Populism in DC, NEC Director Kevin Hassett, & RHONY Mezcal 3/10/25

0:00Bring in show music, please. Hi, I'm CNBC producer Katie Kramer. Here's what's coming up today on Squawk Pod. Six weeks going from animal spirits to a wait-and-see attitude. That was a really quick turnabout. What version of the economy does President Trump want? I think the tariffs are going to be the greatest thing we've ever done as a country. It's going to make our country rich again. Trump 2.0 charging ahead on tariffs, no matter the cost. Will the White House take possible short-term pain for long-term gain? The Commerce Secretary categorically ruling out a recession this year. Like Howard would know.

0:39The President's Chief Economic Advisor, Kevin Hassett, joins us today with his own rosy take on America's financial future. There are a lot of reasons to be extremely bullish about the economy going forward. But for sure, this quarter, there are some blips in the data, including the negative GDP Dow. Plus, tariff trouble hitting small business, a Mezcal brand founded by a Real Housewife of New York, how Bravo's Erin Litchie prepped for a trade war. Tequila can have, it only has to be by Mexican law 51 % pure agave, while the rest can be additive heavy. No one knows this because they don't have to say it on their bottles.

1:16Mezcal by Mexican law must be 100 % pure agave. Well, we're the Real Housewives of Squawk, I think. All that today and much more. It's Monday, March 10th, 2025. Squawk Pod begins right now. Stand Becky by in three, two, one. 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. We're here a little bleary eyed because really it's 5 a.m. on the East Coast. Good debate to be had about whether we like the daylight savings or not. I thought you were going to talk about whether we like the near-term pain, long-term.

2:01No, that's what it is. That's what you have to decide. But I'm talking about for the markets. I'm talking about for tariffs in the market. And I'm talking about the near-term pain of daylight savings. Trump says, I saw someone say he's playing Volcker and he's. I thought the same thing. I didn't hear somebody say that, but I thought the same thing. This feels very much like what Paul Volcker had. Trump 2.0 is nothing like Trump 1.0. No, because he's really kind of digging into these tariffs, talking about the revenue that they expect to. We'll see. I think there's a Trump put not too much lower.

2:31What's the S &P down by about 6 % from the high? That's before today. And I was not disparaging Howard Luck. Like, I don't think that's what he's got to say when I said, how would you know there's a recession? Nobody knows. He said it pretty empathetically. Emphatically. Right. That was the, like, wow. And you should say that. But it's the sound bite that gets cut. Company man, you say that? But nobody knows. Yeah. And if... Well, and President Trump himself was much more circumspect about it all, saying, we don't know. We don't know, and nobody's going to rule out something like that. We've talked about the Atlanta Fed.

3:05They get these crazy numbers, right? Yeah. But they're already... That'd be one quarter already under our belt. You only need two. But I don't think they're going to be right. The classic definition. But I can't categorically tell you that the Atlanta Fed is wrong. No. Who's this? Who's really? Meantime, President Trump dismissing some of the business and market concerns surrounding early moves by his administration. In a Fox News interview that was taped last week that aired the past weekend, Trump said broad, quote, reciprocal tariffs will go into effect on April 2nd. He said his goal was to build a strong U.S.

3:36economy. And to that end, he said, quote, you can't really watch the stock market since America has a short term quarter by quarter focus. Whereas he said China has a 100 year perspective. Asked if he was expecting a recession this year, Trump responded by saying there will be a period of, quote, transition for the economy. Commerce Secretary Howard Lutnick was more forceful on NBC's Meet the Press about it. Should Americans brace for a recession? Absolutely not. Anybody who bets against Donald Trump, it's like the same people who thought Donald Trump wasn't a winner a year ago. Donald Trump is a winner.

4:12He's going to win for the American people. That's just the way it's going to be. There's going to be no recession in America. Ludnick acknowledged that tariffs could make some foreign-made products more expensive, but he maintained that American products will be cheaper. Did not really address, though, the other issue, which is American companies investing, frankly, in America, which is to say that even though these tariffs are here and you could argue that they are meant to try to get people to invest, a lot of people are sitting on their hands waiting to try to just figure out what's exactly happening.

