81. The Moment Trump Snaps

0:28This episode is brought to you by Progressive Insurance.

0:34This is The Rest is Politics. U.S. for our founding members, a better turn down CNN. There is so much news happening to bring to you today that I've got CNN up in the background. I'm Katty Kaye. Thanks for joining us, everybody. I'm Anthony Scaramucci. It's good to be here. I am fully moisturized. I did go to the bathroom before the live session. Any other questions? I'm just going over the questions, Katty. That's it. In the private chat. And we got, hey, we got people from everywhere. I love that all my Swiss compatriots are reaching out. That's so nice from the Swiss mountains, from Thun, which is very near where my grandmother lived in Switzerland, also from East London, Vienna, Austria, Tuscany.

1:09Hey, we're going super global and all the nice places. Hello from Denmark. Denmark might be in the news today. Shaftesbury, Dorset, York, Uppsala. There we go. Join us from everywhere. Thank you very much, everybody. Hey, look, there's a lot. Usually we take one topic in these live streams, And I should tell you that next week is the last of these Monday live streams. But we will come to you with emergency. That's it. That's 100 days. That went by fast, right? Oh, you're feeling sad. Yeah, I thought I started getting used to the live streams and the cheeky questions and everything. Okay. All right.

1:44Okay. But look, guys, how about if there is big breaking news, which, of course, there never is in the Trump administration, we bring you emergency live streams. At which point we'll be having live streams every hour. I mean, I don't know if they want that. You'll be living with Anthony and Kat in your heads. I apologize for that idea. And also, we are doing a series on Elon Musk, which will be for founding members, just for you guys, a four-part series on Elon Musk from his childhood, which we are starting to record at the moment that we're super excited about. So join us for those. So, Katty, first of all, our production team, a big shout out to Fiona who put the notes together on Elon Musk.

2:24And I've gone back to Isaacson's book and I've looked at other things related to Elon, even going back 20 years ago when I used to attend these Allen & Company conferences where he had just sold his business to – PayPal had just sold to eBay. And so I think we're going to have a lot of great things to talk about there. And of course, Elon's story is evolving. There's a rumor today that he's going to be on his earnings call announcing his departure from Doge. I don't know if that's eminent or not, but I know that him and Trump are trying to exit gracefully. It won't be one of those ignominious exits like many of us experience.

3:04But I think that'll be a great series. Is that just for founding members, Katty, or is that for anybody? That is just for founding members. OK, here's what we're going to talk about today. We want to talk about the markets, which are dropping as we're speaking. Monday, we are recording this at 3 p.m. on Monday, just before the markets close. Big sell-off in U.S. markets. We want to talk about Defense Secretary Hegseth. He is still the Defense Secretary. Is he going to carry on being the Defense Secretary? And of course, the Supreme Court ruling that broke overnight Friday into Saturday on what the government can do with reference to people that it wants to send to El Salvador.

3:40before we get to all of that. I was very sorry, Anthony, to hear about the passing of the Pope. I know you are Catholic and your family came back from holiday to celebrate Easter weekend. And I was thinking of you and I was thinking of your mom when I heard the news this morning. He was an extraordinary man. I'm a huge fan of his. I never met him, unfortunately. I didn't get that opportunity. But I've just finished his book. Actually, I would encourage people, if you are Catholic, to read the book because he was Catholic in the truest sense of Catholic. We have a hard time. Many of us lapsed Catholics like me have a hard time being purely Catholic.

4:14But the Pope had three things about him that I really loved. One was he did not judge human frailty too harshly. He had a forgiving soul. So this orthodoxy he was more flexible on. The second thing, which I think was clear, he was very delineating in terms of what was good and bad in the world. And I said this to you, and I'm going to share this, if you don't mind, on this open mic here, about the Vance situation. So Vance is a Catholic. Vance goes to see the Pope. The vice president. The vice president. J.D. Vance goes to see the Pope over the Easter weekend. Not even clear if the Pope actually wanted to see him, by the way.

