The Trump-Xi Meeting & Building a Happy Life 10/30/25

0:00Bring in show music, please. Hi, I'm CNBC producer Katie Kramer. Today on Squawk Pod. Trade talks overnight between President Trump and China's President Xi. The art of the deal. Former U.S. ambassador to China Nick Burns joins us. There's some real positives here. The negatives are this is not a trade deal. And the president ordering nuclear weapons testing for the first time in decades. The timing of that, a couple of hours before the two leaders sat down, had to be related to the leverage the U.S. wants to bring to the table. President Trump did say later it's about another country, Russia.

0:38Finding happiness in life with Arthur Brooks. We've changed our brains with the misuse of technology. The Harvard business professor studies what brings us joy and what doesn't. Political polarization is another thing that's actually just ripping us apart. You know, we're being effectively manipulated by the 5 % extrinsic margins in politics who want us to fight each other. How to build happy lives. We actually need a rebellion of people who want to be happier. Plus, Fed Chair Jay Powell sending a jolt through the markets when he said a rate cut in December isn't a foregone conclusion, our Steve Leisman reports.

1:16The real story here is the direction for cuts remains priced in. The pace is what's in question. And chat GPT parent OpenAI laying the foundation for a trillion dollar IPO. Can it be done? Still have a lawsuit that's out there. Got to solve a lot of things. Many questions need to be answered beforehand. It is Thursday, October 30th, 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 Andrew Ross Sorkin. Joe is out today.

1:55On this Thursday morning, we are looking at some red arrows. This is a pretty unusual occurrence, red arrows in the morning. We've gotten used to the upward momentum and green all the time. Not the case this morning. Concerns about what the Fed is going to do next. Jay Powell saying it's not going to necessarily cut rates, that it's not the trajectory that is set in stone at this point.

2:18Thank you very much. We will be having some discussions. I think we've already agreed to a lot of things and we'll agree to some more right now. But President Xi is a great leader of a great country. And I think we're going to have a fantastic relationship for a long period of time. And you can layer some more news like this on top of all of that. President Trump meeting with China's President Xi in South Korea. That took place overnight in a post on Truth Social. President Trump described the meeting as, quote, truly great and said that they agreed on many things and others were very close, he said, to being resolved.

2:58In that post, Trump said that China has begun massive amounts, buying massive amounts of soybeans, sorghum and other U.S. farm products. He said that the flow of rare earth and critical minerals and magnets would also continue. He said that China would work with the U.S. to stop the flow of fentanyl. And he said that China has agreed to begin the process of purchasing American energy. Now, after the meeting, Beijing paused export controls on rare earth minerals, and the U.S. cut fentanyl-linked tariffs, bringing down the levy on Chinese exports now to 47 percent. That was before this at 57 percent.

3:35Trump said that the two sides discussed, quote, a lot of chips, but not the most advanced Blackwell chips from NVIDIA. Trump also said that he's going to China back. He's going to go back to China. I shouldn't say back to China. He was in South Korea. But he's going to go to China in April. And that would be followed by a visit from President Xi to the United States. And later this hour, we're going to speak to former ambassador to China, Nick Burns, about all of this. still trying to get clear on all of the details of the deal. It's not clear that China has confirmed all these details yet either.

4:10So I think we're going to have to wait a little bit to see what's really going on. I think a big part of this is de-escalation, right? At least putting everything on hold, stand down on both sides in terms of what they're going to be withholding from each other and in terms of some of the worst things that they've thrown on top of each other. There were escalations, things like taxes on shipping when ships came into port that both sides had put on, started by the United States and then followed up by China. Those have come back down for a year. The rare earths issue is a huge one. If that's on hold for a year, that's a big deal, too.

4:41But so many different issues to talk through. And these are not issues that can get worked out in a matter of weeks, like you might see with some other countries. These are big talks. Nick Burns, as you mentioned, the former ambassador, be on with us later. He has concerns about security issues, particularly related to the export of chips. And we'll talk to him about all of those issues. Separately, President Trump posting last night about nuclear weapons. He said that because of testing programs from other countries, namely China and Russia, the United States is going to begin testing our nuclear weapons on an equal basis, starting immediately.

