Kevin Hassett (1:56)

Plus.

Katie Kramer (1:56)

The rest of today's news, Elon versus the EU and a new org chart at Berkshire Hathaway when Warren Buffett steps down after 60 years running the company.

Becky Quick (2:06)

All of these changes are taking place, of course, as Warren Buffett gets ready to hand over the CEO job to Greg Abel.

Katie Kramer (2:13)

It is Monday, December 8th, 2025. Squawk Pod begins right now.

Kevin Hassett (2:18)

Stand Becky by in 3, 2, 1. QR code.

Becky Quick (2:24)

Good morning, everybody, and 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 Joe Kernan and Andrew Raz Sorkin. And here we go on a Monday morning.

Joe Kernen (2:35)

Meantime, President Trump saying he's going to be involved in the government's decision to okay Netflix's acquisition of Warner Brothers, Discovery's movie studio and streaming service. The president making those comments to reporters at the Kennedy center last night. And he said that he recently met with Netflix's co. CEO Ted Sarandos and flagged possible issues with the deal. Take a look at what he said.

Andrew Ross Sorkin (2:58)

He came up. He was in the Oval Office last week.

Kevin Hassett (3:01)

I have a lot of respect for him.

Andrew Ross Sorkin (3:02)

He's a great, he's a great person. But he's done one of the greatest jobs in the history of movies and other things. He's.

Kevin Hassett (3:10)

And he's got a lot of interesting things happening aside from what you're talking about.

Andrew Ross Sorkin (3:15)

But it is a big market share. There's no question about that.

Kevin Hassett (3:18)

It could be a problem.

Joe Kernen (3:20)

Shares of Netflix and Warner Brothers discovery this morning. Take a look. Netflix at 101 bucks. Warner Brothers about 2571. I thought the most interesting piece of that interview was. I mean, there's sort of a whole thing we could deconstruct there. But the idea that he's saying, I'm going to be involved in the decision making is his Justice Department is a very. No, but that's a very unique position to take as the President, at least publicly. I actually, I was trying to think back. I think that may very well be the first time I've ever heard the President of the United States saying that they were going to weigh in personally on a transaction of any sort. Now, yes, it's always been a Justice Department that, you know, and they just lead the Justice Department, somebody they appointed and, and all of that. But if you go back to the.

Andrew Ross Sorkin (4:11)

Yeah, but we certainly always assumed that Trump would do that. Well, but if that's all we talk about.

Joe Kernen (4:14)

But if you go back to the famed AT&T transaction with Time Warner, which was called Time Warner back then, and the effort to block that transaction and all of the commotion and conversation about was he involved in trying to block that transaction or wasn't he involved in trying to block that transaction? And the repeated efforts to suggest that he did not, you know, put his finger on any scale whatsoever, if you recall that typically the Justice Department is supposed to act independently.

Andrew Ross Sorkin (4:50)

He said it out loud.

Joe Kernen (4:51)

Said it out loud.

Andrew Ross Sorkin (4:52)

Okay. That's the only difference, though, because every time.

Joe Kernen (4:55)

Yes.

Andrew Ross Sorkin (4:56)

You know how many times.

Joe Kernen (4:57)

Yes.

Andrew Ross Sorkin (4:57)

We said out loud, Comcast can't do it, or oh, such and such. Or David Ellison can do it because they've. Or all these tech companies are giving.

Joe Kernen (5:05)

Okay, so he said. So now it's, it's.

Andrew Ross Sorkin (5:08)

So it's not new news then. Well, it's a way to come out of the gates on Monday and say, oh, my God, look what Trump's doing again.

Joe Kernen (5:16)

No, it's a way to say this is a major unheard of. It is unheard of.

Andrew Ross Sorkin (5:21)

Even though you knew it was happening already.

Joe Kernen (5:23)

I think a lot of us, even.

Andrew Ross Sorkin (5:24)

Though you said it almost every day.

Joe Kernen (5:25)

That a lot of us suspected behind the scenes that he was involved in these things.

Andrew Ross Sorkin (5:31)

Did he at least make it look good in public?

Joe Kernen (5:34)

What did you say?

Andrew Ross Sorkin (5:34)

At least he'd make it look good and not cop. Do it in public. That would be better if he would do it more surreptitiously. You prefer that?

Joe Kernen (5:42)

Well, what's so interesting about this administration and maybe this is the point that you're trying to make, which is it is all done.

Joe Kernen (5:49)

It is all done in front of you.

Andrew Ross Sorkin (5:51)

How much do you love transparency?

Joe Kernen (5:53)

Love transparency.

Andrew Ross Sorkin (5:54)

You do. Doesn't seem like it. How about. Can we just talk about suddenly remember Tom Lee going to be really rocky, but going to be a good month. Here we are. It was rocky, was it not? I mean, we were worried about the stock market about a week ago or two weeks ago. Because if you look at everything, I think the Dow's been what? I don't know if it actually hit 49,000, but it's pretty darn close, right? I don't think the S and P hit 7,000, but it got up there really, really right on the cusp of actually making all that back. Even with all the. Once again, there is a lot of worry and angst about the market. Bitcoin, who knows Bitcoin.

Joe Kernen (6:37)

One other Netflix oriented question which I did find fascinating.

Andrew Ross Sorkin (6:41)

You met with Sarandos for a couple of hours, right?

Joe Kernen (6:43)

So I had actually done some reporting.

Becky Quick (6:44)

Out of there thinking that, well, that's.

Joe Kernen (6:46)

Where I was going, where Becky just went, which is I wonder whether the president signal to Sarandos or Sarandos misinterpreted the signal. If in fact there were signal. And this goes back to who's doing what and all of that.