4:52And I'm not saying that he brushed off the vice president, but it wasn't the formal audio and wasn't the formal video that you would see if a head of state or somebody as significant as Vance was seeing the pope. It could have been because he was unwell, but it could have been because of the symbolism of it. And then you may know that he sent one of his cardinals to talk to Vance about his responsibilities as a Catholic. And so I'm not saying that J.D. Vance had a wake up call. And if you don't mind, because you say that I share our secrets, so I'm going to share some secrets. You said that J.D.

5:25Vance may not be as self-aware as me. And I wrote back to you on text this morning that I read J.D.'s book, The Hillbilly Elegy, and he is actually very self-aware. But he's now pursuing something I think is very dangerous, which is the blind ambition of power without the grounding wire necessary for that power. And so I'm just wondering how that went with the Pope this weekend and whether or not that Vance got a wake-up call or got his bell rung because the Pope sees good and evil. And one of the last things the Pope said was over the weekend is that evil may be upon us in this hour, but God will obviously have the last say.

6:03And it was directly related to the Ukrainian war. So we'll see where J.D. Vance ends up. I'd see him as a very flawed guy, but a very smart guy. Because remember, that book was written before he was famous. He didn't have a ghostwriter. And we'll see. We'll see what happens. But it's very sad to lose the Pope this past weekend. This is a little less highbrow. But if you obviously, many of you may have watched Conclave, which I suspect people will be rushing to watch again, given what's about to happen in Rome. But if you haven't seen The Two Popes with Jonathan Pryce playing Pope Francis and Anthony Hopkins playing Pope Benedict, it is worth watching.

6:41It's a really fantastic movie. Okay, let's move on to the markets. Somebody has pointed out actually in the chat that Daryl Cousins has pointed out that the FTSE is up. That is not what is happening in New York at 3.23 on Monday afternoon. My understanding, Anthony, that we've talked a lot about the markets in relations to tariffs and what the administration is doing or not doing with tariffs. This seems much more in relation to the president's comments over the weekend and again today attacking Jay Powell. He said on Friday that if he wanted Jay Powell out, he would be out quickly. He put out on Truth Social today saying that calling him too late, Powell.

7:25He's complained that Jay Powell brought down interest rates when it was the Biden and Harris team, and now he won't bring down interest. He clearly feels that Jay Powell should be doing what he wants. I was speaking to somebody from the IMF over the weekend who was saying that actually financial markets and international investors and economists watching the United States are as worried by what Trump is saying about Jay Powell and what that could mean for the independence of the Federal Reserve as they are by the tariffs, which I thought was interesting. What's your thoughts on that? Unpack that a bit for me because I was surprised by that.

8:01Well, there's a lot going on. So I'll hit the highlights quickly and then we'll try to get to some of these questions. But I think the big thing is that he wants to weaken. Let's talk about Trump. He wants to weaken the dollar. He wants to flood the consumer markets outside of the United States with the U.S. goods and services. And one of the ways to do that is you weaken the dollar, you make our stuff attractive overseas. But he's doing everything ass backwards, if I could say something simplistic, because if you really wanted to help the United States with its trade imbalances, and you really wanted to help the United States figure this out and not just go for attention, you would go one by one, or you would go meet with people privately, say, listen, I got to make these adjustments.

8:47I got to get living standards up for the Americans, more disposable income. The Americans are buying one third of the goods from the rest of the world. It'd be better for everybody if lower and middle income Americans have more money to spend. And here's ways you can, the rest of the world help me do that. But he didn't do that. He wanted to start with high levels of antagonism and he set himself a trap. And so now here's what's the components of the trap. Number one, Chinese are going to their trading partners and saying, hey, if you're cutting deals with the US or you're going to go around us, we're the Saudi Arabia manufacturing.

9:22Oil to Saudi Arabia is what manufacturing is to China. And we're going to get very tough with you because we've had war declared on us. The Admiral Yamamoto, who declared the war, we're in tariff. Ladies and gentlemen, not that this is a newsflash, but don't be in denial over this we're in tariff war one okay it's a world war it's a economic world war it was started by donald trump uh and that's just the facts of it and so now all of these variables are happening outside of the u.s control so so caddy he's going to jawbone the fed but the fed the federal reserve guy jerome powell is pretty tough he's not going to back down because he's an establishmentarian and he knows that he has to keep the system together.

