Treasury Secretary Bessent & Media with Mario Gabelli 7/31/25

25:34Well, one thing I'll tell you is that is a gross oversimplification from your previous guest. I didn't hear what he said, but I can tell you, they have used the rare earth magnets as a negotiating card, but we've got plenty of our own, And we, at a point, had 12 countermeasures on against them, all national security-based. We have dropped those. The magnets are flowing. And, you know, we'll see. But you've got the two largest economies in the world. And, Becky, what we've never seen before in recent history is, if you look back to the the economic negotiations, 70s, 80s, even the 90s. You look at the Plaza Accord, the Louvre Accord, some of the big economic negotiations.

26:33Even when the U.S. came off the gold standard in the 70s, we were negotiating with our allies. Our allies were our biggest economic rivals, and then there There was the Soviet Union, who was our big military rival. They were a small economy, but a military powerhouse. Negotiating with China, we are negotiating both with our largest economic rival and our largest military rival. So you're right to say that this is, in a way, three-dimensional chess. Mr. Secretary, one of the things we're all watching is the Treasury market. And China, of course, had been a massive buyer over the years of our treasuries.

27:16And I'm curious, as these negotiations continue over trade and we start to see some of the numbers in terms of what they're buying or not buying or, frankly, selling, how you think that that could influence or change anything? Yeah, so, Andrew, really for most of the Asian economies, 2017 marked the high point of their ownership of U.S. Treasuries. We've seen a gradual decrease since then. So the Treasury market really hasn't featured in any of these negotiations. Mr. Secretary, I have a real specific question to ask you about some of the unintended maybe consequences of tariffs. Ford hasn't lost money in a quarter since 2023.

28:11They make almost all their cars here now. They're doing I think they're trying the best they can to to have U.S. made vehicles, but they still import some some parts. As a result,$800 million in tariffs pushed them into a lot, wiped out the profit entirely. Are there still carve outs available? If a company like Ford comes to you and says, look, this is how this affected us or comes to the president. This is a direct consequence of what's happening. That's not what was intended with the tariffs, was it? And it's not what we want, I don't think, to cause Ford to report a loss, even though they're trying their best to make all their cars here.

28:54Yeah. And look, I admire Joe. I admire Ford. Ford, I believe, has the highest product U.S. production of any auto manufacturer. I think that there are were numerous circumstances with Ford. I believe that the Ford F-150, F-250, their big truck series is made out of aluminum instead of steel, which is different than other cars. So I think maybe the aluminum tariffs have hit them harder. We will be negotiating with Canada on those. So I think with Ford, it's probably been idiosyncratic. The number we got yesterday for GDP was above expectations. Great sounding number, 3%. But if you average it with the first quarter, many are pointing out it's about 1.2 % average GDP growth, which is slower than in the last year.

29:57Obviously, the second half will tell the tale. and the big, beautiful bill, a lot of those positives, some of the tailwinds for businesses probably aren't evident yet. But there is some, it looks like, maybe some lessening of demand. One of the key drivers, I think, is final sales to private domestic purchasers. You probably are more familiar than I am with it. Slowest growth since 2022, and they're tying that to tariffs. I mean, there's a lot of long-term benefits, I think, the president and you see in tariffs. But near term, do you need some other things to kick in, maybe lower interest rates, to offset some of the effects of the tariffs?

30:42Well, Joe, maybe you should call the folks over on Constitution Avenue and tell them what you're hearing. That wasn't what Chair Powell said in the press conference yesterday. And I think we have great momentum in the economy. Now that the tax bill is passed, there is great certainty. I think that there has been a big holdback in CapEx until companies were sure that they were going to get the 100 % immediate expensing. And that's permanent. They'll be getting 100 % immediate expensing for factory structures and ag structures for the next five years. So we're seeing a CapEx boom that started. I think it's going to really accelerate third, fourth quarter.