Becky Quick (7:02)

You don't get a $5.8 billion breakup fee on it if you don't have some sense.

Joe Kernen (7:05)

Clearly.

Becky Quick (7:06)

Because you think things are going to get through, right?

Joe Kernen (7:08)

Clearly. Ted Sarandez thinks he's having this meeting with the president and thinks this president is giving him the high sign. You go for it, buddy. Kind of thing.

Andrew Ross Sorkin (7:17)

I even thought in a more diabolical way, okay. My original thinking is he met with the president. President said, looks good, Ted, looks good. President, though, has to make it look like they're going to do a lot of due diligence to make sure it is okay because of Market share. But maybe there was a wink and a nod. As long as you behave. Ted Sarandos.

Joe Kernen (7:42)

What does behaving mean?

Andrew Ross Sorkin (7:43)

As long as you, you know, as long as I. As you stay in my good.

Andrew Ross Sorkin (7:50)

Favor. I think he probably said it looks pretty good for you, Ted, but just, you know, as long as you walk the walk and talk the talk. In other words, the kind of stuff that you says that you say Trump is doing to all tech and to all these people, he wants, like, gold boxes and he wants everyone to kiss up to him.

Joe Kernen (8:09)

This is in the king's category.

Andrew Ross Sorkin (8:11)

Okay.

Joe Kernen (8:12)

Right. That's what we're talking about here.

Andrew Ross Sorkin (8:13)

We're talking about.

Joe Kernen (8:14)

We're talking about people who are talking about Kiss the Rainbow.

Andrew Ross Sorkin (8:16)

We're talking about what hasn't been talked about in the past. But it's good to. I mean, whenever we talk about any company doing anything, we say, whoa, I don't know whether Trump would go for that. So I, I think that Sarando's got some. They met for, I think, two hours.

Joe Kernen (8:28)

Yeah. A long time.

Andrew Ross Sorkin (8:29)

So I think that he got some very positive.

Andrew Ross Sorkin (8:34)

Overtures from the President, but I think he could screw it up, probably.

Joe Kernen (8:39)

My understanding is he already has He.

Becky Quick (8:41)

Are they ready? Like, what is the talk that's coming from this?

Joe Kernen (8:43)

But my understanding was that the president told Ted Sarandis in the Oval Office, look.

Joe Kernen (8:50)

I'm a free market guy. I wanted to go to the highest bidder. Literally talked about saying, I wanted to go to the highest bidder.

Andrew Ross Sorkin (8:56)

Yeah.

Joe Kernen (8:57)

You know, they went back and forth about what that really meant, that he, that he wasn't necessarily in the Ellison's pocket. That that was. There was a conversation about that.

Andrew Ross Sorkin (9:05)

That's the other.

Joe Kernen (9:05)

And, and that I don't think he.

Becky Quick (9:07)

To some extent, I don't think he thinks he's in anybody's pocket.

Joe Kernen (9:09)

Well, but I think actually it was possible that that was sort of used to suggest to him, oh, the Ellisons are going around the world saying that, you know, they're in your pocket. And he wants to say, well, maybe, no, I'm not anyone.

Becky Quick (9:23)

President Trump, but also anybody's pocket. And I think that plays out with Elon Musk and anybody else who's tried to cross that.

Becky Quick (9:30)

Hey, can I just tell you guys about some breaking news?

Joe Kernen (9:32)

Yeah.

Becky Quick (9:33)

There's some stuff that's come out. You want to finish that thought while.

Andrew Ross Sorkin (9:36)

No, I was just saying that it's almost like, look, the Ellisons are pretty nice to me. We'll see how you do.

Becky Quick (9:41)

Yeah, right. That makes sense. I'm trying to read through this. These are some releases that have just crossed the wires. Berkshire Hathaway announcing some leadership changes and appointments. And this is happening less than a month from Greg Abel taking over the reins from Warren Buffett who has been heading that company up for the last 60 years. In these changes that are coming, Adam Johnson, who is The CEO of NetJets has been appointed to a new role. It's called the President of Consumer products, service and Retailing business of Berkshire Hathaway. He's going to continue as the CEO is NetJets and but he'll be expanding his role by taking up some additional responsibilities. He's been there for three decades at NetJets including 10 years as the CEO. And Greg Abel says that Adam is an accomplished leader with a proven ability to deliver long term shareholder value. Also, Todd Combs is leaving Berkshire Hathaway. He of course has been running a big chunk of the money, something like $20 billion or more of the money at Berkshire Hathaway. And he's been the CEO of Geico for the last six years. Berkshire is saying that he's leaving and he's resigned to accept a new and important and interesting job at J.P. morgan.

Joe Kernen (10:59)

Was on the board of J.P. morgan.

Becky Quick (11:00)

