Goldman Sachs CEO David Solomon & Facebook Co-Founder Chris Hughes 4/22/25

0:00Bring in show music, please. This is Squawk Pod and I'm CNBC producer Cameron Costa. On today's episode, uncertainty breeding market volatility. We know what it looks like it means and that's a sell America trade. Goldman Sachs CEO David Solomon issues a word of caution about tariffs. Until businesses and individuals all over the world, not just here in the United States, can understand our trade policy, how it's going to be implemented, and that allows people to step back and make decisions about their capital spending, their investment, their planning. Solomon's watching U.S. treasuries and tariff plans, but he says you can't unwind 80 years of global investment in a snap.

0:48And markets, well, they tend to overreact. This is a stressful time, but in terms of market function, this is in no way a crisis. And Facebook co-founder and economist Chris Hughes is out with a new book, just as regulators are taking aim at Google and at the company he founded. Hughes is not opposed to reining in the giants. I wrote the book because I believe that the private sector is very, very important to spurring innovation. It just needs to be managed. Those conversations plus AI at the Oscars? Not off the table. and Harvard is suing the Trump administration. That is where the free speech piece of this is complicated.

1:31It's Tuesday, April 22nd, and Squawk Pod begins right now. Stand Becky by in three, two, one, cue it please. Good morning, everybody, and welcome to Squawk Box right here on CNBC. I'm Becky Quick along with Joe Kernan and Andrew Ross-Orkin. This morning, I'm in Houston at the Chevron Leadership Initiative's Commission Champions of Women in Sport event. This is a gathering of business leaders ahead of the Chevron, which is the first major tournament of the LPGA Tour. This is a moment in women's sports where you're seeing lots of money going into it and lots of interest along with that. We'll be talking about all those things through the course of the morning.

2:12You saw the Dow off by close to 1 ,000 points yesterday, closed down by more than 900. It was the worst day for both the Dow and the S &P that we've seen since all the way back to just April 10th. So we are getting a little used to this volatility. NASDAQ futures this morning up by 167 and the S &P up by 46. All of this happening yesterday as President Trump ramped up his attacks on Fed Chair Jay Powell and Fed Independence. In a morning post on Truth Social, President Trump called Powell Mr. Too Late and a major loser and again called for Powell to lower interest rates. You've also got gold coming off its 23rd record settle of the year.

2:52It's now closing in on its inflation-adjusted all-time intraday high of about$3 ,589. This morning, it's up another 1.3 % to$3 ,469. Gold hit that record level on an inflation-adjusted basis in early 1980. Yesterday, the dollar continued to weaken. It hit its lowest level in three years. And you're going to take a look this morning. It's a little higher, only up by about 16 cents. And then you've got Bitcoin, which yesterday was higher. And this morning looks like it is up another one point four percent to eighty eight thousand five hundred and twenty two. Guys, these moves have been really interesting to see equities weaken, to see the dollar weaken, to see yields rise.

3:35At the same time, you've got gold hitting these all time highs. A lot of people wondering what exactly this all means. I think we're still wondering what this all means. We know what it looks like it means, and that's a sell America trade, which is I don't know how long it lasts and how it gets reversed. Journal has a good piece today. Best thing to do is get a couple of trade deals done and move on and do the other things that you were planning all along and hope we can, I don't know, reset a little bit because definitely a lot of these things are not being taken positively by the market. That's an understatement.

4:17He doesn't seem to be doing that at the moment, unfortunately. I mean, he seems to be doubling down. Who's in his ear? You know how quickly he can change. We should also tell you Harvard suing the Trump administration following the White House freezing billions of dollars in grants that was earmarked for the school. The lawsuit accuses the administration of flouting the First Amendment and asks a federal judge to declare President Trump's freeze order unconstitutional. Harvard argues that the move was not related to anti-Semitism concerns that the administration has cited. That lawsuit, in part, says, make no mistake, Harvard rejects anti-Semitism and discrimination in all of its forms and is actively making structural reforms to eradicate anti-Semitism on campus.