5:15President Trump didn't mention specific countries, but the announcement follows reports yesterday that Russia had successfully tested a nuclear-powered, nuclear-arms-capable Poseidon torpedo. The United States hasn't conducted a live nuclear weapons test since all the way back in 1992, when then-President George H.W. Bush imposed a unilateral testing moratorium. So that's hard to model out. Yes. In terms of what this really all means. And is this just an effort to sort of show others what we're doing? And the juxtaposition of the timing, though, to me is so odd. to have before the talks, you mean?

5:55Well, to have this moment where here he's coming back saying, we just had these fabulous talks on tariffs. We're doing this, this, and this, and this. But by the way, we're going to start, you know, testing our nuclear weapons. I mean, that's like a next level kind of situation. And how connected or completely disconnected are those two things? Well, Russia is a key in all of this. Russia is testing the Poseidon weapon at the same time, I'm trying to threaten to say that, you know, as we start these talks with Ukraine, too, as we try and push peace talks through with Ukraine. So nothing anybody wants to see a reversal to where we've been over more than 30 years at this point with holding things off.

6:37But you probably can't ignore what's happening from from these other countries and the provocations that are taking place, too. OpenAI preparing for an IPO that could value the company at up to$1 trillion. That is with a T. It's according to a report from Reuters citing three sources familiar with the matter. It said that OpenAI is considering filing for a public offering as soon as the second half of 2026 and that it could use the injection of capital to fund CEO Sam Altman's plans to pour trillions of dollars into AI infrastructure. spokesperson for OpenAI said, quote, an IPO is not our focus, so we could not possibly have set a date.

7:18So hold your horses, folks. But I also wouldn't be surprised. Look, at some point, they do need to create enormous amount of value, not just for the shareholders that are involved, but ultimately to finance these grand ambitions. This is one of the ways you would do it in the same way when we were talking to Sam Altman's great friend Brian Chesky. Everything is being pulled up as quickly as humanly possible. So the sooner the better. I can't imagine that nobody ever internally ever floated the idea of, you know, could we make this happen in 2026? Yeah, if we did it, probably wouldn't happen in the beginning of 2026.

7:57I don't think they're ready for that. Could it happen by the end of 2026? Maybe. I think people also looking at the deal with Microsoft that was announced earlier this week as maybe potentially starting to clear the way on some of these issues. Of course, you still have a lawsuit that's out there. It's going to solve a lot of things. That many questions need to be answered beforehand. But I think people look at it and say the steps are starting to be laid out to clear the path for it. Shares of Microsoft are under pressure this morning. Earnings came in at$3.72 a share. That beat the estimates of$3.67.

8:29Revenue also topping expectations. They were boosted by a 28 % jump in revenue from its cloud unit. Microsoft saying that its investment in open AI resulted in a$3.1 billion hit to net income in the quarter. The company's CFO saying that capital spending growth in 2026 will be above the 2025 rate. She had previously said there'd been a slowdown in spending growth. But these are some of the questions. If you listen to any of these conference calls last night, Mark Zuckerberg from Meta talking about this too. All of these companies basically saying it doesn't matter how much we spend, we can't keep up with the demand for this.

9:05But it does change the perspective of these companies as being capital-like companies. They've always been capital-like companies. That's been a huge part of the reason for the investment thesis behind it. They are convinced at this point that this spending will lead not only to market share growth, but to more profit down the line. And Mark Zuckerberg talked about that too. But you can see shares of Microsoft down by about two and three quarters percent. Then you've got shares of Google Parent Alphabet that are sharply higher this morning. Earnings of$3.10 a share beat the estimates of$2.33. Revenue,$102.4 billion beat estimates of just under$100 billion.