He was on the board of JP Morgan. He's going to be stepping down from the board of J.P. morgan to pick up this new role that I'll talk about in just a second. It's the head of the Strategic Investment Group at the Security and Resilience Initiative that Jamie's been talking about, Jamie Dimon for some time. We'll talk more about that in just a moment. But just get through the rest of the Berkshire changes. Nancy Pearce has been appointed the CEO of Geico, effective immediately. She's been serving as the Chief Operating Officer at Geico and she joined the company back in 1986. So Ajit Jain has some very nice things to say about her being practical, decisive and focused on results. Mark Hamburg, who is Berkshire's Chief Financial Officer, is going to be retiring from Berkshire Hathaway, but not for another year and a half. He'll be staying through June 1st of 2027. He's been with the company for 40 years and Berkshire is saying they extend their gratitude to Mr. Hamburg for his exceptional leadership. Charles Chang is going to be succeeding him as Senior Vice President and Chief Financial Officer of Berkshire and that's effective in June 1st of 2026. They'll work together for a transition period. There's a new general counsel who's coming in. Michael o', Sullivan, who is coming from snap, but previously he had worked at Munger, Toles, which of course Munger, Toles and Olson is Charlie Munger's old law firm and has been the legal firm for Berkshire for decades. Decades. All of these changes are happening. And again, JP Morgan is just putting out this release on Todd Combs as well. He's going to be heading up the firm's efforts to make direct equity investments of an initial $10 billion as part of this one and a half trillion dollar initiative that JP Morgan has announced to address pressing needs in key sectors from critical minerals to frontier technologies. Jamie Dimon has talked an awful lot about how in this country we need to be more focused on things like the supply chain, things like defense, AI, critical minerals and mining issues. All of those things that we've heard an awful lot about from the Trump administration. Just places that we found we no longer are able to kind of care for ourselves. Jamie Dimon has talked about in the last six or eight weeks he's been talking about this. They put out a release, I think, in October, highlighting some of the things that they'd be doing here. The firm already has plans to loan $1 trillion over the next 10 years. They're hoping to bump that up by 50% to one and a half trillion dollars. And now Todd's going to be running this pretty key and critical frontier.

Andrew Ross Sorkin (13:28)

What do they mean by frontier? I think they mean frontier in terms.

Becky Quick (13:31)

Of new frontier technologies.

Andrew Ross Sorkin (13:32)

Right. Okay. Not frontier. It's not going out of the country.

Becky Quick (13:36)

No. It's not like rolling out in the wagons, covered wagons.

Andrew Ross Sorkin (13:40)

No, but some of the frontiers, like that's there's top tier.

Becky Quick (13:44)

No, the frontier technologies, they're talking about.

Andrew Ross Sorkin (13:46)

Like developed countries, less developed companies. And you think of frontier countries.

Becky Quick (13:52)

This is for an America, I think. And by the way, the council that's heading all of this is going to be chaired by Jamie Dimon. It's got a group, a pretty impressive group of people on the, on the board of this. Jeff Bezos is going to be joining it. Todd will be on the board. Todd Combs, Michael Dell, Jim Farley, Robert Gates, Alex Gorski, Condoleezza Rice, Paul Ryan, a lot of pretty important names of people you probably know, too. But this has been a huge initiative for Jamie Dimon. And so Todd's going to be running that venture capital arm of what's happening there.

Andrew Ross Sorkin (14:26)

It sounds like, you know, kind of setting up to help make America great again in terms of bringing back a lot of things that we lost during globalization.

Joe Kernen (14:34)

Yeah, very cool.

Becky Quick (14:36)

So all of these changes are taking place, of course, as Warren Buffett gets ready to hand over the CEO job to Greg Abel. That's a job he told us about back in May where he surprised all of the shareholders who were there at the annual meeting. But this looks like a pretty.

Kevin Hassett (14:52)

Set.

Becky Quick (14:52)

Plan for an easy transition for how Greg's going to be taking over that company again starting January 1st. He's obviously been running things for a long time and helping along the way with all of these things, but this is the formal transition for that and they're laying out their plans.

Joe Kernen (15:09)

Elon Musk calling for the European Union to be abolished. This after the bloc fined a social media Co. X $140 million. That followed Friday's decision by the European Commission to hit X with the fine after a two year investigation into the company under the EU's Digital Services Act. Now, last week the European Commission had said that infractions by X, which included what it called the deceptive design of X's blue check mark for verification, a lack of advertising, transparency, and they say, the failure to provide access to public data for researchers. Secretary of State Marco Rubio calling the fine an attack by foreign governments on all American tech platforms. We'll see whether there is backlash from the US Government about that.

Andrew Ross Sorkin (15:53)

All right, coming up, they've, you know, we've seen this movie before.

Andrew Ross Sorkin (15:57)

So on Twitter that said ask a person if they know Europe's leading tech company. Ask a person on the street. And some people, very small minority, can come up with asml. Then, then that's it.

Joe Kernen (16:12)

ASML is the top. Spotify.

Becky Quick (16:15)

Spotify is number two.

Andrew Ross Sorkin (16:17)

But you're a finance, you're a leading financial journalist. You're able to come up with that loud and proud. Yeah, you're able to say that on the tip of your tongue. But most people would be like.

Andrew Ross Sorkin (16:27)

Arm.

Joe Kernen (16:27)

Holding, like cricket, arm holdings. Come on, that's pretty big.

Andrew Ross Sorkin (16:31)

It is. But think of when. They've got plenty of other problems. But I think Elon, never hyperbolic this. Fine. We really should. The entire SAP, the entire EU should be gone. We should be. The EU should be gone.

Becky Quick (16:46)

Yeah. When did SAP fall from the top spot? Has that been a long time?

Joe Kernen (16:49)

Oh, I would think a bit. I mean, asml, I do think is such an important sort of component part of the whole.

Andrew Ross Sorkin (16:55)

I wonder what's really behind it, what they're talking about. I mean, you can go to jail for a meme in certain countries.

Joe Kernen (17:02)

In Germany.

Andrew Ross Sorkin (17:03)

Yeah.

Kevin Hassett (17:06)

Teas will be next.

Katie Kramer (17:07)

Coming up next on Squawk Pod National Economic Council director Kevin Hassett shortlisted for next Fed chair watching a meeting he is not a part of but might be casting a shadow over is another interest rate to come.

Kevin Hassett (17:21)

Chairman Powell has done a good job of herding the cats at the committee. If you look at the comments that different committee members were making just a few weeks ago that it looked like they were very evenly split about whether they should cut or not, a big.

Katie Kramer (17:34)

Squawk box interview right after this.