5:04But rather than engage with Harvard regarding those ongoing efforts, the government announced a sweeping freeze of funding for medical, scientific, technological and other research that has nothing at all to do with anti-Semitism. And a new statement, a White House spokesperson says taxpayer funds are a privilege and Harvard fails to meet the basic conditions required to access that privilege. We should talk about this. The thing, and I don't know, Becky, how you feel about it, though. We've talked about the anti-Semitism piece of it. for for weeks on end the truth is if you look at what the government has said and what the president has said as it relates to harvard anti-semitism is only a small part of it what they're really trying to do is change the structure of harvard and change who they hire how they hire what they do and a lot of it has to do with ideological beliefs and he has made it clear that it's actually in large part about ideological beliefs about the professors that are being hired, the students that are being recruited, all of those things.

6:06That is where the free speech piece of this is complicated. That is where the free speech piece of this is complicated. He's got about six things, at least six institutional entities in mind that he is not happy with and wants to disrupt, including media, including law firms. Correct. And I think, and we'll see what courts ultimately think, that that perspective is not constitutional. Not to say that I don't agree that the Ivy League and a lot of higher institutions have totally lost their way. And I don't like what's happening to the kids. I'm not saying that they're perfect. I think they can be a lot better.

6:46Well, they're not just not perfect. They're just hideous in terms of who's hired and the dogma that's institutionalized. Once you're in, you can't get fired. Right. Why do you think we have such problems with anti-Semitism? Because all these wacky, crazy stuff is institutionalized. I agree with you. And that's who you hire, and it's incestuous. And then the people that you hired 20 years ago that were like that are hiring more people that are like, so what do you do? You just let it continue? Well, first of all, I think it's actually shifting. What you're doing by targeting in particular the science funding, the National Institutes of Health, the national science funding that comes through this, is potentially breaking down.

7:25They're taking all the money away. Right. But by setting these things up that are completely unrelated, what it does do is threaten the innovative engine of this country. So many of the great developments have come through the funding that comes through these universities. And I can understand being upset with how things have gone, with how some of these universities are looking on the other side of things. but to do this and to put all of that at risk. By the way, a lot of these funds were set up from funds that were promised for last year. If it's not resolved by July from people I talked to about some of these issues on the science side of things, it's going to create massive problems.

8:04You are going to lose all kinds of students and doctoral candidates and Ph.D. work that's being done and some of the most innovative cycles that are coming through. And that is something that, again, you can look at this the same way you look at the trade war. Were there imbalances and things that need to be adjusted? Yes. Is there a better way to do it? Yes. Is there a way that might preserve these institutions and preserve the functions that are best about the United States to do this instead of breaking everything and saying we're going to shut this down now until we get our way with it? That is the harsh reality.

8:35And that is this. The fear is that you break things that can't be fixed easily by doing it this way. The Academy Awards giving some new guidance on artificial intelligence and movies for top prizes. the Academy of Motion Picture Arts and Sciences, saying the use of generative AI tools and movie making will neither help nor hurt the chances of an Oscar nomination. But it also tried to convey the message that the more that humans were involved in a film, the better. Officially, it said the Academy and each branch will judge the achievement, taking into account the degree to which a human was at the heart of the creative authorship when choosing which movie to award.

9:22So I imagine it's going to be increasingly difficult to discern. Yeah. But that tells you the guidelines. I mean, and just that fear in Hollywood of the machines taking over, not just Hollywood, I guess a lot of places, wanting to make sure that there's still the human creativity, that they're still rewarding that. Joe, you move in these film circles. I can't imagine they'd be thrilled about the idea of having a whole lot of AI there. I'm dragged into these circles. You are. I am. Yeah. And, you know, sometimes people are kind of pointing at me. And I don't look like I've never had granola, I don't think.

