Shaky Markets & the Fight Heard ‘Round the World 3/3/28

0:00Bring in show music, please. This is Squawk Pod, and I'm CNBC producer Cameron Costa. On today's podcast, the markets closed out February on a low note. You can't find a single reason to be bullish right now, which that's why it really didn't surprise me the markets snapped back. I still think people are set up for downsides. And the aftermath of a tense meeting between Presidents Trump and Zelensky, New School Professor Nina Khrushcheva. Trump will continue to dictate the rules, despite all the European efforts to say that they're players of this too. Exploring the different ways to support Ukraine and a shift on the right with Heyman Capital Management's Kyle Bass.

0:47Somehow in the core right of the Republican Party, there's been a lot of stepping away from Ukraine. In the end, we have to stand with them, as you know. Plus, Sunday's winners and losers in Oscars recap with Puck's Matt Baloney. There was no frontrunner this year. There was no Oppenheimer. Nothing that the Academy seemed to be coalescing around. And yet, we saw Onora walk away with five big awards. It's Monday, March 3rd, 2025, and Squawk Pod begins right now. Stand by in three, two, one. Cue, please. Good morning and welcome to Squawk Box here on CNBC. We're live at the Nasdaq Market Site in Times Square.

1:30I'm Melissa Lee, along with Joe Kernan. Becky and Andrew are off today. We should mention the three major averages coming off a negative month. It is a new month today. The S &P fell about 1.4 percent in February. The Nasdaq, meantime, was down 4 percent, and that was its worst month since last April. But the all-time high on the S &P was last month, February, a couple of weeks ago or something. Friday, the market had every reason in the world to go down on Friday. And as we see many times, if everybody's on the same side, there's some short covering. And it looked like it could have gone down.

2:03It didn't really, I was surprised to see it up 600 at the close and the NASDAQ up 300. It looked like it was going to be another one of those days where, you know, valuations are high. The growth seems to be slowing. Inflation is still. You can't, tariffs. You can't find a single reason to be bullish right now, which that's why it really didn't surprise me the market snapped back. I still think people are set up. It's just, yeah, too much of a slam dunk. They were going lower. Trump's policies, Doge, you know, that might be, you know, that may cause a slowdown because the federal government employs so many.

2:40It's the biggest employer in the world. I think Walmart's close. I'm sorry, in the United States, Walmart might be close. So, so many reasons to be negative. And wouldn't you know it, a snapback. At this point, What's the S &P down? 3 % from the high at the most? About. 3%. People that want to, you know, there are people, half the country that really wants Trump to fail or wants the markets to go down. And they already, I have, on Twitter. You think so? You think people aren't self-interested? They're already self-interested. They don't want their own portfolios to go down. True, but on Twitter, they're already telling me, this is what you, this is what's happening because The markets are plump.

3:21They're already taking a victory lap on the market being lower. And it hasn't happened yet. There are enough concerns, though. I mean, the data has been, you know, swishy. But what about deregulation? What about, you know, corporate taxes aren't going to go up? Long term, even Doge long term, you could argue that it. But right now, you know what Americans care about? Egg prices. Egg prices. Right? Talk to the chickens. They care about prices. They care about, well, yeah, granted that's avian flu. But that just sort of underscores the fear that consumers have. Inflation expectations in a year are higher.

3:53The journal has it right here. Consumers are worried. Trump, at this point, has not addressed rising prices. But in bringing prices down, that's deflation. I mean, at this point, we've had CPI, PPI. How about slowing inflation? How about further slowing inflation? Because it hasn't for the last three or four months. Bitcoin this morning. Take a quick look. It got as low. It was low 80s, I think. I even saw maybe a 78 at one point. I think maybe it got all the way down there. And after Trump came out with those comments, there was a big rally back almost to 95. His social, he wrote on Trump social about a U.S.

4:39crypto reserve in an initial post. Trump said the reserve will include the ripple associated XRP as well as Solana and Cardano. The Sorkin coin apparently not going to be actually in the reserve. He's not here to make that pitch. He followed that up, President Dibbitt, by saying that obviously Bitcoin and Ether will be at the heart of the reserve. And Bitcoin rose 10 % to near$95 ,000 after that. After it did fall under$80 ,000 last week, Ether gained a little bit of a little bit 13 percent. Cardano's coin jumped more than 60 percent. Katie Stockton said 78 was was an objective as it got below for Bitcoin.