4:45And that's, I think, going to be part of the story we are going to hear if and when we get to a larger conversation about where the economy is. A couple of big headlines that he's got, which we're welcome, you know, Taiwan, Sammy, and a couple of other. Sure, but most companies are not investing right now and are not putting money to work. They're not putting capital work in anything because they're trying to figure things out. Because they don't know what's about to happen. I feel like the weird thing is in six weeks we've gone from, or six and a half weeks, gone from animal spirits to a wait-and-see attitude.

5:13That was a really quick turnabout. And it's hard to say that that could be blamed for anything more than the rapid changes and fluctuations. Just uncertainty is the enemy of investment. Just what it is. And then the journal assigned a story to someone. Go back and look at how long tariffs were on. and see how, if it's transitory, we think, hey, you put them on, you take them off, it goes back to normal. And the journal's take is that it can, the effects of the tariffs can often far outlive how long the tariffs are on for years. I believe that. You do? Yeah. Well, that's definitely the concerning side to worry about, I guess.

5:55A number of, but they haven't quite gone on yet. And it's - Well, that's the point. They haven't gone on yet, and they're keeping people to the sidelines. I mean, that's the craziest part about this. Anecdotally. I think it's more than anecdotally at this point. We'll get the numbers eventually. I mean, the jobs numbers were very similar to previous jobs. That's the question. Do you believe it, or are these backwards numbers? Is this happening so fast? If the market's leading into it. But if you look at the Treasury market, maybe as an example of the yields are dropping. The number that I'm looking at, and I've talked about it now a couple times last week.

6:32What, the annual spirit? I still think that mergers and acquisitions is the ultimate barometer of confidence in the boardroom about doing things. And so if January means anything to you, those numbers were down 30%. It was as if we had gone back to 2015. The January numbers were literally 2015 numbers in 2025, 10 years later. Okay, so let's see what happens in February. Let's see what happens in March. I don't want to oversell the January thing. Maybe it's a blip. But that actually is it's sometimes that's a backward indicator, but sometimes it's a leading indicator. And that would indicate some headwinds that people see.

7:11Right. Which must be pretty offsetting since the deregulatory, you know, Alina Khan's gone. So that's supposed to be a tailwind. Right. So if you still hesitate. Yeah, I mean, if the tailwind is totally muted by the headwinds, not just muted, but actually down, they'd be right. That's only January. Let's see what February numbers are like. Right. Well, February only had 28 days, I think. This year. This year. Tesla shares this morning, if you want to check it out, are off by about another 3%. For the one year, still up by 45%, but for the year to date, it has been a pretty difficult ride. With today's move, that stock has given up almost all of its post-election gains.

7:58It's been down for seven straight weeks. It's the worst run since the company went public 15 years ago. Tesla shares fell about 10 % last week, and they are down 43 % from their high in mid-December. In the meantime, the Financial Times now reporting that wealthy Chinese investors are funneling tens of millions of dollars into private companies controlled by Elon Musk. The FT says this includes XAI, Neuralink and SpaceX. The investors are using so-called special purpose vehicles to invest in the companies without having to disclose their stakes. Now, the use of those investment vehicles is commonplace.

8:32I don't want to say there's anything crazy about it and there's nothing illegal about the arrangements. But it does raise some questions, and that's what the article is doing, about the potential for what they say is undue influence and conflicts of interest with Musk's role in advising President Trump. And speaking of President Trump, denying reports of a rift in his administration between Elon Musk and Secretary of State Marco Rubio, details have emerged about a tense cabinet meeting last Thursday. We talked about this actually last week. We talked about it on Friday. During which Rubio and Transportation Secretary Sean Duffy criticized Musk for firing their employees.