31:37Andrew and I were out in Sun Valley. A lot of the tech titans out there are talking about the continued AI acceleration. And we're expecting to see that productivity kick in in the first or second quarter of next year. So I would expect that we are going to see an economic acceleration from here. And, again, if I were the Fed, I would try to think a little about the 1990s Greenspan model, where you saw the productivity kick in from the previous decades adoption cycle in office technology, in electronic technology. I think there's a good chance we could see a replay of the 1990s, and it's going to take a little bit of imagination, same way Alan Greenspan had.

32:38With AI as well. I mean, one of the best things in the report yesterday, the PCE, 2.5%, that's almost where the Fed wants it to be versus previous 3.5%. So that's down. But you understand, Mr. Secretary, the more that the president or the administration crows about the strength of the economy, that just sort of gives, I don't know, it gives Jay Powell more rationale not to cut at this point. But when you throw in the PCE, along with maybe the average of the two quarters at 1.2, I think it makes it much more compelling. We had a couple of dissents. We haven't had that two of them since 1993. Well, I also think, well, I know Chair Powell said at the ECB annual conference in Portugal that the Fed would have been cutting if it weren't for tariffs.

33:34And Joe, to your point, we haven't seen any inflation. And PCE is quite nascent. So I'm not sure what the case is here. But at this point, you figure, when will we hear? That's a good one. So he makes it till May, Jay Powell. Let's assume that it's not unusual to see an appointment announced, I don't know, well before then. Do you have any idea on when we might hear what the president is thinking in terms of Chair Powell's replacement? I do. I'm going to be. Can you tell us? I'm going to be sure, Joe, if you could just lean forward, I'll tell you a little. Oh, that's Connie Chung whispered in my ear.

34:23That's right. So we are putting together a very good list of candidates. And remember, there are going to be two seats opening up. Governor Kugler will be leaving in, I can't remember whether it's January, February. Chair Powell in May, so there will be two seats opening up. I'm putting together a list for President, Chief of Staff to review. We'll be interviewing people. So, you know, I would expect that we could have an announcement by the end of the year. Is Powell definitely leaving? Because even though his chairmanship is up, his seat, I think, extends a little longer. Right. His seat extends for two years.

35:14Two more years. Two years. It would be highly unusual for a chair to stay on. And you're helping with the search, obviously. We shouldn't read into it any like Dick Cheney type stuff, should we, Mr. Secretary? Dick Cheney looking for our vice president and then lo and behold uh as i keep saying i you would serve likes this job better he does yeah he says the food's better at the fed though he might be able to keep that job and have the other job the the food is the food is better at the fed and i can tell you the treasury building uh we we run it very well we keep it in good shape we don't do any major building projects You know, we do things as needed.

36:02And, you know, it's a great historical building. Mr. Secretary, I have one actually Fed question. Do you think that the Fed chair, because you do have to have the whole board kind of with you, how, I mean, could you imagine actually putting somebody in who has views that are otherwise different than the rest of the group and is therefore unable to effectuate the changes that perhaps the president would be pursuing? I think, Andrew, that we want the person who's going to do what is best for the American people and for the economy. And, you know, as Joe said, we had the first two dissents for several decades.

36:48So it looks like there's already a schism in the board. So, you know, there would be two more voters. We would have a majority of the board. But, of course, then there are the regional governors who rotate their voting status. Did people misunderstand some of your comments and extrapolate it to Social Security, Mr. Secretary? Or was that actually something you're thinking about, the privatization? No, it was ridiculous. I was giving an interview, and I was talking about the$1 ,000 baby bonds that every American citizen, every newborn is going to get. The Democrats hate this program because it brings capitalism and markets to every American, not just their constituents at the upper end.

37:49And over time, the compounding is going to be an incredible supplement to Social Security, not a replacement. It is a complement. And what I said was Social Security will continue as it is. It is intact. Everyone will get their check every month. but it's very exciting to me that there could be a big payout at the end of you know when people turn 59 or 60 for the first time Joe because as you know bottom 50 % of households in America do not have financial assets and President Trump is giving them financial assets but you know I believe that the reason you all have the mess you are about to have in New York Caracas on the Hudson is because people have given up on a market-based system.