10:04I don't have it all the time. It is a certain. But you do wear Birkenstocks with your socks. With socks. With dark colored. that, you said, right? You still do that. I wear Burks, not with socks. Oh, but you don't wear socks. Okay. Yeah, you're right. And, Becky, I don't know, like we were just saying, how do you discern? It's going to be more and more difficult to see. But there will be buzz within the community. Like, these are the people involved in the film industry are the ones voting for this, and there will be buzz about where they actually use people and where they wouldn't. And my guess would be is if the artist community, community, the creative community feels like they were cut out of the process, you're going to get snubbed.

10:45Right. The Federal Trade Commission is now suing Uber. The government claims that the ride-handling company provided misleading information to users about the Uber One subscription service, failed to provide a simple way to cancel memberships, and charged people without their consent. The move is the first FTC action against a major tech company during President Trump's second term. Notably, Uber and CEO Dara Khosrowshahi each reportedly donated $1 million to the president's inaugural fund. And Uber's spokesperson telling CNBC the company's disappointed by the FTC's complaint, but is confident the courts will rule in its favor, Joe.

11:25So I think for all those folks who thought that, you know. That's not why. They could be just patriotic and want to participate in the inauguration of the U.S. president. Stop being so cynical. I'm going to start drawing a line at some of this cynicism, okay? We've got to move on. We've got to come together. We've been part for, remember HW? Got to come together. Dana Carvey, we've been a part. Let me just tell you, I spoke to so many CEOs who wrote those checks. And they wanted something? Who will privately tell you exactly what they think, which is that this was a down payment. And all I'm suggesting to you is it was a down payment on nothing.

12:09Because it was a down payment on the rug being pulled out collectively from under them? Good. These corporate fat cats.

12:20Cheese will be next. Next on Squawk Pod, Facebook co-founder and economist Chris Hughes joins us. He weighs in on President Trump's criticism of Fed Chairman Jay Powell, future of capitalism, and much, much more. I also think that if Trump fires Powell, then the chaos in those markets is going to lift the cost of borrowing. It's going to make it a lot harder to follow up on those kinds of promises. So I think most of it — I'm American, I'm a patriot — I believe that it would be great to have those kinds of investments here at home. I just think that there, in the long term, is a much better way to go about doing it.

13:04This is Squawk Pod. You're watching Squawk Box right here on CNBC. I'm Andrew Ross Sorkin, along with Joe Kernan and Becky Quick, who's in Houston this morning. Facebook co-founder and economist Chris Hughes out with a new book this morning. It's called Market Crafters, the 100-Year Struggle to Shape the American Economy. It explores the history of capitalism. He joins us now. Got a whole bunch of things to talk to you about. But I'm ready. But maybe the best way to start is to try to put this moment in terms of our politics and maybe our economy. Yeah. In the context of what you looked at, because you talk about sort of the whole sweep of history.

13:42And by the way, Democrats ruling and Republicans ruling. Absolutely. So this book makes the case that there is a long history of policymakers organizing and managing markets for political goals. things like making Americans richer, safer, more economically stable. That's a joint project. Republicans do it. Democrats do it. And only by uncovering that hidden history are we going to figure out some way to rebuild after the chaos of Trump in this moment. OK, so here's my question. How important is your you went to Harvard, for example. How important do you think government spending as it relates to universities, universities, science endeavors, and things like that, compared to the quote-unquote true private market where there's no government money at all?

14:29It's incredibly important. I mean, the universities are a major engine of research and development, and as you've seen over the past half century, the overall public investment in R &D has gone down, and a lot of that has shifted to the universities as being the engines of doing that. Now, for me, at least in the context of my research, What I find is even more powerful is when government institutions are doing that kind of R &D, making those kinds of investments for political goals. So something like the CHIPS Act from a few years ago. Republicans started in the first Trump administration. Republicans believed we needed to make semiconductors here.

15:04The Biden folks agreed. Congress passes it. Now we have five of the world's largest semiconductor fabricators either operating or opening plants here. That's a major investment of R &D, of course. but also of industrial policy to make us safer. And it's successful, and we can learn a lot from it. There's been a lot of criticism about tariffs, but is there any example that, I mean, you talk a lot about more, I would say, carrots than sticks, if you will. But are there any examples where the stick has worked? Well, I think on balance, the public investment industrial policy is a much better way to accomplish these goals.