9:10Over the weekend, the president posted a message to his social media network that Elon and Marco have a great relationship. Any statement other than that, it's fake news. DJT Musk chimed in on X saying, we just had dinner together. Good conversation. But it was after the president had somewhat, I guess he made it more clear who's in charge of firing. And it was an odd edict that came out last week that said the department heads are solely responsible, which supposedly resulted from a conversation where Elon Musk said to Marco Rubio, you haven't fired anyone in the States. You only fired one person, and that was the doge person looking into, and it supposedly got contentious.

9:55So, yeah, this was already out. We had already discussed this. It doesn't mean it's not newsworthy, do I guess. Yeah, anytime you get more details on things. On Friday, the Trump administration said it's pulling$400 million in grants and contracts from Columbia University. It accused the school of failing to do enough to squelch the anti-Semitism on campus. In recent weeks, Colombia has set up a new disciplinary committee, ramped up investigations into students critical of Israel. But those efforts evidently didn't go far enough for the White House or to prevent what's really happening on Colombia.

10:36Education Secretary Linda McMahon said for too long, Colombia has abandoned the obligation to Jewish students studying on its campus. And on Saturday night, U.S. immigration agents arrested a Palestinian graduate student, Mahboud Khalil, who has played a prominent role in the pro-Palestinian protests at Colombia. Reports say that his wife is a U.S. citizen, eight months pregnant, and he holds a U.S. permanent residency green card. The Department of Homeland Security said it had arrested Khalil because what his activities have done were aligned to Hamas and led to some things that could be, I guess, considered criminal activities.

11:16But it's a very gray area here. In a post yesterday sharing a news article about the arrest, Secretary of State Marco Rubio said, we will be revoking the visas and or green cards of Hamas supporters in America. What do you think of this? And the reason I say I find obviously the anti-Semitism and all the protests, I'm not. Obviously, a poor and all of that. We're probably the same. Hold on. But then. No, I don't think. What I don't know. Right. Is especially this administration, which is arguing that they are free speech, free speech, free speech. No, I understand that. We don't even have to explain all this stuff.

11:53We get the issues. But if what he did caused— And it's like, wokeness is, we should be arrested, and this should be— I just don't know. I don't understand what the charges are against him. If it was just leading a peaceful demonstration, obviously the free speech issues are paramount. If it's intimidating and chasing— 100 percent. And causing— I agree. You know, destroying parts of the campus and making it impossible— making it impossible for Jewish students to feel safe on campus— You don't need to argue. Well, I think I do at times. No, no, no, but it's very interesting how... So initially my knee-jerk reaction was, get this guy out of here.

12:30The more you think about it, if it was, like I said, if it was purely just we shall overcome the table. That's what I mean. I don't understand the charges. But if it's radical and, you know, hurting policemen and pushing through barriers and really hurting or eventually a Jewish student loses their life or something like that, Oh, 100 percent. Trust me. I mean, I wondered if we'd talk about this. And then you got, you know, I'm just saying it's you got the post kick the guy out. I think it and you got the Daily News. By the way, sparks outrage. I have no love lost for for for what's going on for this gentleman.

13:10I don't know this gentleman, but I don't even you know, I don't agree with him. I don't like what he's saying. All of those things. All I'm saying is this administration has taken some very interesting positions about this idea that everything's free speech. but then they're suing you know media organizations they're taking money away from university i mean there's all sorts of things going on here that aren't completely um well even with elon consistent let's just say twitter is open until you've criticized you know it it's like do what i say not what i do you see a lot of that this one i think the college is i mean i think they're they haven't done enough and i think it's uh you know i didn't realize he was living this protester was living in a university-owned department, even though he had graduated.

13:51I mean, that's where you wonder what the university doesn't do. He's just there to educate. I'm not, by the way, I'm not defending this guy at all. He's just there to educate. I'm not either, but I don't understand why the university didn't do something more. I mean, you'd even use this guy if he gives you a chance to criticize the Trump administration. I'm not. I know. I'm not doing that at all. I'm just saying that there's a larger issue, not about this guy. Let's take him completely out of it. Well, that's who we're talking about. Well, I'm not talking about him. I am not talking about it. But is it okay to just take someone's green card or whatever just because you don't like their political views?