Andy Richter (17:39)

Hi there, it's Andy Richter and I'm here to tell you about my podcast, the three Questions with Andy Richter. Each week I invite friends, comedians, actors and musicians to discuss these three questions. Our where do you come from, where are you going, and what have you learned? New episodes are out every Tuesday with guests like Julie Bowen, Ted Danson, Tig Notaro, Will Arnett, Phoebe Bridgers and more. You can also tune in for my weekly Andy Richter call in show episodes where me and a special guest invite callers to weigh in on topics like dating, disasters, bad teachers and lots more. Listen to the three Questions with Andy Richter wherever you get your podcasts.

Andrew Ross Sorkin (18:18)

Foreign.

Keith Lansford (18:20)

This episode is brought to you by Schwab Market Update, an original podcast from Charles Schwab. Join host Keith Landsford for this information packed daily market Preview delivered in 10 minutes or less, including projected stock updates, monetary policy decisions and key results and statistics that may impact your trading. Download the latest episode and subscribe@schwab.com Market Update podcast or find Schwab Market Update wherever you get your podcasts.

Katie Kramer (18:50)

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Andy Richter (18:58)

And handbags to give and get cause.

Katie Kramer (19:01)

I always find something amazing. Just so many good brands.

Becky Quick (19:04)

I get an extra 5% off with my Nordstrom credit card Total Queen treatment.

Katie Kramer (19:09)

Join the Nordy Club at Nordstrom Rack to unlock our best deals.

Andrew Ross Sorkin (19:13)

Big gifts, big perks.

Katie Kramer (19:14)

That's why you rack.

Katie Kramer (19:20)

Welcome back to Squawkpod from cnbc. The Federal Reserve's Rate setting Committee begins a two day meeting tomorrow and the Trump White House is expecting and calling for a 25 basis point cut. This would be the third consecutive cut by the central bank hoped by many to help ease the pain of consistently higher prices. But complicating the Fed's outlook are a number of factors missing data about the economy not collected during the government shutdown, some dissension among the voting members of the committee about how hawkish to be towards interest rates and the General consensus that President Trump can't wait to replace current Chair Jay Powell with a handpicked successor.

Katie Kramer (20:05)

One man on the short list, White House National Economic Council Director Kevin Hassett. He was an advisor in the first Trump term and if he got the Fed nod, would follow another colleague, former Chairman of the Council of Economic Advisers, Stephen Myron. Appointed by the president as a Fed govern earlier this year, Hassett looks like the man for the job. Wharton School professor and noted market watcher Jeremy Seagolt joined our TV broadcast today and laid out the state of the candidates.

Andrew Ross Sorkin (20:30)

I think is Kevin, I think in the 70s now as the probability of the next Fed chair, which Trump says he will announce at the beginning of the new year, he certainly has gained in prominence and what he says is going to start moving the market much more than in the past.

Katie Kramer (20:49)

And Kevin Hassett himself joined squawkbox. Joe Kernan takes things from here.

Andrew Ross Sorkin (20:54)

Joining us now, the aforementioned White House National Economic Council Director Kevin Hassett, who's I don't know, it's growing. He's growing in size like and I think I need to call you Mr. Director now. Just anticipation of maybe even greater things for you in the Future. You're at 78% now on some of the things. So we're going to have a wide ranging talk, Kevin, because it all. Oh, I just said I was going to call you Mr. Director and then I called you Kevin. But you think about 3% inflation affordability. Should the Fed be cutting? I think Myron would like even more than 25 basis point cut. We might have dissension on both sides. What do you think the Fed should be doing right now, doing more than 25 or should it be a dovish cut instead of what people are predicting? People are predicting a hawkish cut where they jawbone that maybe this is it.

Kevin Hassett (21:51)

Well, it looks to me like Chairman Powell has done a good job of herding the cats at the committee that if you look at the comments that different committee members were making just a few weeks ago, that it looked like they were very evenly split about whether they should cut or not. And I think that Chairman Powell agrees with me on this one, that we should probably continue to get the rate down. Some do so you know, prudently with an eye on the data. And so I think that it's an example of, you know, you're managing a committee. The committee was really in diverse opinions before. And it looks like Chairman Powell has done a good job of getting people to circle around the futures markets.

Andrew Ross Sorkin (22:29)

Right. The right answer well, how restrictive do you think the Fed is right now in terms of away from where it should be? How much would you, let's say you were in the job, what would you be looking forward to in addition to this cut and then next year, how many more?

Kevin Hassett (22:48)

You know, I hate to disappoint with the sort of counting of cuts, but I can say that what you need to do is watch the data. We've got a lot of missing data because of the government shutdowns. We're going to get really back to back jobs numbers pretty soon. And so, yeah, I think that the Fed Chair's job is to watch the data and to adjust and to explain, you know, why they're doing what they're doing. And, and so to say I'm going to do this over the next six months would be irresponsible, really. And I know you don't want me to be irresponsible. I mean, you do sometimes, but.

Andrew Ross Sorkin (23:18)

No, I do, I do. And I'm not expecting to get a lot of answers about whether, you know, whether you are the President's pick or not. But when the President sort. The betting markets went up to 80% after that meeting where you were, you were standing there. I was watching.

Kevin Hassett (23:34)

You were standing outside.

Andrew Ross Sorkin (23:35)

Yeah, you were standing there. And he said, yeah, we've got one in the room, a potential. And I've done your face because it was kind of like, and I was just wondering what were you thinking at the time? Wow, I got it, or wow, I'm embarrassed or wow, I wish you wouldn't do this or I'll just. Whatever the President wants to do, I'm okay with. What were you thinking when he said that?