38:48And the Trump administration is going to make every newborn a shareholder, and they are going to have a stake in the system. When you have a stake in the system, you do not want to bring down the system. So the power of compounding could mean a big payout that would be a complement, not a substitute for Social Security. Oh, yeah, that is horrifying. It is, and it is horrifying to some. If you're not beholden to the government, it sort of undercuts a lot of one side's programs, doesn't it? Yeah, that's horrifying. The secretary? Well, you know, Joe, the other thing, too, is, you know, I've got to say, some of the senators who criticize me are the ones who take the most advantage of, you know, they don't have insider trading rules.

39:36So Senator Wyden criticized me. You know, he has a, you know, he's a statistical aberration. Somehow he has made over 120 percent one year, over 70 percent the next year. You know, if he were a private citizen, the SEC would be knocking on his door. Same with the Pelosi family. How does this happen? That's a good point. That's a good point. Mr. Secretary, we appreciate all the time again that you've given us and hope to see you frequently as we did today. Thanks. Good. Thank you. Next on Squawk Pod, veteran media investor Mario Gabelli joins us. What he's watching in entertainment. Netflix has got streaming.

40:21The world has changed. It's got a market cap greater than Comcast, greater than Disney, greater than Warner Brothers, greater than Paramount, greater than three or four of the other ones like Lions Studios, like AMC combined. So how do we compete and survive in that? and Paramount's long road to its$8 billion merger with Skydance. I have owned Paramount since Gulf and Western owned it. So I've been in it for 50 years. Just think about the next 20 years. I think you should have sold it. Has that been a mistake for you? No. A spirited discussion right after this.

40:59You're listening to Squawk Pod. Stand by Joe. Here's Mike. Here. Good morning and welcome back to Squawk Pod. Live from the NASDAQ market site in Times Square. All right, let's talk media, taxes, tariffs, sports investing, and much more. We've got billionaire and value investor Mario Gabelli with us. He is the chairman and CEO of Gamco Investors. And Mario, it's great to see you here this morning. Well, it's indeed a privilege and fun to talk about our favorite subject, which is stocks and the world of which volatility is part of the daily breakfast, lunch, and dinner for us. There has not been a lot of volatility lately.

41:32It's been kind of an upward march. I'm looking at specific stocks, you know, the amount of transactions. For example, FlowServe had a deal to buy a chart, and it's being taken over for$210 in cash. And the shorts were in FlowServe because they were arbing it. And the FlowServe stock at$58.50 is down from$65, and it's a bargain. Scott Rowe's going to do a great job. You know, and then you've got a deal like Iveco in Italy that postponed their meeting until this week on Thursday. and speculation is they'll sell their defense business. And the stock is 18 euros, and we think it's worth 29. And if they do that, what will they do with the balance of the business?

42:13So there's a lot going on all the time. I know it's probably not in your wheelhouse at the moment in terms of things you've been considering, but Union Pacific announcing this deal with Norfolk Southern, I mean, that's going to be one that does test the regulatory, I guess how willing they are to allow bigger transactions to happen. What do you think happens there? Well, that is a great start because the notion of the tax structure in place so that now you can figure out what you can expense on R &D, what your depreciation bonuses are, what your other things are, that gives you a little more clarity.

42:49Secondly, the notion of some of these transactions getting approved quickly. Now, you have a new head of the Federal Communications Commission. Carr is saying, hey, we don't want the broadcasters to go the way of the newspapers. And he's going to be a lot quicker on making decisions. You're going to have Ferguson at the head of the Federal Trade Commission. The other one turned down a shoe company and it caused it to have a disaster, Capri. Then, you know, among others, like iRobot was 55 and it's now 5. Sports warehouse was 15. It's now three. So those individuals have moved on and now you have that and the changes also in the EU in terms of M &A.