5:23I think 89. Yeah this this Friday President Trump is scheduled to host the first White House crypto summit. It was really Cardano and Solana that was a surprise. That's why it was a surprise to be included in the reserve. That's why you saw the biggest jumps in those two coins? Are those Shih Tzu coins? You know, they call some of them. No, they're not. No. Where do you grow? I mean, how far down do you go? I don't know what they do. I know Bitcoin a little. I would say that. I mean, I don't know. This is all the time I had. I shouldn't say that. I was at the top five. How many coins are there?

5:59Oh, I mean, so there are plenty of those other Oh, yeah, yeah, of the aforementioned points. Yeah, yeah. It's a dog. It's a dog. Not Solana and Cardano. No, Shih Tzu is a dog. Oh, yeah. Yes, it's a dog. That's a dog. You can say that. At Westminster, they say it again and again and again. John O 'Hurley. You've seen that, right, Mr. Peterson? Glad you take your cues from the dog show. The clock, of course, is ticking. A new terrorist from the White House aimed at America's biggest trading partners. Megan Casella joins us now with the very latest. Good morning, Megan. Melissa, good morning. So we've been expecting these tariffs of 25 percent on Mexico, 25 percent on Canada, but 10 percent on Canadian energy.

6:39And then that additional 10 percent on China, all set to take effect just after midnight tonight. But negotiations are ongoing to try to reach a deal and to illustrate just how influx things are. For the first time yesterday, we heard Commerce Secretary Howard Lutnick suggest that tariffs could potentially take effect at maybe a lower rate. Here's what he said. They have done a lot. So he's sort of thinking about right now how exactly he wants to play it with Mexico and Canada. And that is a fluid situation. There are going to be tariffs on Tuesday on Mexico and Canada, exactly what they are. We're going to leave that for the president and his team to negotiate.

7:19What we still don't know, guys, is what exactly Canada or Mexico could do to convince the president to pause or lower those tariffs. Both countries have taken some steps to shore up their border security. But Treasury Secretary Scott Besson also over the weekend suggested that the countries could raise their own tariffs against China to match the U.S.'s rate. Both sides say that they're open to discussing that idea. So that's just one more thing to watch today as we move toward this deadline and as both countries race to try to make a deal. Guys, it's not just Mexico and Canada, of course. I mean, China could be facing an additional 10 percent tariff on its goods.

7:53and this is the day before the National People's Congress meets in Beijing, Megan. What sort of retaliatory measures could we be facing there? We saw what they did last time. They were immediately putting tariffs on some goods, limiting some exports of critical minerals. They've started blacklisting some American companies, investigating companies like NVIDIA. So it looks like it's not going to be just tariffs, but that's one place to start. They're sort of broadening some of their retaliation, even as overall it's more measured. And one of the things I found most fascinating through the first couple of months of this administration is we know it's been very public, the discussions that are ongoing with Canada and Mexico.

8:29But there really hasn't been the same level of negotiation with China. President Trump said a month ago when he put those first 10 percent tariffs on that he was set to talk with President Xi, he thought, within 24, 48 hours. That kind of went away. That call never happened. And as of last week, when I was talking with White House officials, they weren't tracking a call then. So it doesn't exactly garner a lot of hope that a deal could be reached. And we have to wonder if there's another 10 percent now, how much further could this go? Yeah. Megan, thank you. Megan Casella. Cheese will be next.

9:01Coming up next on Squawk Pod, the fallout from the Zelensky-Trump conversation that fell apart with Heyman Capital's Kyle Bass. I really don't understand how those discussions broke down like that, because if the U.S. has a long-term mineral deal, critical mineral deal with Ukraine, it involves us more in their sovereignty. And what that means for Russia with the new school's Nina Khrushcheva. For them, the disagreements in the West without even Russia doing something particular at that moment obviously is a great gift.

9:41Welcome back to Squawk Pod from CNBC, today with Joe Kernan and Melissa Lee. And do you think that it's respectful to come to the Oval Office of the United States of America and attack the administration that is trying to prevent the destruction of your country? A lot of questions. Let's start from the beginning. First of all, during the war, everybody has problems. Even you, but you have nice ocean and don't feel now, but you will feel it in the future. God bless, you will not have a war. Don't tell us what we're going to feel. We're trying to solve a problem. Don't tell us what we're going to feel.