Kevin Hassett (23:57)

First, I support the president 100% and he's very, very good at like playing the drama of things. The thing I got to say though is people are talking about it. I think the markets kind of have it wrong about how the President has a tough choice. You know, if you look at it. Chris Waller is one of the best monetary theorists of the last generation. He's got papers in places like the Journal of Economic Theory that were really the path breaking papers that showed us how to model monetary policy. Becky Bowman's the best regulator on earth. I talk to her all the time when I'm trying to think about what about this, what about that, what happened to svb. And Kevin Warsh is about the most experienced Fed person that there is. He was there during the financial crisis before. So the point is that the President doesn't have a Tough choice. He's got a guaranteed good choice. And if I happen to be that choice, I'll be pleased to help him serve.

Andrew Ross Sorkin (24:47)

I want to get into the affordability thing eventually, but I want to get into it this way. We've had a couple of people defend you recently. Brad Gerstner, we just had Jeremy Siegel say you're not going to be a rubber stamp in terms of easy monetary policy, that you're a, you know, an established economist that would make the right decisions. I guess the raise. But it does. At 3% inflation, it is on everyone's mind right now because that's above target. That's much higher than what the Fed would like. And I want to talk about affordable affordability because suddenly it's a buzzword. Look, 23% of these price increases happened under the Biden administration. Now, the President's been in for not even a year, but inflation is still too hot and it's above where it was when he came in. So you would need to think about, as a Fed chief, whether whether cutting is the right move right now. And there's an article in the Journal Day adviser are urging the President to start acknowledging that people are hurting or that there's an affordability problem. And he's been saying it's kind of like a Democratic talking point that doesn't exist. How should you be handling this? Because you know the mainstream media is going to play it up. The buck stops with who's in the White House. And even if it was Biden's problem, the President's getting blamed, right?

Kevin Hassett (26:09)

Well, well, the way that in the end, you know, with an eye on the horizon, that this problem gets fixed is that real wage growth goes up enough so that that huge 20, 23% hole that was dug by Joe Biden is a thing of the past. Because people have money in their pockets, enough money in their pockets to bring their real standard of living back up the real standard of living in the US the purchasing power of ordinary Americans has gone up by about $1200 so far this year. If you look at the great data on Friday that said that real wages were up 2 1/2% over the last few months. You know, that happens when you get positive supply in the economy. And that's what drives growth up and prices down. And so what you want to do is lock that kind of gain in where you're seeing real wages coming from positive supply shocks. And if you do that, then just as in the 90s when we had positive supply shocks from the computer and Alan Greenspan was willing to sort of let the economy run a little bit hotter. We have an opportunity with AI and all the productivity that we're seeing to do so again. But to do so with a great deal of caution as you watch the inflation numbers go by. Because the one thing we know is that, that inflation hurts everybody, everybody in the economy. And you saw that in the last election. I'm sure the last election was very much an inflation election.

Becky Quick (27:21)

Right, Kevin? Nobody likes inflation and I think part of this administration's plan to try and get affordability really within more affordability, I should say, out there, is to lower mortgage rates. Right. Have car loans come down. Part of that is the Fed lowering those interest rates. We have seen the 10 year treasury jump up. Not it's not a spike, but 4, 414 versus 4 on the expectation even that when the Fed is going to cut rates again, we think to see the 10 year move higher just as it did when the Fed originally cut 100 basis points. It does raise questions about how much control the Fed has over the longer term, longer end of the bond market, what that means for things like bottom mortgage rates that are set off of the 10 year. We had Ed Yardening on this morning and he said he thinks it may be that the bond market is concerned that inflation is not under control at this point. What do you think?

Kevin Hassett (28:19)

Well, I think the bond market is still like much improved from the beginning of the year. It's fluctuating around a little bit now. I think in part that could be related to the uncertainty over what the Fed was going to do and signal in this meeting the bottom line is that if we get inflation down with positive growth like happened in the 90s because of the positive supply shocks, that there's plenty of room for the 10 year to go down. But that's going to require discipline and you know, keeping a close eye on things. But absolutely, when you see real wage growth over the last three months of about two and a half percent, that's a sign of we're in the midst of a positive supply shock. And that's really good news both for equity markets and for bond markets.

Andrew Ross Sorkin (29:03)

The I just wondered, is this article accurate? As some advisers been saying to the President, you got to recalibrate your response to and.

Andrew Ross Sorkin (29:16)

I can remember during the Biden administration when the Biden administration would blame the feeling that the economy wasn't going well on the media I used to say that's just patently absurd. But that's kind of what we're hearing now that there's, you know, almost.

Andrew Ross Sorkin (29:33)

You know, ignore the public's feelings about how, you know, they feel about the economy at your own peril. And I'm just wondering, did that ring true to the president, that maybe he needs to.

Andrew Ross Sorkin (29:46)

You know, he's in the White House. It may not have caused it, but the buck stops with whoever's in the White House.

Kevin Hassett (29:51)

There's a huge amount, there's a huge amount of positive news that the president is going to be breaking this week about the economy. You know, we've got a person who actually approached the studio with me, walked with me, who's tracking the openings, the groundbreakings for the new factories that are, you know, in the trillions of dollars of announcements that the president's been making, and we're up to almost 30 of those that actually the groundbreakings have happened. And so there's a lot of positive news that's positive for people's jobs, for people's incomes, and for, for inflation. And President Trump is just going to go out there and remind people of that. But in the end, again, going back to the eye on the horizon, that President Trump's economic policies were profoundly popular just before COVID in his first term because he had $6,500 of income growth after the big tax cuts. And so right now, we're going into next year where the typical person who's got no tax on tips, no tax on overtime is probably going to see an extra 600 to $2,000. A lot of that will come as tax refunds in the beginning of the year. That kind of stuff is going to make it so that people are going to look at their wallets and say, oh, boy, this guy's really making me better off. And in the end, that's more important than any poll. The final thing I got to say is that we did look at a lot of the sentiment, the softer indicators over the last few weeks, and we found a pattern that I'm sure you guys could find a chart that would show, which is that consumer sentiment tends to crater when there's a government shutdown. And so we have sort of back to back 4% quarters coming in. And then we got the government shutdown and all the chaos related to that. And the sentiment indicators went down, but the hard indicators really didn't. And that's a pattern that we've seen over and over again.