14:24But then again, like I said, if he's agitated to the point where someone's been hurt or property's been damaged, it's like, then I could see it. Property isn't damaged? Yeah. We've pardoned people who have damaged our property. I understand. In the United States. I understand. On the Capitol. I understand, but this is in... This has a different connotation of being... of harassing Jewish students. And when you damage the property, they're unsafe. They're spending$90 ,000 a year to go to this place, and they can't even go to class. Tell it to the guards at the Capitol. I mean, right? I'm just saying that this whole thing, there's nothing about all of this.

15:02I'm not defending this guy at all. I'm just saying that... Well, that's one's a pardon. The other is a green card getting taken away. You're mixing a lot of different metaphors here. Justice is the broad... The broad question is, what does a consistent form of justice mean? And is this a consistent form of justice? You're not going to get that in the last administration or this administration. I'm not suggesting it, but shouldn't it be the ideal? It should always be the ideal, just that we live in a real world. So you're fine with that? No, it's just that you want the ideal world when this guy's president.

15:35You didn't give a crap about it. That's not true at all. It's not true at all. Cheese will be next. Coming up on Squawk Pod, we head to Washington, where our own Eamon Javers reports on this market shift coming from the White House. This is a much more populist Trump administration than in the first term. The president now dismissing stock market losses as pain for globalists, not his voter base. Then we hear from the Trump administration's National Economic Council director, Kevin Hassett, who argues we're on the right track. Just wait and see. The deregulation is already underway and the drilling, baby drilling, is going as well.

16:15And so there's a heck of a lot of uncertainty that's resolved. I think that in the end, the trade policy uncertainty is the one thing that people will see. And that is going to be resolved in early April, as President Trump has said.

16:35Welcome back to Squawk Pod. It's Monday on Wall Street and in Washington, and the U.S. government set to run out of funding at the end of this week. The president and GOP leaders have endorsed a plan that would largely continue current funding from now until the end of September, and the House is expected to vote on this continuing resolution as soon as tomorrow. Passage would avoid a government shutdown. A shutdown in the early days of a new administration is exactly what President Trump and his team don't want. It's terrible for messaging on the White House's ability to problem solve.

17:15And those optics are especially critical as the president's team works out how to talk about the economy. Treasury Secretary Scott Besant left some room for softness when he was on Squawk Box just Friday. Could we be seeing that this economy that we inherited starting to roll a bit? Sure. And look, there's going to be a natural adjustment as we move away from public spending to private spending. You can hear that conversation in its entirety in your SquawkPod feed. It is the episode just before this one. But does this acknowledgement of weakness, of possible pain, mark a shift in Trump world? Here's Joe Kernan.

18:00President Trump is speaking about the recent stock market volatility. Eamon Jevers joins us now with more. Hey, Eamon. Yeah, good morning, Joe. In an interview with Fox News yesterday, President Trump addressed last week's stock market turmoil caused by confusion around his tariff agenda. In one exchange, the president suggested that calls by the business community for clarity on that policy are just a talking point for the big globalists. Here's what he said. I think that they say that, you know, it sounds good to say. But for years, the globalists, the big globalists have been ripping off the United States.

18:39And asked if he's OK with the stock market going down, the president dismissed the idea of short-term focusing on the stock market. What I have to do is build a strong country. You can't really watch the stock market. If you look at China, they have a hundred-year perspective. If we have a quarter, we go by quarters. That's true. And you can't go by that. Now, that's a striking departure and approach from the first Trump administration when cabinet members suggested that the stock market was a good barometer for how well the administration was performing. But this is a much more populist Trump administration than in the first term.

