Treasury Secretary Bessent, the Future of Democrats, & ‘Embrace Rage’ 11/25/25

0:00Bring in show music, please. Hi, I'm CNBC producer Katie Kramer. Today on Squawk Pod, tariff talk makes the world go round. Treasury Secretary Scott Bessent joins us on President Trump's call with China's President Xi. We're always going to be rivals. That's natural. But are there things we can do together? Yes, we have the relationship in a good place. And news on the president's plan to nominate a new head of the U.S. Federal Reserve. I think that there's a very good chance that the president will make an announcement before Christmas. But it's his prerogative, whether it's before the Christmas holidays and the New Year's.

0:46Then longtime Democratic presidential campaign advisor James Carville wants his party to get angry. I think U.S. capitalism needs an intervention because it's producing wealth, but the wealth is all going in one place, and that's not to a lot of people. Plus, all the rest of today's news, like New York's mayor-elect building his transition team. And is Alphabet's Gemini AI your new girlfriend? It, for me, is better at doing certain things, but it doesn't know me as well as ChatGPT does. So you're married and off the market? I don't know if I'm married enough to the market because I might have at least for now found a better date.

1:25It is Tuesday, November 25th. Squawk Pod begins right now. Stand Becky by in 3, 2, 1. Cue it, please. Good morning, everybody. Welcome to Squawk Box right here on CNBC. I'm Becky Quick along with Andrew Ross-Sorkin. Joe is out today. If you take a look right now, you'll see Alphabet shares are higher in the pre-market, up by about 4%. That is a big move for such a big cap company. Comes after yesterday's 6 % gain. Those shares are up double digits just in the last week. For the last week, it's up by about 16.5%. The stock closing in on a$4 trillion market cap. Investors becoming more optimistic about the company's place in the AI race.

2:07Last week, Alphabet announced an updated version of its Gemini large language model. Earlier this month, SEC filings showed that Warren Buffett's Berkshire Hathaway had built a nearly 18 million share stake in the company by the end of the third quarter. Alphabet's performance yesterday also boosting some other AI names, including Broadcom, Micron, Palantir, and AMD. And then there's this other big Google headline, and I think that is the big reason for the stock's move this morning, Andrew. Well, let's tell it to them. Let's tell the audience that headline. The information reporting that the company pitching some of its cloud customers on using Google's homegrown AI chips in the company's own data centers.

2:52This is rather than Google's data centers. The article saying that Facebook parent Meta is speaking with Google about potentially spending tens of billions of dollars on Google's AI chips. This may be a big factor in NVIDIA's slide this morning as well. So you get it coming both ways effectively. And you can look right now at the stock in NVIDIA. That's down about 4%. Of course, the most interesting aspect about how Google has built its AI and inference program has been on its own chips. It has not been using NVIDIA chips along the way. And now there's this potential move where Meta and others might actually buy chips from Google.

3:32So this could be transformative in so many ways. We're watching both the large language model that they've built appear to be now the best one in market, if you will, plus now the idea that they could be selling their chips or at least access to those chips. You know, layers a whole new whole new story on top of this, Becky. Yeah. Some of the some of NVIDIA's biggest customers have been working on their own homegrown chips. if you look at a Microsoft, if you look at an Amazon, but nobody has had quite the success that Alphabet has to this point, that Google has to this point. Sergey Brin has gone back into founder mode by all reports that he's really kind of digging into this, and they have had some success with this.

4:13If they can get a big customer like Ameta to spend billions of dollars on chips to go in, and I think the information is reporting that could happen as early as 2027 for those chips to go into their data centers, If that's the case, it would represent some new competition. Obviously, NVIDIA is the only game in town at this point. They have more demand than they can possibly meet at these moments. But with the stock that has done so well, we spoke with an analyst yesterday who just pointed out, hey, they are looking for any reason to not continue to see this growth going for forever. That analyst said that he doesn't think it's going to be this year.

4:49It's not going to be next year. But we'll see. And market does trade ahead. year-to-date Nvidia shares still up by about 30 percent. But again, people are looking everywhere with AI to try and poke any holes on what might make a problem for some of the big gainers or what could make another entrant look like they are taking off in another way. And again, it's not just the chips. It was also Gemini 3 and the really great reports that people have been giving on what an improvement it is at this point. I've been playing with it. It's pretty good. But the question that I have, and it's the thing we've been talking about for a long time about these large language models, is this persistent memory question and whether there's a lock-in effect or not.

5:29So it, for me, is better at doing certain things, but it doesn't know me as well, for example, as ChatGPT does, just because I've been on ChatGPT religiously for so long now. And it has so much of my information that when I ask it a certain kind of question, it knows things from my history and my past and this and that. That, obviously, Gemini doesn't know. So you're married and off the market. So you're married and off the market. I don't know if I'm married and off the market, because I might have at least for now found a better date. The problem is it's possible that ChatGPT will become a better date in a month or two.