Andrew Ross Sorkin (31:31)

Kevin, the Democrats would say the shutdown was entirely about these subsidies, even though, you know, that's what they picked, the shutdown, the government over Obviously. But you can't talk about inflation if you don't talk about health care and rising costs that are across the board in health care. What do you think?

Andrew Ross Sorkin (31:56)

Not just Republicans. I don't know if it could ever be bipartisan, but what should the government be doing about these subsidies right now? Should there be in good faith bipartisan talks about extending these subsidies or, or not without guardrails? How do you think that's going to go? Because it all comes into the affordability discussion.

Kevin Hassett (32:15)

Well, the president and Republicans, you know, brought forward two big policies in the big beautiful bill. One, about $50 billion to rural hospitals and then about $30 billion for cost sharing to help the people who might be affected by these increases. That were really a Democratic policy because of the expiration of the extra Covid subsidies. And so the cost sharing stuff was thrown out by the parliamentarian. But it shows that there's room for negotiation about something that could be good for people. I mean, we obviously want lower health care costs, but also we've got to get the fundamentals down. And don't forget that for two years in a row under President Trump, we were able to get the consumer price index for drug prices to go negative for the first time since World War II because all of the hard work we did working with, with drug companies to make drugs cheaper for Americans, and you've seen how much hard work we're doing again on that. And I would expect that we're going to see another third year of a negative CPI because of that. And so we've got to get the fundamentals right. And you know, we're going to. I'm going to see Senator Thune in the White House today. I'm sure there'll be some discussion about how we go forward with the health care debate up there on the Hill between now and Christmas.

Andrew Ross Sorkin (33:24)

Some other things are on President Trump's mind this morning. Kevin, just posting on Truth Social. There must be only one rule book if we're going to continue to lead in AI. We're beating all countries at this point in the race. But that won't last long if we're going to have 50 states, many of them bad actors involved in rules and the approval process. There can be no doubt about this. AI will be destroyed in its infancy. I will be doing a one rule executive order this week, and you can't expect a company to get 50 approvals every time they want to do something that will never work. Any comments on that, Mr. Director?

Kevin Hassett (34:02)

I've seen, I've seen a draft of what the president's talking about. It's been a top priority for him to make sure that we win the race. And I think that the order that he's promising to sign this week, I guess he's reviewed something close to a final over the weekend, is something that's going to really help the AI companies understand what the rules of the game are. As you know that there are some states that want to regulate these companies within an inch of their lives, and then when they make a misstep, fine the heck out of them, just so that the states that are going bankrupt because of their profligate governments can take some money from the AI companies and so on. And so that's a game that President Trump isn't going to allow people to play. And this executive order that he's promised to come out is going to make it clear that there's one set of rules for American companies in the U.S.

Joe Kernen (34:48)

Hey, Kevin, one other question we've been batting around the table this morning was the president said just yesterday that he was going to be part of making the decision about this Netflix transaction with Warner Brothers. And at least the comment that we were making in the past is that the president, this president and presidents prior, I believe, have never have never at least publicly declared their involvement in these decisions. They've historically been left to the antitrust department with inside the Department of Justice. So how different is this and how should we think about that?

Kevin Hassett (35:21)

Well, I don't think it's, you know, just rare for presidents to have opinions about big society changing mergers. But in the end, the Justice Department is going to study things like the Herfindahl Index, the concentration in this industry, the amount of competition that is reduced because of this big merger, and, you know, what the responses of all the other companies that are playing this space might be. You know, that's going to be something that goes on for quite a while. And I think the president is just very interested in making sure that there's a lot of analysis to make sure that we make the right choice.

Andrew Ross Sorkin (35:56)

Do you think that there's more to it now, though, the relationship that a company can have with the president than in past administrations?

Kevin Hassett (36:05)

Is it.

Andrew Ross Sorkin (36:06)

I think that's what Andrew's alluded to. Is it different than it's been in the past? Do you think the influence that President Trump.

Kevin Hassett (36:13)

You know, I haven't been inside any other administration than the Trump administration, but I can say something about the Trump administration is that it's about the most transparent. Is the most transparent administration I've seen in my lifetime.

Joe Kernen (36:26)

Now we agree with Kevin.

Kevin Hassett (36:28)

And so what the other guys were doing probably, you know, is they weren't telling you, and so it's harder to sell. But Mr. Trump let you know how he feels, and that really, really makes him a wonderful person to work for. I can remember when I came in to work for him the first day in 2017, he sort of patted me on the back and said, don't worry, a lot of people are going to be grumbling at you because you're coming out to the White House and I got your back. And he's had my back the whole time. And I really respect him for that.

Andrew Ross Sorkin (36:54)

All right, Kevin. Yeah, I think it's sometimes so transparent. People are like, oh, they can't believe what. No, I'm just kidding. Thanks for all your time today, Mr. Mr. Director. I don't know what we're going to be calling you, and.

Andrew Ross Sorkin (37:12)

As long as we call you to dinner, you don't care what we call you. But.

Kevin Hassett (37:15)

Okay.