43:31So I would think I'm not going to say it's greater confidence. But when you look at the map, where is Burlington Northern, which is not on the East Coast? Where is Union Pacific? It's not on the East Coast. So are you want to what are the negatives to the shippers? And that's one issue. Clearly, you want to look at it, but it should not take two years. Right. So you think there's going to be more deals? There already are more deals. Things are percolating. Not only that, you're going to have the private equity guys are stuck with, you know, holdings, and they're laying them off to related parties and continuation funds.

44:09And now they would like to go more into the public domain or just figure out another way to swap them. So you're going to see a lot more. And yeah. Go ahead. No, that's it. And then, you know, we're going to see it in some other parts of the world as well. Well, let's talk about media because that's where you've always been a big investor. Paramount shares, voting shares of Paramount you owned, that deal getting approved. What do you think of it? And what do you think happens next with some of these other media? Well, you know, I thought somebody would ask me about Paramount. So I brought this, Andrew, for you.

44:40Thank you. You're welcome. What's important now? Whip inflation now? No. Yeah, but that's an old. What's important now is what's important. That's my version. Whip inflation now was back in the 1970s. That was obviously important. Maybe that my mother told me about that period. Go ahead. Yeah, yeah, yeah. You bought one of those expensive potters recently. Come on. That private equity fund I just bought. Independent of that. What is important now? Netflix has got streaming. The world has changed. It's got a market cap greater than Comcast, greater than Disney, greater than Warner Brothers, greater than Paramount, greater than three or four of the other ones like Lions Studios, like AMC combined.

45:28So how do we compete and survive in that? What is important now is to help Hollywood. We have to bring American creativity back. We have to bring the content and capability back. And that's what is going to happen with a combination of Redbird and Skydance. They will own 70 % of a billion share company. They'll have$10 billion of debt. Hopefully they can peel off some of the TV stations. So there's a lot to be done. Do you think that that company will ultimately buy and or merge with Warner Brothers, which just announced yesterday that it's going to be, it gave the new names, Warner Brothers and Discovery.

46:06But that would be something that you'd consider to be potentially an opportunity for them. Look, think of Zaslav. He's going to take over what I call sports and streaming. He's put a new name on it last night, OK? Discovery. Discovery. Discovery Global. No, he's got, not Discovery, he's put it on Warner Brothers. And so, yes, the Zaslav Variety came out and listed how many Emmys they got. 142. They got the highest number of anyone. So the notion of, and he's got Superman doing a half a billion dollars at the box office, domestic and global. And so content creativity, but then how to monetize it.

46:47And that's where he's going to be very strong. Now, will he try to buy that? Let's look at Warner Brothers. They've got 2.5 billion shares. The stock is 13,$32 billion market cap. They've got$60 billion. Compare that to Netflix with$400 billion, maybe a little higher than that,$500 billion. How does he create value, and what is he going to do? Comcast is spinning off Versant, okay? And others are doing the same. Versant. Versant. Sorry. It's not French. I got that French version. Think of it like conversant. The reason I'm asking the question about about Warner Brothers is right now there's a question.

47:26You're going to have the Paramount deal that's going to close. Right. So that's about to happen. The question is right now, if you believe that the other ones that are up for grabs would be Warner Brothers, that would be one. You would think that Peacock, which would be an NBC, which is a part of this company. I don't know if you think that regulators would actually allow this company to do anything during this administration. That's an open question. Therefore, then you start to think to yourself, okay, there's sort of only two or three other options if you are David Ellison or you're David Zaslav.

47:56The answer is go to Hollywood and start going back to basics. Give the consumer what they want, when they want it, at the lowest possible cost. And I'm asking as an investor. So neither a buyer nor a seller be? That's what you do. That's the business. Yeah, but I have owned Paramount since some of the Reds, since Gulf and Western owned it. So I've been in it for 50 years. Just think about the next 20 years. Think about content. How do you create what the consumer... By the way, has that been a mistake for you? What? Yeah, has that been a mistake for you? No, don't forget there was a time when the guy in 02 shorted the stock and it ran to$90 and we were able to liquefy some and buy some back.

