chip. Nvidia says the government told it it would now have to get a license to export those chips to China.

20:42Additionally, Congress's select committee on the Chinese Communist Party is now calling for answers from Nvidia about its sales of chips to China and to Southeast Asia. They want more information related to reports that Chinese AI model DeepSeq was developed with tens of thousands of NVIDIA chips, even though the H20 was legal for export to China until last week under previous Biden administration rules. In a statement, an NVIDIA rep said the U.S. government instructs American businesses on what they can sell and where, and the company follows the government's instructions to the letter. The Financial Times reported yesterday that NVIDIA was blindsided by the Trump White House's new export controls on its chip sales to China.

21:19I don't know if you remember, Alex Wong from Scale AI was on our broadcast from Davos. This was the week of the DeepSeek thing. And everybody couldn't fathom how DeepSeek had done what he did. And he said on our, he said, you know, they had a lot more, you know, you all think it's so great, but they really actually had a lot more NVIDIA chips than you can. Like this wasn't made with some efficient way. The thought is that they were still the ones that they were allowed to have access to at the time. Yeah, we're on top of the line, but they still... This, you know, and I had some thoughts about this, as I always do.

21:53The Trump administration wants to crush China's AI ambitions. Now, what is that worth to us here? A lot, but the return is a backfire. I mean, I think it's a... Right, but I think it's a legitimate... That's all we need, is China way ahead in the AI. I don't even know what the future would look like. But that's where TikTok comes from. I'm scared enough for humans. If China's the leader, then I'm even more scared. Yeah. So how much should you pay in pressure on the NASDAQ? How much should we accept to try to crush China? Or not crush, but try to prevent them from being market leaders. Are you willing to give something?

22:30If we could do it, maybe you think we can't do it anyway. Right. So I'm in a different place, which is I think it's an almost impossible task. I think we can slow them down. I think we can slow them down. We can put them a year or two or three or five years behind. But the Huawei example is the story. We thought that Huawei was so far behind in terms of what they could do with their chips for their phone. And then what did they do? And this is, look, this is a great phrase. You know, when you're put in a box, you try to figure out how to fix it. And that's what they did. Meaning their mother of all invention.

23:05For necessity, the mother of invention. Mother of invention. Great, great. Frank Zappa. Amazing. And by the way, I also think you want competition. You do. You do. You ultimately want competition. But you see what I'm saying about China. Look, if you can. China. I'm just suggesting to you, I think it's a very hard thing to put that genie fully back in the box. And then look at how, because of this, Huawei now has relationships all over the rest of the world, right? Look at how we galvanize. And they become the low-cost provider and everything else. So I think if you just totally chop off everybody, you're...

23:39We went to the Met when Russia launched Sputnik to make sure we got to the moon. Where'd that get us? I mean, this really matters with AI, I would say. Right, but as you just said, where did that get us? Where did that get us? Got us to the moon first. Hey, we found some rocks. Got the flag there. Found some, no cheese. It's probably worth trying to do what we can on the margin. slow it down a little.