Andrew Ross Sorkin (37:15)

All right, see you later. Thanks.

Kevin Hassett (37:17)

Thanks. Thanks a lot, Joe. Great to see you.

Katie Kramer (37:21)

Up next on Squawk Pod, former MTV president Michael Wolf weighs in on the media story. We can't stop talking about Netflix's winning bid for the film and TV assets of Warner Brothers Discovery.

Michael Wolff (37:32)

The bigger issue here is sports. You've got Amazon going very deep on Sports. You've got YouTube going deep on sports. And at the same time, both Peacock and Paramount plus have a lot of sports. And you know who doesn't is Worm.

Katie Kramer (37:47)

We'll be right back.

Andy Richter (37:51)

Hi there, it's Andy Richter, and I'm here to tell you about my podcast, the Three Questions with Andy Richter. Each week I invite friends, comedians, actors and musicians musicians to discuss these three where do you come from, where are you going, and what have you learned? New episodes are out every Tuesday with guests like Julie Bowe and Ted Danson, Tig Notaro, Will Arnett, Phoebe Bridgers and more. You can also tune in for my weekly Andy Richter Call in show episodes where me and a special guest invite callers to weigh in on topics like dating, disasters, bad teachers, and lots more. Listen to the three Questions with Andy Richter wherever you get your podcasts.

Keith Lansford (38:32)

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Katie Kramer (39:02)

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Katie Kramer (39:20)

And we're back.

Kevin Hassett (39:21)

This is Squawk Pod up and Becky, thank you.

Becky Quick (39:25)

You're watching Squawkbox right here on cnbc. I'm Becky Quick, along with Joe Kernan and Andrew Ross Sorkin.

Andrew Ross Sorkin (39:31)

Netflix's winning bid for Warner Brothers Discoveries film and streaming assets still has obviously a long way to go before it's finalized. Joining us now with his take on the deal, former MTV president and CEO Michael Wolff. He's co founder and CEO of Activate this. What do you think when it happened and your overall impression?

Michael Wolff (39:52)

It's a must do for Netflix, for Netflix. And there are a couple of reasons. One, for anybody to succeed in streaming, they need two things. They need one, global franchises that, that really work everywhere. And they need large volumes of programming. And so if you look at it, Netflix really isn't competing just with HBO Max. They're competing. Their biggest competitor is, is YouTube. And then you've got Amazon prime. And then the other is Tubi tv. So people forget about both Amazon prime and Tubi tv, which is owned by Fox. So it comes down to even the number of titles. So right now, if you look at the comparison, Netflix has 7,000 titles, HBO has 4,000 titles. Prime, Amazon prime is 25,000 and Tubi has 70,000. So this is this market. They really, in a lot of ways that they had to have this. And then earlier you were talking about Peacock and about Paramount. Plus, they both have something that Netflix doesn't have. They have live sports.

Michael Wolff (41:04)

And that's the other place where this game is going to be played. And they don't get live sports with the HBO Max deal because just when.

Andrew Ross Sorkin (41:11)

You started, it's like they had to have this. Netflix is the, is the, you know, the elephant in the room right now in terms of having succeeded in media at the expense of everybody else, all the legacy players. So I would have thought you would have said if Netflix has to have it, how much did Comcast have to have it? How much did the other suitors need? They needed it even more than Netflix.

Michael Wolff (41:38)

Well, they needed it, but Netflix is the default where most people start when they're looking at streaming. They start with Netflix right when they look at where they're actually watching. They start with YouTube. In a lot of ways, YouTube is TV for a number of people.

Andrew Ross Sorkin (41:54)

Some people said that this does nothing to help Netflix compete against YouTube, just buying a library of old boomer films.

Michael Wolff (42:02)

It does, because there are two different modalities in terms of viewing. If on YouTube, what you're watching is short, you're watching in a lot of cases under three to four minutes. And especially even less so now with YouTube shorts. When you look at Netflix and HBO Max and Amazon prime and Tubi, you're watching much longer form, you're watching hours, you're watching two hour movies. There's different.

Becky Quick (42:27)

Are they going to continue to put out the theatrical releases at the same pace that Warner Brothers has to this point? Because there's some people concerned about whether they'll really stick to that or not.

Michael Wolff (42:38)

It's not clear. But I can tell you one thing, which is all of the studios, the things that they're going out with big releases are really the top franchise films and that that's going to continue because they need that audience build and they need the huge amount of advertising and promotion that comes around that otherwise those films aren't as valuable when they're on a street streaming service.

Joe Kernen (43:01)

What do you make of what we were talking earlier about this? If you are Paramount right now, or your Comcast or your name name the other Sony even. I mean, there's a lot of, there's a couple of players around. Do you try to do a deal quickly, maybe among yourselves, to try to draft off of this deal? Meaning from a regulatory perspective, if there's two deals in front of the DOJ and you're starting to think about competition in that way, that's different than one deal and waiting effectively 18 months, 24 months or whatever, however long you think that's going to take, to then figure out how to pick apart the pieces later if you think that deal gets blocked. Do you see what I'm saying?

Michael Wolff (43:36)

Yeah, I think that the rationale will be less about getting approval and it'll be much more about figuring out how they're going to put together a service that really can rival the, the new Netflix service, especially because it's going to take a while for this deal to clear, right?

Joe Kernen (43:54)

No, no, but what I'm saying is either you sit around and you say to yourself, this deal is not going to make it and we're going to spend all of our, our firepower, all of our energy to try to upend this transaction in Washington and And pray that in 18 months this deal doesn't happen. In which case then you're paramount, you go back at it in some other way, or then Comcast has an opportunity, whatever. Or you say to yourself, the, the train has left the station. I'm letting the train go and I'm going to actually just now deal with it and I'm going to try to make my own deal.