15:40So bringing back jobs in American manufacturing, for instance. I think targeted tariffs can work in some moments, but I definitely don't think that's what's happening in this administration. What do you make when we see a press release, like Roche announced this morning, they're going to make a$50 billion investment in the U.S. They say it's going to create 12 ,000 jobs over the next five years. Great. Right. We saw NVIDIA make a statement last week. We saw Apple make a statement two months. Is that policy by press release or is that real? No, I think it can be real. However, I also think that if Trump fires Powell, then the chaos in those markets is going to lift the cost of borrowing.

16:17It's going to make it a lot harder to follow up on those kinds of promises. So I think most of it, I'm American, I'm a patriot. I believe that it would be great to have those kinds of investments here at home. I just think that they're in the long term is a much better way to go about doing it. One of the things I've been thinking about is assuming that Powell is out next May anyway. Yeah. and assuming that Trump is going to put his person in then, why would the market dislike his firing but be fine with whoever replaces him? Because you're going to think that whoever, because of what it says.

16:48Because of what it says. But the practical reality may be no different. I don't think that's right. I think, you know, a quarter of the book that I write about is the history of the Fed and why its insulation independence is so important to its success. And so, first off, the Federal Reserve Act is very clear. The chair cannot be fired unless it's for cause. Now, the FTC Act also says that, and Trump has fired two of the Democratic commissioners. So we'll see if he follows the law in the first place. However, if he does fire the chair, he can also remove the other governors. So if he so chooses, if the courts uphold that way of thinking about it.

17:24And so all of a sudden you have a board of governors, which is entirely dependent on the political cycle. And how are you going to trust that to guarantee price stability, let alone financial stability or full employment? I just have almost my default position is that the government is probably the worst entity at snickering. I'm not snickering. I just have a sense of what you're going to say. No, it's just historically central planning and trying to allocate resources based on what 100 intellectuals in an administration think they should do. It just hasn't worked out in the past. And, you know, iPencil, Adam Smith, the invisible band.

18:05That industrial, and I would say both sides probably make mistakes in terms of trying to orchestrate industrial policy. Solyndra on one side, you know, and then the Republicans do tariffs on the other side with all the unintended consequences of tariffs. It just seems like central planning and industrial policy never works. Yeah. So I'm with you on central planning, but you like the Fed. Is that different than industrial planning? Well, what I'm talking about is something called market craft. And so I think the Fed is a good example here. I imagine you like it. Most investors, watchers of the show believe that on balance, it's a good thing to have.

18:39The Fed is literally guiding short-term money markets, sets the price of credit, and then it buffers and ensures that in any given day it functions in an orderly fashion. That's not planning, nor is that a free market fantasy. That's market craft. Who thinks the government can decide which in? That's a powerful and inspiring example. But the Fed, I'm not talking about the Fed, but let's talk about just innovation in the way that the private sector decides to allocate resources for things. You don't think that's more effective than a bunch of smart people in Washington? I wrote the book because I believe that the private sector is very, very important to spurring innovation.

19:16It just needs to be managed. It's all about entrepreneurs. It's a dance. You need two. You need the state and you need markets to make it work. but it was just that the government industrial policy has been more important in the private sector in terms of innovation i think this is this is a false choice but more important or less important you need both of these things to guide markets and make sure that they're working the way that we want them to you know on climate policy the by administration is a perfect example of the during the beginning in the end let me just finish okay where climate investment doubled because of the ira because we agreed Hey, climate's actually a big problem, guys.

19:52And we need to address present capital. We don't agree with that. He doesn't agree with that. I think that's a prime example of what I'm talking about. Well, we agree on some things and we disagree on others. But I think the important thing is seeing that market craft is a real history that we need to wrestle with and reckon with if we're going to be able to think about these things constructively in the future. Well, I just want to go back to then the tariff piece, because I would argue the tariff piece is similar to the carrot piece or the chips act. That's what I'm saying. Both sides use industrial policy, and it seems to be ineffective on both sides.