10:18Because you're in no position to dictate that. Remember this. You're in no position to dictate what we're going to feel. President Trump and Ukrainian President Zelensky held a heated meeting last Friday with Trump posting on Truth Social after the meeting that Zelensky could return to the White House when he is ready for peace. Joining us now to discuss the ramifications, Nina Khrushcheva, professor of international affairs at the New School and co-author of In Putin's Footsteps. Nina, great to have you with us. Thank you. What was your reaction to this meeting? I mean, it was a pretty big blow up.

10:52And you write that this really played into Putin's hands. Well, every disagreement on the Ukraine front, on the Western front, plays into Putin's hands. And so this was just a gift that that I don't think even they expected, because Zelensky showed himself as they think exactly as they thought he would. That is, he's argumentative. He wants concessions at all times. He thinks he is the king of the hill. And Donald Trump basically slapped him down. And then Europeans rushed to support Zelensky versus or so it seemed for a bit versus Donald Trump. And therefore, of course, Putin is a former KGB operative.

11:38So for them, the disagreements in the West without even Russia doing something particularly at that moment, obviously, is a great gift. The Europeans were quick to rally around Zelensky, Nina. And the reaction, at least among investors, is to bid European defense stocks higher over the weekend and in today's session. I'm wondering what your opinion of that is in that. Does Europeans have the wherewithal, the money, the finances to actually support Zelensky in the way that he needs to be supported without U.S. help? Well, that's an amazing question. I mean, yes, the stocks went up. And actually, Keir Stammer, who had a meeting in London, who gathered European leaders, did say that this is the time for talk is over and now it's the time for action.

12:28And here we are going to offer that support. Well, the question is, are they actually going to offer that support or will continue to be more talk? So that's we still don't know that. But at the same time, the story is that they want to repair the relationship with the United States. So if the blow up was to make Zelensky and Europeans more important in conversation with Trump, potentially it is achieving something. But at the same time, there was a proposal. Trump was talking about the ceasefire. And now Emmanuel Macron talks about ceasefire and they're going to do a coalition of the willing, which is not a good name because we know how the previous one, the Bush coalition of the willing ended up.

13:17So it's not clear. On one hand, they want to be with Trump. On the other hand, they sort of against Trump. So how it's going to play out? And will Zelensky indeed meet with Trump again? And once again, what kind of for now, Russia is only having the satisfaction. It's still not very clear whether they're going to be any results in Russian favor from that blow up. But then the question, these are still moving pieces. Who is going to win or Trump would actually get you the way because Zelensky is going to come to him. Europeans cannot do it without the United States. And so Trump will continue to dictate to dictate the rules, despite all the all the European efforts to say that they are players in this, too.

14:00Nina, is it possible for the West to to to enter into some type of agreement with with Putin with a clear conscience? I mean, he was the aggressor. He invaded Ukraine. I mean, we know what he does to enemies within Russia and even outside Russia. We know about the atrocities and children's hospitals and the bombing. It's just all reprehensible. But we're in this position where the practical outcome would entail dealing with this man and trying to... I mean, you risk looking like Neville Chamberlain or appeasing Russia when what you're really trying to do is acknowledge the reality that you're probably not going to have a total victory for Ukraine.

14:53And anything short of that seems like you're appeasing Putin. How can it be done? Well, you know, Mikhail Gorbachev, the great leader, he had his birthday yesterday, the author of Pistroika and Freeing the Soviet Union. from the Soviet Union, used to say in your question, there is an answer. You just answered your own question. But Ukraine is not winning. And I think it was the way it was going. It has not been winning for at least two years. So ultimately, it's either further destruction or there is a greater involvement of Europe, which potentially would be to war. Or they could be some or should be some sort of negotiation, understanding reality on the ground and dealing with that.

15:42And so I think that's what seems to me the United States under Trump wants to be doing. He's not a moralistic guy. He's not an ideological guy. He's not a guy on the side of Putin, which I think is important. He's the guy on the side of Trump. What's convenient to Trump? What works for Trump? Nobel Peace Prize for Nobel Peace Prize? Great. economic development with right economic relations with Russia that going to be very firmly organized great that works and so whatever it is to help Ukraine to get out of this without moralization probably at this point is a realistic I would even say Henry Kissingerian way to do it if there are any other option please offer it but nobody so far has offered a moralistic option that also would help Ukraine to actually win realistically.