10:08If Trump goes to fire him, he's probably right. At some point, it becomes impossible for him to stay the same way it became impossible for Ray to stay at the FBI. But that'll be a cataclysm in the markets. That'll be a 20 to 25 percent downdraft in U.S. markets. It'll demolish the dollar. And then at that point, I think even if you're afraid of going to jail in this sort of Prussianistic Donald Trump regime, you know, start speaking out against it. So you have had, I mean, we've had some Republicans speaking out already. And we had Senator Kennedy from Louisiana, the Republican John Kennedy saying over the weekend on the Sunday shows that the administration shouldn't fire Jay Powell.

10:51Carla Hesseltine has got an interesting question. Thank you for being a founding member, by the way, Carla, asking very confusing. He can't fire him, but can he? And And you're right that it's confusing. The clearest answer at the moment is probably not, but things could change. Secretary Powell has recognized that himself. He has said that the Fed's independence is a matter of law and that they're not removable except for cause. And the question is, what is cause? There is a case that is going through the courts at the moment with Trump firing the head of another of these independent bodies, the National Labor Relations Board.

11:30And I think the way that the Supreme Court rules in that case could have an impact on whether Donald Trump can legally fire Powell. But one of the things that I had heard, Anthony, is that from economists and financial people is that the damage that Donald Trump is doing already by signaling these things is quite considerable. and just bringing into question the idea of the Federal Reserve's independence. If it looks like Jerome Powell, even if he doesn't fire him, but if it looks like the Fed is making decisions about the dollar and interest rates based on the politics of the White House, that is already undermining the system and will further undermine foreign investors' confidence in the American system.

12:28So he's doing damage even by saying, what they were saying to me, he's already doing damage by saying this. There's a weird thing going on though. And I'm not giving investment advice to people, but I am sitting here at Skybridge where we run money. I'm just letting you guys know that I'm very bullish. I'm going to explain to you why I'm bullish because the system is going to hold. Seven to two, Supreme Court, sorry. Got to have deportation, has to have human rights. Now, there's a lot of Americans that are confused by this because they're in the Trump cult. And they, well, the guy's an MS-13 gang member, deport him immediately.

13:04Well, time out. It's like I suppose they were accusing your family member of being that. Okay. Ben Franklin had one of the best lines ever, which I'll repeat here. If 100 guilty people go free to save one innocent person, Caddy, 100 guilty people go free to save one innocent person is worth it. okay and and if you either get the concepts of freedom or you don't and we're getting dangerous now where you've got a guy that thinks that we're working for him we don't work for him they work for us in this country so the supreme court seven to two i mean you know at some point we got to talk about these two guys that are in the two because i think you know to use that justice to lito if my grandmother was alive she'd say guguz you know the guy's crazy okay and he's embarrassing to me as a fellow italian but that's a whole other topic but but just saying to you the system is holding supreme court is shoving donald trump jerome powell is shoving donald trump and so what's going to happen is neil ferguson who's a trumpette okay you know neil i know neil and i like neil and i was with neil and davos debating trump okay and the virtues or the vices of trump is now saying that they're gonna get demolished okay so one of our listeners just brought this up on the, I don't know, maybe Fiona can find the question, but I read that over the weekend because I'm part of Neil's Green Mantle research.

14:27But the points that I'm making is the system is going to hold. And Donald Trump is arrogantly with a few people flexing on the system. And watch me, the system's going to hit him, going to punch back. And so the market will rally on that okay the market's going down now because they're like holy shit no one's taking control but under the surface control is being taken by the system you see what i'm saying push back on me if you disagree but that's what i'm seeing that's what i'm saying okay here's the counter point i think you're right and let's we'll we'll spell out that 72 ruling that came down extraordinary emergency ruling from the supreme court in just a second but the thing the counter point that I'm hearing to the system will hold, and I have always tended to believe that the system will hold, is that there are real concerns about competency and that those concerns are kind of across the board.