20:22I mean, the Chips Act, you know, they picked Intel as one. I mean, they do have fab plants, obviously, but they picked the biggest loser. But this goes back to the question whether then you're very happy they're taking money away from Harvard. My point is, like, this picky and choosing thing is the problem. I'm saying with$37 trillion in debt that we've had 30 times the amount of funding just in the last 20 years or whatever it is. And when I said, if you want to defund universities, we should have a debate about that. If you want to defund specific universities, we should have a different conversation about that, because that's where it gets more complicated.

20:53But I think the key thing that I'm trying to say is that it's not just about industrial policy. You look back at Treasury Secretary Bill Simon, the libertarian's libertarian. When he was in government in the 1970s, he worked with Alan Greenspan to set up the Strategic Petroleum Reserve to take enormous amounts of oil, store them here so that we would be able to be resilient if there was another oil embargo, and so that we could buffer the price. I don't think you would call that industrial policy. I wouldn't either. But it is market craft. It's saying that we can't just wait for energy markets to supply us.

21:25We need government to have a guiding hand here to make sure these things are still, and we haven't had an energy crisis in 40-plus years. Then your guys, I'm talking about Biden, used it because the emergency was that prices were too high during the midterms. So we depleted it to where we're down how much at this point. The SPR. The SPCR still has hundreds of billions. But we're probably 40 percent. Aren't we down 40 percent? Well, the whole idea is to use it to buffer. Like if you're not using it, then you said for wars. You didn't say for higher energy prices. No, I didn't say for wars. No, actually, for price buffering.

21:56I think it's important. That wasn't an emergency, the midterms. What I think is important to learn from the SPR is that we can buffer prices, right? So that when they get high, we can ensure that they don't get too expensive. And when they go low, we can ensure that they're exactly. And that is market craft. It is fossil fuels, though, Chris. Well, it is. We need them, it turns out. It's a longer conversation. For a little while longer. The book is called Market Crafters, and it's a fascinating history of just what's happened in this economy. It actually creates a lot of this good debate. So, Chris, thank you for having me.

22:25Thank you for having me. Coming up on Squawk Pod, Becky Quick is in Houston. With her, Goldman Sachs CEO David Solomon. He has a word of caution on the world's history of confidence in America's economy. And he, like everyone else, is awaiting tariff certainty. I don't think that we're taking 80 years of a direction of travel and just reversing it instantaneously. But I do think these are serious things that you have to watch very, very carefully. And if we don't get to a policy place of certainty where people can trust and they can rely, it will have longer term implications. Solomon's take on market health, U.S.

23:05treasuries and much more right after this.

23:15you're listening to squawk pod from cnbc with joe kernan andrew ross sorkin and becky quick we are here at the chevron leadership initiatives commission champions of women in sport event joining us right now is goldman sachs ceo david solomon he's here because goldman sachs has an interest in women's sports and in the lpga in particular but david i want to talk to you about what's happening in the markets right now. It's been a pretty confusing time. You're seeing all these weird things happening with equities dropping, bond yields going up, the dollar dropping pretty steadily, gold prices at all-time highs.

23:54And it's making people wonder what this all means. Is this a crisis of confidence in our markets right now? What do you read as to what we're seeing? Well, first of all, thank you for having me. And it's good to be with you. Thank you for joining us. Absolutely. It's good to be with you in Houston. We're in a very different macro environment than we were in just a few months ago. I think the last time I was on the show and the last time I spoke to you guys was in Davos. And certainly we could all talk about kind of the aura of how people felt in Davos, but it was very, very different. You were coming into the inauguration.

24:28There was a lot of optimism around a lower regulatory environment and changes. And so now we're a few months into the administration. And instead of policy becoming more certain, we actually have a greater sense of uncertainty broadly, and it's having a big impact on asset prices and markets. And so the trade policy and the discussions about trade policy certainly have changed the level of uncertainty in markets. Markets are looking to reprice the value of things based on the uncertainty they have around what these policies will ultimately look like and how they will ultimately be implemented.