16:33Norway won't fill our submarines now. I mean, Europe has this, I don't know, the PR war, it matters, I think. But it's very strange to see. And even some of the people on the left in the United States, Nina, continued billions being sent to Ukraine for weapons, to continue the war with casualties coming on both sides. continuing for years with no end in sight. How is that morally the right? How is that presented as the morally right decision? Well, that was I was answering your question. I mean, you were saying, how could we how could we agree on peace with without showing that we peace Putin?

17:19Well, Putin is fine. He can say continue war. I mean, I have 145 million people. I'm ready to kill them all. Are you ready to kill all of yours? So the question is, what would be the lesser evil in this scenario? And the moralistic part is that we're going to help Ukraine for as long as it can, even if Ukraine doesn't even have people to fight anymore. But yes, moralistically, yes, in a justice sense, of course, supporting Ukraine is great. What is the plan B? What actually is the plan for victory? Because they keep talking about we need to strengthen Ukraine on the battlefield. three years has it strong on the battlefield when it began when the war began ukraine had 77 under the russian occupation now it's almost 20 so did it get better so i don't know i mean it's a policy matter but it should be a realistic policy matter not a policy matter of something what is i mean we're not in a movie uh and in a movie of course good guys win and bad guys lose But in life, often good guys actually may not necessarily lose completely, but not victorious as the movie at the beginning promised.

18:34Right. Professor Khrushcheva, thank you. Thank you.

18:41Joining us now, Kyle Bass, Hayman Capital Management, founder and chief investment officer. When did you sit down? Did you hear Nina, Professor Khrushcheva? Did you hear that conversation, Kyle? I did. Do you think, you probably disagree. I'm trying to think, you're such a China hawk. And so, I don't know, realistic about what they want for themselves in the future, what it means for the United States. Is there anything to the notion that there's a method to President Trump's madness that he would like to maybe put those two, China and Russia, in opposition and maybe drive a wedge between those two?

19:22I mean, what do you make of what happened with Zelensky? You know, I think that if you look at what we've been asking for, we've been, you know, we sent Treasury Secretary Besant to Ukraine in an effort to get Zelensky to sign this minerals deal. Now, if you just kind of step away from the politics for a second and think about what we're doing. What we're trying to do is further ingrained, further intertwine ourselves with the identity, with the sovereignty of Ukraine by getting a critical minerals deal done. The deal was done behind the scenes. And there were three things that were supposed to happen on Friday.

19:59It was supposed to be a press conference. There was supposed to be a lunch with 16 cabinet secretaries and then a signing of the deal. The fact that the deal was essentially being relitigated by Zelensky in the public forum in a public press conference was, it just shouldn't have happened that way. It should have happened in the back room and not in the front room. And so I really don't understand how those discussions broke down like that. Because if the US has a long-term mineral deal, critical mineral deal with Ukraine, It involves us more in their sovereignty and it involves us more in defending their sovereignty.

20:39The Ukraine, I believe, will end up signing that deal. Just anecdotally, I've heard that when Treasury Secretary Besant was over there, it was a similar situation they were supposed to sign. And when he got in the room, it was the same type of, he sort of saw the same Zelensky in terms of, I don't know where he got. You heard that he met with Democrats and Chris Murphy like 45 minutes prior to going into the Oval Office. And I think Murphy and others told him don't sign the deal, didn't they? Well, I don't know, Joe. I hope that's not true. I think it is. You know, what happened in Kiev, what happened in D.C.?

21:22We just need to come up with some transaction and some deal. As you know, we've given Ukraine almost, I guess, somewhere around$200 billion. The majority of that goes into the U.S. defense, tech and defense side. We don't really send them dollars. We send them weapons and capabilities. You know, the real issue here since this war broke out is, you know, Russia's got 150 million people and Ukraine's got somewhere around 37 million people. It's our call, 145, 35. In a war of attrition, Ukraine loses right away. I think - How many nukes does Putin have? Still got a thousand? Ukraine used to have a third of all of the nukes of Russia.