15:23There is concerns about competency when it comes to the tariff, concerns about competency when it comes to the way they're doing immigration, that they're rushing things, which is actually getting them into trouble. There are concerns, and we're going to talk about it, around staffing. Pete Hegseth, who is back in trouble yet again. And concerns from international economists that Donald Trump is making policy both based on personal relationships, like he has with President Bukele in El Salvador, or he sent Scott Besant, his Treasury Secretary, down to Argentina last week for a day, when actually Besant would have been much better off being in the United States.

16:02States handling the situation with the American economy, just to kind of congratulate Millet on a new IMF program, I think it was. So there's a lot of questions about whether this is a competent administration and that in and of itself, and the lack of checks and balances from Congress makes people nervous when they're looking at the United States. I think what we're seeing, and we should spell this out about the Supreme Court ruling, is the Supreme Court doing what the court is meant to do. Fabio Sandro is asking, is Trump aware that lowering rates will fuel inflation even more? I'm sure he's aware that there is the risk of that.

16:39He is not stupid. He's being told that by people around him. Scott Bessent will have told him that. But he thinks that in the end, he wants a cheaper dollar. And he thinks, he said it, Americans have to go through some pain. And he believes that MAGA will stay with him. And that's All he needs is MAGA to stay with him. He's not running for re-election. If you're going to have a glitch in the economy and make people unhappy, do it early on in your term before you get to the end, before he can hand over to whoever he's going to hand over to. But I'm sure he's aware that lowering rates is going to fuel inflation.

17:15Well, I mean, listen, it will. But you said something earlier that we should talk about the FTSE is up. The DAX is up. The German exchange is up. And so and for the last three weeks, there's been incremental capital flight outside of the United States. And so so he is setting up a narrative now that's very dangerous to the U.S. evacuation of dollar supremacy, evacuation of the stability of the rule of law, where you're going to actually have the executive branch now go after judges, calling them activist judges when they're obviously not. and you're setting up a situation that capital does not like caddy and so here's the flywheel capital leaving the united states trade barriers going up smooth holly like around the world dollar getting devalued and guess what ladies and gentlemen we're having the worst april since 1932.

18:11And 1932 was dead center. In the markets, you mean? Yeah, 1932 was dead center in the middle of the Great Depression. So we're having the worst stock market activity since 1932. So a shout out to John Torrance for bringing up Professor Ferguson, by the way, and basically saying, hey, Trump's going to get crushed in the midterm. So he's getting pushed back by the courts. He's going to get crushed in the midterms. He's getting pushed back by the Federal Reserve chairman. One other person on here is saying, well, is that going to make him more erratic? It might. But if the system holds, I think it's great news for America.

18:47On the long term, getting getting crushed in the midterms, it would be a blow to him. And obviously, it's not something he can brag about. But the degree to which Congress has been sidelined, what does that actually do? It increases investigations. It increases subpoenas. But I think the country really has to wait until 28 to have a real check on Donald Trump because he is going round Congress at the moment. I mean, none of this is being done through Congress. There is no legislation happening in Congress. He's doing everything by circumventing Congress. So even if Democrats were in control of the House, I'm not sure how much real impact that would have on Donald Trump's agenda.

19:29So here's the question for you. Yeah. Edward R. Murrow went on television in front of 40 million viewers and rebuked Joe McCarthy. And then he said to Joe McCarthy and CBS said this to Joe McCarthy, you can get an hour of our time to give the counterpoint to my rebuking. So you're the media person here, Caddy. I just play one on television and on podcasts. You're the media person. Is there a call out of Donald Trump? Or is the media too fragmented? Is his base too tied to him? In other words, could something here – you remember the famous lines, right? Do you have no dignity, sir? Remember they said this to Joe McCarthy.

20:13They censored him. They knocked him off all of his committees. And then eventually he died of the disease that he was suffering from. My point to you though, is there something you could see that could break the fever? Because I can tell you that the business people are getting this close to being done with Donald Trump. They're not ready to admit it on a podcast like this. They're not ready to go public because they're communications people. Their lawyers are saying, please don't do that. But they're here now. They're done with the guy. You had Stan Druckenmiller saying two days before the Biden administration, very anti-business.