48:39We've been a long term. We own five million of the 30 million shares of the voting stock. We have 10 million that are outstanding. We're going to have zero. We're not going to own any. He's cashing us out. It's the terms of trade that we object. No, I know. The reason I ask that is, is Joe, as I think alluded to, wouldn't have you would have been happier selling those shares five years ago? I did. You're saying I bought it back five years ago. Well, no. You didn't say that. Look, Tootsie Roll went from 30 to 60. Paramount went from like 30 to 80, back to 23. Today, I bought some today because I got until Thursday to make an election.

49:21You know, you've got to look at financial engineering. You've got to say, hey, I have to elect. And everyone looking at this program has to make the election by Thursday of whether they own Paramount and whether they want to own the non-voting stock and how do they get the cash and elect to get the cash. And then they'll work on it again. But let's not get on that one. Financial engineering is the process of either buying or selling stuff. Are you suggesting Zaslav should neither be a buyer nor a seller? Oh, no, no, no. First step, unfortunately, it's going to take three or four months to get this spun off.

49:56Okay? So there are other companies doing that. Tegna and Storer Broadcasting are in the broadcasting area, and when Brendan Carr lifts the cap, right now you can only have 39.5 % footprint of the U.S. TV households. That's going to be lifted. Which companies are going to do that? Then will he allow, which I think he just did, allowing you to own more than one TV station in major markets? But I have to get a better clarification. Let me ask you a different question about Brendan Carr. Given what he did to Paramount, given what the administration has done with a number of these lawsuits against media companies.

50:31How do you as an investor feel about that? Come on. Here. Andrew, that's why I brought this for you. Okay? What is important now is the vitality of that industry for the American consumer and the benefit of Hollywood. But I'm saying that Brendan Carr may not allow other deals to happen because they may have differences. Well, that's your speculation. It's not mine. But we saw it in practice. It's empirical that these deals were held up because of these things. When he uses empirical, he's telling you a fact. Warner Brothers, when Zaslav tried to buy it, It was held up by the previous regulators for at least two years.

51:01And that was a crushing time. The world has changed. I'm not just doing that. I'm saying that was not about... That's fine. You don't believe the world has changed? I do. I'm asking a different question. I'm asking, what did you think, for example, of this last go-round with 60 Minutes and CBS and the payments that were made? What's the relevance of that? That's history. That was shareholder money. You don't care about these things? You know, there's an old New York expression called bupkis. And let's deal with the relevant dynamics. Paramount. Paramount has 650 million shares at$15. It's$10 billion market cap.

51:40They got$12 billion of debt. What did you want it to do? To go the way of Capri? And they'll save twice as much from canceling Colbert in a year that they spent on. Well, that's irrelevant to me. The point is that you've got to protect Hollywood. It's very satisfying. There's a bigger picture here of intellectual content coming out of Hollywood that you have. Paramount spends$18 billion on content. You wanted it to go down the sink if you didn't approve the deal? That should have been done months ago. It should have been done by the other persons that were running it. Anyway, today, I want to talk about Nat Gas.

52:15Before we get to that, though, Barry Diller has the idea. Barry Diller has come on and said that he thinks a lot of these assets are being discounted far too much. He thinks there's more value in the content than the legacy in the legacy content than you is reflected in the market today. Do you agree with that? Yes, you have to because you can recycle content to do other things. And so he if you have content that's been fully amortized on your balance sheet, how do I look at the financial statements? amortization, like for example, Netflix will spend$20 billion on content, but they're only amortizing 18.

52:54Whereas last year, Zaslav at Warners amortized it fully. What is Amazon doing spending$20 billion? What is Apple doing spending$20 billion? What have they learned from Formula One? And what will they want to have as content? So Lion Studios is an example of that. AMC, which the Walking Dead at$6 is an example of potential content. That's it. This is exciting. This is, we have to save Hollywood. From itself. What? From itself. Oh, come on. You know, this way when you guys go out to Sun Valley, you can talk to all these organizations and feel comfortable. And on top of that, the sports parts of this, you've long been somebody who's believed in Churchill Downs.