19:14And you see that reflected by the president now dismissing stock market losses as pain for globalists, not his voter base. We'll see if Trump continues that approach later today when he's expected to meet with top technology executives at the White House. We expect the discussion there will include the president's tariff agenda, also his call to repeal the Bipartisan Chips Act. And guys, Andrew, I was thinking about this this morning. You and I were at a dinner in New York on Thursday night where the discussion was largely around this. Just how populist is this Trump administration and how much do these stock market losses move the needle inside this White House?

19:50And I think it's different, a different calculation this time than it was last time around. It may be different in this particular moment. The question is, if this were to persist for several months or longer, how do you think that changes the dynamic? Which is to say, if the stock market continues to fall as you were to walk into midterms, for example, does that change what they want to do? Or do you think that they're all in? So I think there's an intellectual group who are all in of populist, conservative economics folks who look at this and say, what we need to do is entirely restructure the U.S.

20:24economy. And the focus for too many years, too many decades, has been on lowering prices, not on families and communities. And that's really the central unit of the economy should be the family, not prices. And you heard Scott Besson, the Treasury Secretary, say this last week, you know, that the ideal of the American dream is not about access to low prices. It's about other things. That's that sort of worldview. The question is how much pain Trump himself is willing to tolerate. I think the answer is he's willing to tolerate a lot more pain on the stock market, as you just heard him say, this time around than he was last time.

20:57But I don't think that's indefinite. I think there's some threshold larger than it was last time around at which the president might respond to stock market losses by changing course politically. I think we've got a ways to go, though, before that happens. Yeah, it's not just how deep, but also how long. And he can point to interest rates, too, which don't always, you know, the bonds themselves don't always sync up with equities. And you could actually see equities coming down, and as a result, bond prices go up with the safety. And then he would immediately talk about mortgage rates and consumer loans and all the benefits that come from that.

21:39So you can kind of have you can you can pick something else to brag about if the stock market is not cooperating Yeah, and it's largely about jobs, right? I mean so one conservative economist looked at this and said to me Imagine rolling back the clock to 1990 and telling somebody in a small town in the American heartland Look in the future your TV will cost ten times less But your children are gonna have to move out of your town because there won't be any work for them Would you take that deal? And he said that, you know, 90 % of Americans would not take that deal, even if it meant cheaper TVs because of the devastation of their community.

22:17Can you get the jobs back, especially when you're talking about automation of factories at this point? I mean, and how long it takes to put some of those things in. How big a TV? Like a 75-incher? I mean, what are we talking about? Are you debating whether you'd take the deal? No, I would not. I mean, how many kids do you have, right? I mean, it's that calculation, too. Exactly. Oh, my God. These are really big questions when you think about it, Eamon. And, you know, here we are. We're in our little gilded cage. I mean, it really was hollowed out, the center of the country. And we do love those cheap prices, but it came at a good.

22:56We'll see if prices really do rise and it takes time to bring jobs back. And one might happen before the other. We'll see what our actual resolve is. Which I think you get back. Go ahead, I mean. Yeah, I was going to say, I think that's what Trump was talking about in that soundbite where he said what you have to do is build a strong country, not look at the stock market. Right. He's signaling that that's his priority is rebuilding that industrial heartland of the United States. Now, whether that's doable or not, as you guys point out, is a huge open question. Whether it's doable in any kind of time frame that lines up with political and economic reality is another question.

23:33But that's that's the goal that they're setting out to do here. It's a sweeping change. And it's not the sort of Chamber of Commerce, George W. Bush Republican Party that we've seen in past decades. This is a Republican Party that's very focused, again, on on family and communities and workers. And that's a totally different approach. Yep. All right. Thanks, Eamon.

23:59Hey, Hassett, he is here today. Hey, Kevin has tell us everything's going to be OK. Can you do that? Let's just start with that. Allay our fears, recession fears, inflation fears. The president acknowledged that maybe we have to wait a little bit and that we're not a country that, you know, gauges its success completely on the stock market, that it could be, you know, the heartland repopulating with great jobs. Is that is that your story? Yeah. You know, let's think about near term and then medium term. Near term, we've got a Biden economy that, you know, still most of Biden policies are in place.