20:51The business leaders are giddy that Trump's coming into power. $14 trillion taken out of the stock market. Total disarray. Worst stock market performance is 1932. They're right here. So my question is, can it be popped, Gatti? I think the closest we've come to it being popped was in the market meltdown after the tariffs were announced. And that is because the business community's self interest was impacted. And I was struck actually during that crisis by how few CEOs actually came out and forcefully said, this is not okay. But then Trump put in that 90 day pause. I think if the markets go crazy again, then you could see the business community speaking out in much bigger numbers.

21:39And at that point, you could start to see people like Joe Rogan, Theo Vaughn, the podcast world, even some of the Fox News anchors were starting to get anxious around the time of the tariffs. So yes, the media is more fragmented. It is different from Joe McCarthy. Joe McCarthy was one senator. This is a whole administration and at the moment, a whole party. So there's a lot more people that you have to move. But if people were going to, if I think it is still looking at the business community that we have to look at. Okay, we're going to take a quick break. We'll be right back. We'll talk about Pete Hegseth, the latest with that.

22:15Is he in or is he out? And then also we'll explain that 72 Supreme Court ruling, which we have tantalized you with.

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23:35Okay, Pete Hegseth, Peter Korachan is messaging us. The Pentagon's newly resigned spokesperson predicts Trump will fire Pete Hegseth after a full-blown meltdown of a month. Can we look forward to this happening soon? So there are two schools of thought on Pete Hegseth. One is that Donald Trump doesn't like to back down on anything, especially under media pressure. He didn't like the fact that in his first term, he fired General Flynn after media investigations into General Flynn as his national security advisor. He regretted doing that. He doesn't want to be seen as weak. So now that Hegseth's in, he doesn't want to let him go or force him out.

24:21The second school of thought is that Donald Trump is kind of done with having to defend Pete Hegseth in public, and it's getting embarrassing for him to have to do so. So a quick recap on the latest, which is that there was revelations of a second signal chat with details of that Yemeni strike that went not to a journalist, but to his wife, his brother and his personal lawyer, none of whom needed to be on the chat. It's not clear whether his wife even has the security clearance to be in that kind of a signal group. I spoke to a general this morning who said that Pete Hegg's personal phone, which is what these chats were on, is certainly not secure.

25:03That signal is not necessarily secure. It is possible for people to break in behind these walls. And this General Barry McCaffrey said to me this morning that Iran, Russia, China, even America's allies, the UK, Denmark, for example, would be very keen to get access to those signal conversations just to see whether the Pentagon was about to invade Greenland, for example. So they have these systems that cost America billions of dollars. That's where they're meant to be communicating to keep these things secure. And he's gone around that for a second time that we know of. There is reporting that there may be as many as 20 of these signal threads.

25:42words. The NPR then reported today that Hegseth is on his way out. The White House has vehemently denied that. They wheeled out Donald Trump to say that. The press secretary came out and said that that was absolutely fake news. Hegseth gave this kind of excruciatingly embarrassing kind of couple of minutes to camera at the White House Easter egg roll, which has just been happening, saying, I'm not going anywhere. This is old news. This is the fake news media. Do they protest too much, Anthony what do you reckon well I think he keeps him because he he doesn't want to give a win to the fake news media and I think that unless you're telling me there's something that's going to damage Donald Trump unless someone's called Steve Miller calls up Donald Trump and says hey xyz is going to happen to you personally if you keep Hegseth I think he keeps him and I think that But Hexeth has proven himself to be a complete and total amateur.

26:39And Trump would have shed at the first term of Trump. Hexeth wouldn't have lasted. But I think he'd last this time because I think he – who is he going to put in there? Is he going to put DeSantis in there? Susie Wiles is not going to let him put DeSantis in there. Who are you going to get to do the job? So I don't think he's going to fire Hexeth. I know that there's reports saying that he's going to fire Hexeth. But I'll believe that when I see it. But I think it begs a bigger question, though. This is my question to you. So he's not fired. He's obviously proven incompetent and an amateur. Does that create its own set of problems, Caddy?