53:38You've long believed in the Atlanta Braves. How does that fit into what you're seeing today? Sports and live news. are important fundamentals for the small TV broadcasters, whether it's Fox, which I like at$51, with$4.50 of earnings for June 30th year. And then they'll have the... So you want to own sports. How do I play sports? Baseball. You all were kind enough two years ago to sign this, okay? And this here is the Atlanta Braves. The stock, unfortunately, they're... I'm going to cuff this. $15.45. So they've had a challenge starting off the year. However, the stadium and the battery park, and it's worth over$60, and it's fun to own it.

54:23However, you also have Madison Square Garden Sports, which is basketball. The Knicks and the Rangers are worth$400 a share. What is Jimmy doing? Right now, he's focusing on Abu Dhabi and the sphere. He'll do something else. There's 24 million shares. They own 100 % of the vote. I mean, 4.5 billion shares of SuperVote. So then in addition to that, soccer. Next year, next year, 12 months from now, you're going to have everybody talk about the World Cup. So I want you to own Televisa. Grupo Televisa has the rights to the Latin American market. They are selling, the stock is$2.27. There's 535 million shares located in Mexico City.

55:04And then there's a public company called Dartmouth. Somewhere in Rhino-Metal, I'm pronouncing it wrong, in Germany. The stock sells for€2.80. It's worth about€10. And that's a soccer team. So sports is exciting because it's content. And it's global content. And soccer glows global. Okay, Man U, for example, is selling at 17.25. And the Glazers still own control. And Radcliffe bought it at low 30s. And at 17, it's probably worth it. They've been uninspiring on the field. But they'll improve. Then on top of that, I can't avoid talking about a company in Buffalo, New York. Would you buy the spinoff from Warner?

55:51Would you buy Versant? Should they be buyers or sellers of the cable assets? Lazarus is going to do a great job. What's he going to do, buyers? Is he going to consult? No, but let's get the data out. Let's get the what? The data. I want the financials. What is Comcast going to spin off? What's the debt? What's the P &L on a historical basis? What's the corporate cost? Once I get there, we'll put a microscope, and then we'll sit down with the management. What do you think of the split of Warner Brothers and Discovery? I keep calling it Versant. Versant. Versant. What do you think about the other business, the Discovery Global business, which is going to have a ton of debt on it?

56:31The debt of the pro forma company is$28 billion. Right. OK, because he's made some adjustments. I don't have the final debt figures because there was some buying and swapping of debt and restructuring it. I can't answer. I know what the debt's going to look like. Gunnar is going to do a good job running it. OK, and we'll see. There's time and motion in place right now. Think about what. Just wait for the data. Wait for the data. Stars. I'm an analyst. You have a couple of youths. You've got to dig into the numbers. And that can happen in the next 60 to 90 days. They have, unfortunately, what you want, Andrew, is the regulatory environment to accelerate the time.

57:12You can't have a deal sitting out there for a year and a half in the content world, and then you have a strike, what's that thing, Screen Actors Guild, Writers Guild, what? Andrew's expression. It's gotten progressively. I don't even know what's going on anymore. I'm befuddled. Oh, come on. You know, the answer is you know everything, and you're right. You're doing a great job, and you're asking the right questions. But I don't have the answers. There you go. Now he's smiling. Mario, thank you. Well, we're always privileged to be here to talk about my national fuel and gas. Yes. Which is an$85 stock, which is the way to play gas, because they own 1 ,300 ,000 acres in Marcellus.

57:50Goodbye. Goodbye. Thank you. You've got one more. You've got five seconds. Oh, come on. Five seconds? I've got so many I can do in five seconds. And that is Squawk Pod for today. Thank you for listening. Squawk Box is hosted by Joe Kernan, Becky Quick, and Andrew Ross Sorkin. Tune in weekday mornings on CNBC at 6 Eastern. Or listen to this podcast anytime when you follow Squawk Pod wherever you like to get your podcasts. You won't miss a thing. The latest headlines, newsworthy interviews, existential crises. We put it all out there. College grads, I think they're going to start being mad at you too.

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