9:40The company exceeded expectations for almost every metric, including YouTube ad revenue, Google Cloud revenue, which was probably the most important one. This idea that their cloud can now compete with the likes of an Amazon or Amazon or Microsoft. And that's been a big question. They have not been really seeing the same growth. Their growth was stronger than those other companies this time around. Also, search revenue. The strong search revenue was another key signaling that AI hasn't yet cannibalized Google's core search business. And that stock is up by 7%, which is kind of amazing to think of what that means in terms of market cap.

10:17And then there's shares of Meta. Meta Platform's lower earnings of$7.25 per share beat estimates of$6.69, revenue beating estimates. But the company reported a one-time tax charge of nearly$16 billion. That was related to the implementation of President Trump's so-called One Big Beautiful Bill. The company said that the law would result in a significant reduction in tax payments for the rest of this year and in future years as well. Now, Meta raising its guidance for capital spending and now expects to spend between$70 billion and$72 billion in 2025, which is just such a remarkable amount of money to consider.

10:56For the past couple of quarters, up until this quarter, most investors were rewarding Meta every time that they announced they were going to spend more money. This was really the first quarter where you saw it. Right now the stock down about 8%, 8.5%, that there's some concerns about effectively overspending. And the big distinction between Meta and Microsoft and Google is they have their own cloud platforms, their own infrastructure, if you will. So they're able to offset some of the costs because they're selling access to their cloud. Meta doesn't have that. So they're actually having to just pay for it wholesale themselves.

11:32Right. And to those comments from the Microsoft CFO, Amy Hood, she would only say that the spending is going to be, the CapEx is going to be sequentially higher than in the September quarter. It was$25 billion in the September quarter. So if it's substantially higher, that puts it on track to spend well over$100 billion for the fiscal year. I think for those three companies, the spend just for the last quarter was$78 billion. So massive amounts of money that are being poured out. And you're right. Coursing through the economy. allowed to be able to immediately amortize some of that. That's one thing.

12:06It's just a different business. And it's going to be interesting to see what happens. But look, the advertising business at Meta is still firing on all cylinders. That's the remarkable part. I think it's just people starting to get a little anxious just about how much money you're going to spend. And the idea, I mean, Mark said yesterday, he said, it's not that we're just going to be spending this, we're going to spend even more down the line. He said he thought it was something that would lead to additional profitability, no question. just that no matter how quickly they build this again, you can't build this stuff fast enough.

12:34I think the issue is that most, I think a lot of investors, there's sort of a conceit. The conceit in the valley is if you build it, they will come. We will build all the stuff and we will figure it out. And I think there's a question about how much patience the investor class is going to have. Right. Or when that sentiment changes, because when sentiment changes for stuff like that, it happens quickly. It happens overnight. It happens when one company all of a sudden can't meet its bills and then everyone says, OK, well, maybe everyone else can't either. Never mind. Right. We've watched this play out again and again with Meta, even when it changed its name to Meta and went with Metaverse.

13:07Totally. But you've seen it with Netflix and other companies, too, and Amazon at different points. You know, there are times when investors will reward the idea of growth and patience in times where they get pretty impatient themselves. helps. Let's talk about what the Fed is doing right now. The Fed cutting rates by a quarter point as expected. And now the focus turning to the December meeting. But another cut may not be such a sure thing. Want to get more from CNBC's senior economics reporter Steve Leisman. I'm so curious about what you thought after we heard so directly in terms of some of the commentary from Jay Powell yesterday afternoon.

13:41Well, the quarter point cut brought the funds rate down to 375 to 4 percent. That's the lowest level since rates were jacked up to fight inflation back in 2022. But investors are left with the question of what's it going to take for the Fed to cut in December? Fed Chair Jay Powell was definitive that a cut was not a done deal. We have strong views across the committee. And as I mentioned, there were strongly differing views today. And the takeaway from that is that we haven't made a decision about December. And we're going to be looking at the data that we have, how that affects the outlook and the balance of risks.