6:10And who knows where Anthropoc is going to be in two months from now. So that's the thing about this. So you can keep looking for the better date all the time. But some of these dates may know you a little bit better and you may like that more. I don't know. We'll see. This is a bad analogy. I should probably stop right now. I'm married. I'm sorry I led you down that path. We'll continue to watch it again. NVIDIA shares right now off by about three point seven percent. Meantime, we should tell you about this story this morning. President Trump now holding a telephone call with Chinese President Xi Jinping.

6:40And what Trump said that the two leaders spoke about the Russia-Ukraine war, Also soybean purchases and more. Several reports saying that Xi initiated that call. There was a post on Truth Social, in which President Trump said that he accepted an invitation from Xi to visit China in April, and that he invited Xi to the United States for a visit later this year. Now, during the phone call, the Chinese foreign ministry saying that Xi stressed the importance to his country that Taiwan be, quote, returned to it. Trump didn't mention Taiwan in his social media post. Later, Trump spoke with Japan's prime minister.

7:16She's dealing with a dispute she triggered with China recently when she made remarks over how Japan might respond to a Chinese attack on Taiwan. So a lot of things to consider going on in China. Obviously, Taiwan has been the chess piece in the middle of this whole story. And we're going to get the chance to speak with Treasury Secretary Besson a little later about all of these issues and much more. The New York City mayor-elect Zoran Mondami appointing hundreds of people to his transition team, including several people from the corporate world. This one's interesting, Becky. Partnership for New York City president and frequent squawk guest Catherine Wilds is now going to serve on Mondami's Committee on Economic Development and Workforce Development.

8:02We'll talk about that in a second. She's going to be joined on that panel by former Goldman Sachs partner Margaret Anadou and more than a dozen other people. You know, for the last couple of months, we had Kathy come on the broadcast representing the Partnership for New York, which represents the biggest companies that are headquartered and work here in the city. and we would ask her about Zoran Mamdami. And she was, to be blunt about it, much more supportive of him publicly on our broadcast than the kind of text messages and emails and conversations I was having with the membership of the New York City Partnership and the CEOs in New York.

8:45And I would ask her every time she'd come on, I'd say, you know, your view does not seem totally to add up to the view of the partnership. There's two things going on here. One is that she's leaving the partnership, which we did know. But what we didn't know was that she was going to go work for the Mamdani, effectively the administration. And I just point that out to all of us now because I don't think that was known to us at the time. And boy, do I wish it was. Well, I mean, it may not have been a plan that was in the works before. The only thing I'll say to that is you want voices from business who have some input into that.

9:28I think it would be a more concerning issue to have a Mom Donnie mayoral position and not have input coming in from business. I think that would be the most concerning. I don't know how effective those voices will be in terms of advocating for business. And maybe that's really where the rubber hits the road. We'll see. You want to have some back and forth. You want to have some contributions from it. But my hope is that Kathy and the other people will speak pretty plainly about what needs to happen from the business's perspectives in New York City to make sure that they are still involved and active.

10:14We'll see what suggestions they make, and we'll see if this administration takes those suggestions seriously and puts them into play. I guess I'll withhold judgment to see that. I wouldn't want this administration to not have input from people representing the businesses. But you're right to point out that her point, that her take over the last couple of months was much more simpatico, much less concerned than the businesses that she was representing at that point. That's the only point that I'm making. And as I said to you, I was talking to people inside that New York City partnership who run businesses in the city who are saying she may be the head of our organization or look like she's the head of our organization, but she is not representing our views and our perspectives.

11:09And it's interesting to me now that this is the role that she's now in. Let's see what the recommendations are to the Mamdani administration. And then let's see if that administration takes into account those concerns and issues that are brought up. I guess we'll watch and see. The relationship. We'd love to have her back on. We can talk all about it. Yeah, for sure. And look, the relationship when Mom Donnie went to the White House was not what a lot of us had been anticipating. So we'll see if it means that some of the views are kind of softened and, you know, made to a situation where it kind of works better for all aspects of the city.

11:56great. I don't think any of us were thrilled with what we were hearing just in terms of what might be coming from a Mom Donnie administration. So if it softens those views, I'm all for it. But I think we'll have to watch very closely what advice is given and whether that advice is actually taken. Up next on Squawk Pod, Treasury Secretary Scott Besant, the Federal Reserve, tariffs, and the American farmers caught up in a trade war with China. As far as the soybeans, the Chinese are right on schedule in terms of the cadence of their purchases. Over the next three and a half years, we're going to see the 87 and a half million metric tons purchased by the Chinese minimum.

12:42In addition to his role in the administration, Secretary Bassett has a soybean farm of his own. That interview is next.