22:08And that's how and why this has come about. We told them if they would get rid of their nukes, we would actually defend their sovereignty if attacked. In fact, we didn't we didn't make it an actual signed U.N. agreement, but we did tell them that we would defend them. So in the end, Joe, what we've got to do is get a deal done with Zelensky so that we have a deal done with him. And then we can start talking more about about peace. Hey, Kyle, when you explain it that way, and that's what I was was my thinking, too, that there's an there's an implicit understanding that if we're in bed with Ukraine on on the minerals, that there are some security that is implied with that, some security guarantees.

22:55Number one, why didn't Zelensky know that? Number two, why doesn't Putin know that? And why would he? I mean, that seems like that might be difficult to get him to do a deal if it was if everybody knew what was actually going on with the with the minerals deal. Yeah, I mean, as you and I both know, Joe, it's impossible to to appease madmen. We're trying to appease Putin. We're trying to appease Xi. And, you know, I realize there's a deep desire to get, you know, deals done. But at the same time, what Europe's got to do, you know, when Trump first in 2018 threatened leaving NATO, only five NATO nations complied out of 32 with spending at least 2 percent on defense.

23:38That comment by 2023 had had almost, you know, 23 of 32 complying. You can say it's unorthodox, but you can say that many of the NATO members have spun up their defense spending as a percentage of GDP. But you know who hasn't? Germany hasn't. Spain hasn't. There are nine NATO members that haven't agreed to spend 2 % of GDP on defense, which is absolutely insane. And Germany being the leading one, around 1.5 % of GDP on defense. Germany does so much business with Russia, Iran and China that it's hard for Germany to get on the right side of history yet again. You know, they should be leading Europe and they should be leading Europe into spending into the Ukraine situation.

24:28So you expect Zelensky, even I can't tell what Europe's telling him to do. On the one hand, you know, you got Norway not filling our submarines. And, you know, I don't know what I don't know what they're saying. What are they saying? Carry on. Keep doing this. Let's go another couple of years, another couple of hundred billion dollars. Our weapons supply is already depleted here. Why do we want to keep depleting weapons, spending more money and having casualties on both sides? And I don't think we should be appeasing a madman either. And there's no denying Putin, you know, was the aggressor. And this is the brutality we've seen has been beyond the pale.

25:09But if you do it in a pragmatic way, it's sort of you that you got to end it now. There's no end game for Ukraine, is there? That's right. I mean, but but with the U.S. having a deal with a sovereign country of Ukraine on critical minerals, it's something Russia doesn't want if you see how they're playing this in the background. own. So I think it's important for us to try to work towards an agreement. But unfortunately, Zelensky is going to have to, I guess, apologize for litigating this in a public form in the Oval Office. And they're going to have to at least figure out how to agree to have another meeting at some point in time.

25:49And I think that's the first thing that's got to get overcome here, Joe. Right. I can't tell where we are. I mean, you know, was it just Vermont? Vance goes to try up in Vermont and there's a mile long group of, in my neighborhood, Kyle, every house where I know someone very progressive lives has a, I stand with Ukraine sign in the front of their yard. It's almost like a litmus test. What is that from? What is that? How does that happen? You know, I think when you look at the new Trump administration, there are a group of folks in there that are basically saying that, Ukraine is Europe's problem, China's our problem, and we need to be focused on our problems.

26:32I guess that's an oversimplified way of looking at it. But somehow, in the core right of the Republican Party, there's been a lot of stepping away from Ukraine. In the end, we have to stand with them, as you know. We, Europe, we need to keep an allied front. I think our economic deal with Ukraine was an effort to show no daylight between the U.S., Ukraine and different ways of standing with Ukraine. I think there's there's, you know, realistic ways. And then there's what Nina Khrushcheva called moralistic ways that they probably aren't going to end well. The good guys might not always win 100 percent.

27:13Kyle Bass, you got a lot to worry about. Russia now, Ukraine, China, Iran. We'll have you on again. Do you sleep at all without medication? Yeah, you do? You wake up in the middle of the night in a cold sweat. Sometimes, sometimes. Okay, see you later. Up next on Squawk Pod, another Academy Awards in the books, the Enora wins and the streaming glitches with Puck founding partner, Matt Bellany. Don't think they're going to get to the 19.5 million viewers they got for last year's show, which was fueled by the interest in Barbenheimer, in Barbie and Oppenheimer. But we'll see because it's a wild card how many younger people might watch via Hulu that might not have watched otherwise.