14:16And I'll just say that. So what was different? Well, there was the lack of government data. Committee members, as we reported yesterday, split on the outlook. And one of the bigger concern is growth or inflation. Growth data has been relatively strong. The jobs data could just be cooling and not falling off a cliff. Reflecting the committee's divide, even the vote to cut rates this month came with two dissents, one by new Fed Governor Stephen Myron. He's on unpaid leave from the Trump administration once again wanted a 50 basis point cut. And from the other side, by Kansas City Fed President Jeff Schmidt, favoring no rate change at all.

14:49Chance of a December cut falling from 84 percent before the press conference to 73 percent now. So it's still the odds on bet. But the probability that it happens in January rising from 42 percent to 85 percent. So the real story here is the direction for cuts remains priced in. The pace is what's in question. And despite Powell's comments yesterday, several Wall Street firms, including J.P. Morgan, Goldman and Barclays, continue to forecast that December cut, with most believing what will happen is the alternative jobs data will weaken enough to support a move. Andrew. So help me with this. You talk about what was priced in.

15:24This doesn't seem like it was priced in. Why do you think the market was caught so offside? You know, sometimes, Andrew, I think the market hears what it wants to hear. You get a little momentum going in the forecasting out there and everybody says, well, this guy's begging on it. The market's got it priced in. And what I think they didn't do is take a step back and listen to what committee members were saying. We looked at three Fed presidents, voting Fed presidents, who had expressed some concern or some caution about cutting down the road. The other interesting thing here is the market may be too focused on the median estimate from the Fed's forecast of the dot plot.

16:03If you look at it, yeah, three rate cuts was the median. But then look at the actual spread. Seven members wanted one or no cut. Nine members wanted just one more cut. And so the three were not in the forecast there, Andrew. So I think people are seeing what they want to see, hearing what they want to hear, especially with the momentum in the stock market. They're saying, well, everything's going to be great. Instead of taking a step back and saying, well, what's really going on? It's tough work. There's 19 folks talking, but you can figure it out, as we did yesterday. Are you surprised that he was so open about the dissension?

16:43I think what was, yes, in a way he was. And I think it's an interesting question, if you want to get a little more technical, Andrew, the idea that all of the forward guidance now comes from the chair. It's not in the statement. Very difficult, obviously, to put the lack of consensus on the outlook in the statement. But it's Powell who gives that. And I think the story was that he felt a real need to claw back that flexibility and to bring the market off of its certainty over that rate cut. He did exactly what you said. But he kind of stepped out and specifically said, you know, we are not done on this and the market is wrong on this, or at least the market is too certain about this.

17:26I think that's where we are. They may end up cutting, Andrew, but I think there has to be some resolution about the outlook for the economy and this dispute between should the Fed be more concerned about inflation or the jobs report. And the jobs data we have is just not that bad or that concerning right now. The professor, thank you, always. You make it clearer, better than anybody I know. Appreciate it, thank you. Cheese will be next. Coming up next on Squawk Pod, what came out of President Trump's meeting with President Xi, former ambassador to China Nick Burns, says maybe don't call it a deal.

18:04Plus, the chips factor in national security. President Biden prohibited three years ago this month the sale of these chips. And why did he do that? because the Chinese companies would then give those chips to the People's Liberation Army. We'll be right back.

18:24Welcome back to Squawk Pod from CNBC. Today with Becky Quick and Andrew Ross Sorkin. Here's Andrew. The high stakes meeting in South Korea between President Trump and President Xi, resulting in deals, we think, on rare earths, fentanyl and tariffs. Joining us right now is Nicholas Burns. He's a former U.S. ambassador to China, a professor at Harvard University. I said, we think, because we've heard from President Trump, we haven't fully heard from the Chinese on all of these issues just yet. And so I'm curious, just read the tea leaves for us. Not a lot of detail, but I think where we are is an uneasy truce in a long, still simmering trade war.