12:54This is Squawk Pod.

13:20with more on the U.S.-China trade latest is Treasury Secretary Scott Besant. And Mr. Secretary, thank you very much for being with us this morning. Good morning, Becky. Good morning, Andrew. Why don't we start with this latest, what we're seeing right now and what we've heard from this conversation with President Trump and President Xi. The readouts from the two countries were a little different. Obviously, the United States has a very important push on making sure that China does step up its purchases of soybeans. How is that going? Well, first of all, Becky, to set the record straight, President Trump initiated the call 30 days after the historic meeting in Busan, South Korea, between the two leaders.

14:06They have a great relationship. And as far as the soybeans, the Chinese are right on schedule in terms of the cadence of their purchases. Over the next three and a half years, we're going to see the 87 and a half million metric tons purchased by the Chinese, minimum, minimum, and they are right on schedule. There have been some reports coming from China where their take on this talk is a little different, at least what they emphasized in the talks was a little different. They bring up both Ukraine and the U.S. position and the Chinese position on Taiwan. What is the U.S. position on Taiwan at this point?

14:46U.S. position on Taiwan is unchanged. And on Ukraine, President and Party Chair Xi agreed that the peace in this Ukraine conflict must move forward. And they agreed to work together on it. Am I right to think that this is a truce, but maybe a little bit of an uneasy truce at this point. How secure and settled are you feeling with where we stand with China right now? Well, we have a one year, what I would say, pause. And, Becky, what I feel very good about is the relationship between the leaders. Because when the leaders can have calls like this at the highest level, then bad things don't happen.

15:32It was the strong relationship, President Trump showing leadership that sort of calmed things down between the two countries. And look, we're always going to be rivals. We're always going to be rivals. That's natural. But are there things we can do together? Yes. We have the relationship in a good place. President Trump is going to do a state visit to Beijing. she is going to come to the U.S. for a state visit. He'll also be in the U.S. for the G20 at Doral. And President Trump may attend the APEC summit in Shenzhen in November. So if there are four meetings during the year, I think that that gives the relationship great stability.

16:20And stability is good for the American people and good for the world economy.

16:28Mr. Secretary, I wanted to pivot the conversation. We've been talking all fall with you about the prospect of the president selecting a new Fed chair. And as we get closer to the end of the year, I wanted to get an update as to where things perhaps stand right now. Yep. So we're going to have the last interview in the second round today, Andrew. We have five very strong candidates. I am impressed with all of them. And Andrew, I'll tell you, one of the things in terms of the criteria that I've been looking for that I have morphed a bit on in the fall when we started with 11 candidates is in talking to these candidates, I realized the Fed has become this very complicated operation.

17:13It's no longer just a price setting of money. There's this very complicated calculus between the monetary policy, the balance sheet, and regulatory policy. And we've really emphasized in the interviews what's the interplay for that calculus in terms of the best way forward for the American economy. And what is each person's point of view in terms of protecting the American people, protecting the economy, and moving forward with the dual mandate? Can you give us a hint? We often talk about the two Kevins, Kevin Warsh and Kevin Hassett being the frontrunners. Is that still the case? Andrew, I've still got one interview left, so I don't think it would be prudent to give any hints.

18:11And I think that there's a very good chance that the president will make an announcement before Christmas. But it's his prerogative, whether it's before the Christmas holidays, in the New Year's. But things are moving along very well. Mr. Secretary, last week the president, I'm not sure if he was joking or how serious he was about it. He said he loves everything you're doing, but if you don't get the Fed to lower interest rates soon, he might fire your butt. Well, Becky, if you were in the room, he was joking. And, you know, again, I think that we've gotten to this point where monetary policy has gotten very complicated, and it's more than just cutting rates.

18:57We've got this balance sheet and what are we going to do with it? The Fed has taken us into a new regime and what is called ample reserves regime. And it looks like that might be fraying a bit here in terms of whether the reserves are actually ample in the system. There are all these facilities and operations, the standing repo facility. And, you know, I think we've got to kind of simplify things. And I think it's time for the Fed just to move back into the background like it used to do, calm things down and work for the American people, set monetary policy on a good course. This isn't sport, it's people's lives.

19:47And I think we just need to calm down. all these speeches by these bank presidents that are just redundant. Why don't they actually just come out and talk about the meaningful issues in the American people rather than a short-term view of the next meeting? Well, to be fair, the Fed governors or the presidents of the banks, at least, are hearing from people in their districts, and each of them may be hearing slightly different things about where the job market lays, where inflation lays, and that's probably useful information to hear from around the country. I guess my bigger question— Well, no, no, no.