Michael Wolff (44:25)

I think it's the latter. I think it's really around figuring out you're not going to wait. I mean, there's the rationale for the deal. I mean, regardless of whether or not it's the whims of, of, of the President, you put that aside. The rationale for the deal from a market share perspective, it really isn't great. I brought the numbers. Here's the percentage of TV viewing you've got. 46% of TV viewing is streaming. 12.9% is YouTube, 8% is Netflix, 4.8 Disney, Warner Brothers Discovery is 1.3%.

Joe Kernen (44:58)

But how are you. But here's, and this is a question about definition. When you say tv, the TV market share, right. Some people say it should be eyeball market share in terms of time spent, in which case YouTube would be. What number would that really be?

Michael Wolff (45:15)

YouTube is 12.9%. 12.9% of YouTube is of eyeballs.

Joe Kernen (45:20)

So we're in the eyeball. Is that you're looking at as an.

Kevin Hassett (45:22)

Eyeball game, because that's, that's really.

Michael Wolff (45:23)

We have to look at it.

Joe Kernen (45:24)

But then would you put video games in that, in that marketplace?

Michael Wolff (45:27)

Well, that's not tv.

Joe Kernen (45:28)

Well, but this is why, but what I'm saying is, by the way, some people are going to say it's the theater business. And because that's a specific business and this can have an impact on the.

Michael Wolff (45:36)

Theater business, you can keep adding it up, but it, but, but still, this deal makes this deal get smaller.

Joe Kernen (45:42)

Okay, here's one thing.

Andrew Ross Sorkin (45:45)

Is President Trump right, that Netflix has way too much power already and that this could be too big? It reminds me of Kroger trying to merge with some other supermarket chain when you got Amazon and Wal Mart. You're not even defining what the, what the current market or the future market is. You're saying Netflix is not a monopoly right now.

Michael Wolff (46:05)

It's not.

Andrew Ross Sorkin (46:06)

So do you think this passes regulatory muster when it comes down on the merits of it?

Michael Wolff (46:11)

Absolutely, it should pass.

Andrew Ross Sorkin (46:12)

So then when the President says there's problems, it's way too big. They got way too much control of streaming. He's missing all the other.

Michael Wolff (46:18)

I think he's missing out on the facts. I mean, the facts here are that the company that is quickly becoming the monopoly is YouTube.

Andrew Ross Sorkin (46:26)

What?

Joe Kernen (46:26)

Okay, so there's a cynical take. The most cynical take that you could have on this transaction is that Netflix says themselves it'll for $5.8 billion, potentially I can slow everybody else's train down, meaning I'm effectively paying for two years of regulatory Michigan. During that two year period, I'm going to be able to make all sorts of new shows. People are going to come to us. They're not going to go to HBO or any of these other services because no one's going to know what's going on and I'm going to win. And that's, that's if, if that's what it costs, that's what it costs. What do you make of that?

Michael Wolff (47:03)

I think I don't agree with this.

Joe Kernen (47:05)

In a sort of defensive posture.

Michael Wolff (47:07)

I don't agree with the cynical point of view. And there are a couple of reasons. One of them is the overlap among these services is, is pretty low. The overlap with HBO Max and Netflix roughly about 30%. The overlap with Netflix and Amazon is about 60%. So it's not as if they're going to crowd somebody else at this point.

Joe Kernen (47:28)

Look, I'm in the creative business. I like to try to make shows and do things. If you were going to sell a show today, who would you sell your show to in this, right this minute? How much more complicated does it get to sell a show to an HBO for example, right now, when you don't know what its future is going to be, or maybe even a Paramount or whomever. Whomever. Then it would be to Netflix because Netflix now looks like they're clear.

Michael Wolff (47:53)

The cynical point of view is that you'll sell. If you're a producer of television or films, you're going to sell your show to, the people are going to pay you the most mean right now, this is, this is a buyer's market. It's not a seller's market in terms of shows.

Joe Kernen (48:07)

A couple of years ago it was a seller's market. That, by the way, boy, is that true.

Michael Wolff (48:11)

Yeah. So sellers. So that's not where this comes down to. This comes down to really the bigger issue here is sports. You've got Amazon going very deep on Sports. You've got YouTube going deep on sports. And at the same time, both Peacock and Paramount plus have a lot of sports. And you know who doesn't is Warner is Warner Brothers. Discovery doesn't have any sports.

Andrew Ross Sorkin (48:37)

Michael, thank you.

Katie Kramer (48:41)

That is Squawk Pod for today this Monday. Thanks for starting your week with us. Squawkbox is hosted by Joe Kernan, Becky Quick and Andrew Ross Sorkin. Tune in weekday mornings on CNBC at 6 Eastern to get the smartest takes and analysis from our TV show right into your ears. Please follow Squawkpod wherever you get your podcasts. Have a great day. We'll meet you right back here tomorrow.

Kevin Hassett (49:05)

We are clear.

Joe Kernen (49:06)

Thanks guys.

Andy Richter (49:17)

Hi there, it's Andy Richter, and I'm here to tell you about my podcast, the three Questions with Andy Richter. Each week I invite friends, comedians, actors and musicians to discuss these three questions. Where do you come from, where are you going, and what have you learned? New episodes are out every Tuesday with guests like Julie Bowe and Ted Danson, Tig Notaro, Will Arnett, Phoebe Bridgers and more. You can also tune in for my weekly Andy Richter Call in Show episodes, where me and a special guest invite callers to weigh in on topics like dating, disasters, bad teachers and lots more. Listen to the three Questions with Andy Richter wherever you get your podcasts.