19:03OK. On the positive side, they met. And that's actually very important. They hadn't met since 2019. if you want to get any decisions out of the government of China, you have to meet with Xi Jinping. So I actually thought that was positive. President Trump's going to be going to China in April. Xi Jinping will come to the U.S. in autumn. In diplomacy, this is structural. It's foundational. Positives, fentanyl. Leading cause of death in our society, Americans 18 to 49. The majority of the precursor chemicals come from China. So Xi Jinping said, we'll help you on fentanyl. He made the same commitment to President Biden when we met with him just last year.

19:39I hope the Chinese are going to meet this commitment. Did they do it after they made the commitment to Biden? There was progress on shutting down online selling platforms of these precursor chemicals. And they're exported by the Chinese black market into the drug cartels. And they make the synthetic opioid. They arrested some people, but not enough progress. So both Presidents Biden and Trump are trying to push them on fentanyl. And let's see if the Chinese will come forward with better action. Progress on agricultural sales. This is important. One fifth of all U.S. ag exports go to China. Two years ago,$41 billion in sales, 14 billion of which were soybeans.

20:15So obviously the American farmer has been hurting. The Chinese have played hardball. There's been no purchases. So I think this is probably the most substantial achievement of the meeting they just had. And then, of course, the Chinese agreed they'll suspend the export controls that they put on their rare earth metals. That would have roiled global supply chain. So I think there's some real positives here. The negatives are this is not a trade deal. And if there was a trade deal, a comprehensive trade deal, they would have announced it. So I would expect further, almost like two boxers in the ring sparring.

20:49Give me the split screen of this. So we at the very top of this hour, six o 'clock, we talk about this potential tariff framework, followed by news that President Trump is announcing that we're going to begin testing nuclear weapons again live for the first time in decades. In three decades. What does that mean in this context? The fact that that announcement came within hours of this trade framework? That we're still sparring, that we're still trying to gain leverage over each other. I mean, the timing of that, a couple of hours before the two leaders sat down, had to be related to the leverage the U.S.

21:32wants to bring to the table. President Trump did say later, it's about another country, Russia. And what it means is, and we've been at this since 1963 in prohibiting nuclear testing, that whole regime is breaking down between the United States and Russia. China comes into it because China's engaged in the largest buildup of its nuclear weapons force of any country in nuclear weapons history. They're trying to reach parity with the U.S. by the 2030s. So the fortunes and the balance of power among these three countries, the United States, Russia, and China, is very carefully calibrated. But the timing of this, you think, speaks to the, does it speak to the tariff issue and whatever the relationship is with China or it doesn't?

22:14I mean, I think to the extent that he's suggesting it's related to Russia, I understand that. But the timing is so close. I do not believe it was coincidental. I think the timing had to be. You're about to sit down with Xi Jinping. You haven't seen him in six years. You announced this major development that changes potentially American policy. I think it was intentional because there are a lot of unresolved issues in this relationship. The Trump administration rightly opposes what the Chinese are doing to help the Russians in the Ukraine war. There are problems on Taiwan. The president said that actually didn't come up.

22:47You think that this was a message that was sent to say back off from helping the Russians when it comes to Ukraine? Well, also that the United States is concerned about China's buildup of nuclear weapons. They're completely opaque. They refuse to talk to us. at any meaningful level. Do they do nuclear testing? Pardon? Do they do nuclear testing? They have in the past. They haven't done it recently, but they have in the past. So I think you're looking at a relationship that's forming. There's some good news in the announcements on fentanyl and ag sales and the others, but there are a lot of differences here that have prevented them from getting to a trade deal.

23:21The president, President Trump said yesterday that they discussed high-end chips, not Blackwell, which is the best that NVIDIA currently has to offer. What are your concerns about what we should be giving them, what we should not be giving them? The Chinese are trying desperately to convince the Trump administration to allow the export of advanced American semiconductors for AI purposes into the Chinese market. So not the H20, but the... Not the H20. In fact, the Chinese didn't even buy the H20. And that was another drama. But this is very important for American national security. President Biden prohibited three years ago this month the sale of these chips.