20:24Hold on for a minute, Becky. Yeah. Is that the—but that's not what they're talking about. That's not what they're talking about in their district. You know, they're talking about some macro things. Well, Susan Collins was saying she hears about inflation. She was just on last week with Steve Leisman, the Boston Fed president, and she was saying that she does hear a lot about inflation from within her district. That was kind of the part of that interview that jumped out to me the most. Well, the other thing I'll tell you that I find very interesting is these regional presidents were supposed to be people from the district.

20:57And it was supposed to break the New York hold on the reserve banks. And we've got at least three, maybe four of the reserve banks where people were hired from outside the district. They don't even live in their district. They commute back to New York. So these are New Yorkers going out into the country and then coming back on weekends. I'm not sure that's the way the Federal Reserve was designed. Mr. Secretary, I'm curious how you grapple with this question. The president and I believe yourself have talked about perhaps the need to lower interest rates. The president's clearly made that case.

21:33You know, if you if you listen to some of these Fed governors, including Neil Kashkari and others, as they're trying to balance what what appears to be, you know, an increase in unemployment or seemingly a little bit more unemployment against inflation fears. How do you balance that in your mind right now, given the sort of clash of those two issues? Well, Neil Kashkari is a regional bank president, not a governor. And what I think is interesting is that the governors seem to be leaning toward cutting rates. And again, Andrew, what I go back to is we've now got this very complicated calculus. And I believe when you're looking at monetary policy, you know what happened in the past.

22:23You try to have a view of what's happening now, and then you have a view of the future. And I think that the mistake that we're seeing a lot of times is either looking in the rearview mirror. We're flying a little blind with the numbers here, but we've had two cuts thus far. And what do we know that this Schumer shutdown, the longest in history, has shaved 1.5 percent off GDP, at least an 11 billion permanent hit. So we know the economy hasn't gotten better. So I'm not even sure what the discussion is here. And Mr. Secretary, I had actually maybe a curveball, maybe not. It was a curveball, I think, for all of us.

23:04I was curious what your reaction was watching the meeting between the president and the mayor-elect of New York, Mondami. We've talked about the mayor-elect, us on the air before, and some of the president's views about socialism and the like. It does seem like they were at least buddy-buddy on the issue of affordability. Well, Andrew, I was in the room, and I think that you've got to have some admiration for a candidate who ran a campaign the way he did. It was a great, great campaign. He is clearly the leader of the Democratic Party now. And I think it speaks to how open-minded the president is that he invited him into the Oval.

23:55Senator Schumer never endorsed him. I don't even know if he's met with him. And President Trump wants the best for New Yorkers. I can tell you my impression of the mayor-elect is he's a young man with a lot of old ideas that have never worked. and point to one example where policies like his have led to anything other than a decline. But President Trump wants the best for the American people, and he hopes that New York will do well. It's easy to run a campaign, but the practical every day of keeping people safe, picking up the trash, making the subways run on time, we'll see. Secretary Bessent, affordability has certainly been the key word, particularly since those elections, not just of Mamdani, but of the Democrats who won in both New Jersey and in Virginia.

24:50And there are a lot of questions about how to get our arms around those things. Health care is a big issue. The ACA tax credits being a big issue, too. There were reports that Yesterday, the president had been considering saying that he would extend the Obamacare tax subsidies, at least for a year, until things can get worked out. MSNOW and other places are reporting that that was kind of shut down. But I wonder if you could tell us what the administration's plan is on this front, what you think the best way forward is, just in terms of trying to figure out what to do on both a short-term and a long-term basis.

25:31Well, let's go back and just talk about affordability. On March 12, 2024, I wrote a piece that got published, and it was on the three I's that were hurting the American people. It was immigration, interest rates, inflation. We can come back to it. I would add the insanity, and the insanity on the Democratic side. So we got four eyes. Immigrant, this mass unfettered immigration is now under control. The border is secure, which it couldn't be done. That was putting substantial downward pressure on working class wages, upward pressure on rent for working people. Two, interest rates have come down.

26:17The bond market's had its best year since 2020. So you can mark those off. And now we're working on the inflation. and this insanity of the Democratic Party shutting the government down. Now we've got this brinksmanship. They wanted, we'll reopen the government if you'll talk about health care. They wouldn't. And now here we are, kind of on the eve. But I'm not involved in the conversation. I know President Trump wants working Americans to keep more of their money, cut out the insurance companies, and we'll see. He's the president of solutions, and I'm sure that we will have a solution to this.

26:58The front page of The Wall Street Journal has an article today talking about how the economy is kind of addicted to AI spending. It points out that business investment in AI might have accounted for as much as half of the growth in the gross domestic product adjusted for inflation in the first six months of the year. And questions whether if growth in that sector slows down, whether it tanks the entire economy. What's your thought on that? Yes, so Becky, two weeks ago I was at my hometown in Charleston, South Carolina. Boeing was doing a substantial expansion of their plant for the Dreamliner, 1 ,000 new, great high-paying jobs.